I get a lot of people that ask me how to become a licensed commercial real estate agent. They may either be residential real estate agents that want to cross over to commercial real estate or they maybe coming from another industry all together. One misconception is that you can be a commercial real estate broker part time, just like you see some people doing residential real estate part time. It's just not that simple. Commercial real estate transaction are a bit more complex and you won't have much luck (if any) getting businesses to hire you if they know you are only doing it part time. Either way before you make the decision to become a licensed commercial real estate agent or broker consider the the below.
What is a Commercial Real Estate Agent?
A commercial real estate agent is one who represents investors, buyers, tenants, owners, sellers, landlords, etc, in office space, retail space, warehouse space, multifamily, storage, mobile home parks, land & other commercial real estate lease or purchase transactions. The transactions tend to take longer and be a bit more complex than residential real estate transactions. Also the ramp up time to closing your first deal is typically longer in commercial real estate than residential. You may also here people refer to commercial agents as brokers.
Do I need to have a commercial real estate license?
Yes, the license is the same whether you want to be a commercial agent or residential agent. Both are required to take the same real estate courses and tests. To get your real estate license you have to take 5 core courses as well as have a number of college credit hours. The requirement vary by state, however you will need somewhere between 60 and 120 total hours of coursework. In Texas for example the Texas Real Estate Commission requires 180 hours of coursework and a pass a state exam to earn a Texas real estate license. The test is really not that hard as long as you study as it's made up of 75 to 100 multiple choice questions.
Once you have your license you are now qualified to pursue a career in real estate. The hard part is determining if you want to do residential sales or leasing, OR commercial real estate sales or leasing.
Find a Commercial Real Estate Agency to Work For
During the time you are taking your courses this is also a good time to determine whether you want to do residential or commercial and find a broker to work under. It will take few interviews to figure it out and you typically will have to identify a sponsoring broker before you can take your licensing exam. Also, keep in mind it's not easy getting into the commercial real estate industry. It's going to take a lot of door knocking to get an interview unless you know someone on the inside.
A few ways to get your foot in the door to commercial real estate
- Work for a company that does residential and commercial – Deals take a lot longer to close in commercial which means you won't make money very quickly so you might want to consider working for a company that does both residential and commercial so you can make some money a bit faster. Residential is a little bit less complex also so you would be able to get a few transactions under your belt (30 days as opposed to many months) as you learn about the commercial real estate industry and build a clientele. On the flip side of this option most companies are either a residential or commercial real estate agency. If you work for a firm that does mostly residential and a only a little commercial you may not get the commercial real estate experience that you want.
- Do an internship during college – If you are about to graduate college a great way to get your foot in the door is to do an internship. That way you can learn a ton and get to know all the other commercial real estate agents in town. After you graduate you will have a lot of connections to follow up with.
- Take a salaried marketing or market research job first – A lot of brand new agents who are not ready to go commission only and want a salary might become part of the marketing or market research team then graduate to brokerage after about 1 or 2 years. This gives them a chance to get paid a little month while they learn the business. Don't expect to make more than about $25,000 to $40,000 per year.
How Much Do Commercial Real Estate Agents Make?
I know a lot of residential and commercial agents that make great money and I know some that don't. Most NAR statistics will show that commercial realtors on average make a bit more than residential agents (Median of $100k compared to $40k). Obviously those numbers are skewed because a lot of residential agents work part time (20 hours +/- per week). In commercial real estate it's not possible to work part time. It's basically a 40 hour per week job. At the end of the day the harder the work the more money you make and the faster you make it.
Is Commercial Real Estate Right For You?
Look the commercial real estate industry is not for everyone. Clients and prospects are harder to get. Deals take longer to close. It takes much longer to make money. It's a commission only job. If you are coming from an industry where you made a nice guaranteed salary then you better save up at least 6-12 months of cash because it might be 6-12 months before you make a commission. Some deals I've worked on have taken 12 months to close which means a lot of upfront work with no paycheck. That is exactly why you have to fill up your pipeline as quickly as you can.
This is a social, cold call industry so you have to be confident and not care about getting a door slammed in your face. Overall it can be a rewarding career if you can weather the storm, stick to a plan, and never give up.