According to the most recent report by Dun & Bradstreet, commercial real estate brokerages and property management companies have a combined annual revenue of about $36 billion a year.
Even a small percentage of that figure can add up to a handsome income for a commercial real estate agent. But in order to earn big as an agent or broker you need to first get your commercial real estate license.
Here are the some questions to consider if you are thinking about becoming a commercial real estate agent.
What’s the Difference Between a Residential and Commercial Real Estate License?
All states have the same licensing program and educational requirements for a real estate license. They don’t distinguish between a residential and commercial license, instead offering a single, one-size-fits-all real estate license.
Licensing courses, exams, and fees usually run less than $1,000 in total. Courses can be online or in a classroom. Course lengths average about 100 hours but vary from state to state. Topics can include fair housing laws, property management, ethics, contracts, financing, and real estate law.
How to Get A State Real Estate License
After you’ve successfully completed your real estate licensing course it is necessary to take the state exam in person. Most states also require a background check and fingerprints because you’ll be working with the general public.
State exams usually have around 120 multiple choice questions. If you don’t pass the first time, most states will give potential licensees a second or third chance to pass the real estate licensing exam.
What To Do After Getting Licensed
After you pass your state exam and get your license, the hard part begins. That’s because very little of your licensing course will prepare you for the commercial real estate market.
Out of about 2 million licensed real estate agents in the U.S., very few work in commercial real estate. Real estate training programs and state licensing focus on the residential market, where the demand is greatest.
Which means that you, as a newly licensed commercial real estate agent, need to find a good agency to work for. It’s important to look for a commercial real estate company that will provide you with more training, and that will support you until you start making money.
Commercial Real Estate Is Much Different from Residential
Commercial deals can be incredibly complex, and involves corporate lawyers, financiers, asset managers, and sophisticated investors.
The more complicated a deal is, the longer it will take to close. While residential sales and rentals usually close in one or two months, commercial sales and leases can easily take between three months and a year, if not more.
When you’re working on straight commission, waiting a year for your first check can be a big problem.
Two Ways to Get Started with A Commercial Real Estate License
One way to solve that problem is to join a firm that handles both residential and commercial rentals and sales. You can work the residential side to generate quick commissions while learning more about the commercial real estate business.
After you learn the ropes, build a client list, and have a few commercial deals under your belt, you can move your license to a firm that specializes in commercial real estate.
Another option is to hang your commercial real estate license with a commercial brokerage that offers a mentoring or salaried training program. With a mentoring program you’ll split part of your commission with your mentor – and that’s after the company takes its share. Salaried training programs don’t offer six-figure incomes since they’re designed to cover basic expenses while you get your foot in the door.
You won’t make as much money this way, at least at first, but you won’t be waiting an entire year for your first commission check either.
Is Working in Commercial Real Estate Right for You?
Before you even think about getting your real estate license, ask yourself if commercial real estate is right for you.
To succeed in commercial real estate, you need to have confidence and perseverance. Transactions and clients are much more difficult to find than in residential. Your competition will be more experienced than you and possible tougher and more aggressive.
In addition to having the right attitude you need to have the education and skills to back that attitude up.
Most commercial real estate firms look for agents with at least a four-year college degree, preferably with a major in economics, finance, accounting, or real estate because there is a lot of business analysis in commercial real estate transactions.
Having the right professional experience in the real world can also go a long way. Commercial real estate licensees who have experience in investment banking, property management, accounting and law, and residential income property investment often change careers and do quite well in the commercial real estate business.