This article is part of a larger series on How to Become a Real Estate Agent.
Agents with a commercial real estate license have an average income double that of residential agents, with many agents bringing home six and seven figures. This is because commercial properties tend to be priced higher and transactions are more complex. However, this specialization requires additional skills and knowledge to serve the needs of landlords and lessees, which can also make commercial agents more in demand.
While the road to commercial real estate success is different for everyone, this guide will show you the first steps to take and the core skills you’ll need to get started.
1. Complete Courses Required in Your State
All prospective real estate agents, whether residential or commercial, take the same licensing courses as those who plan to become a residential real estate agent. While the requirements vary widely by state, they generally require somewhere between 60 and 120 hours of coursework followed by a state-administered exam.
The topics covered in these courses run the gamut from residential sales and leasing, fair housing laws, types of real property ownership, commercial real estate, and other national and state-specific content. Most courses are roughly on par with an entry-level college course.
As far as pricing goes, you can expect to pay anywhere from $150 to $900 depending on your state, and what format you decide to take the course in. As you can imagine, live courses or intensives are generally more expensive than online or study-at-home courses.
Here’s a quick breakdown of the course requirements needed to get a real estate license in the six largest states in the country:
Required Number of Education Hours
75 hours of the following courses
9 semester credits or 12 quarter credits (135 hours) of the following courses
63 hours of the following courses
180 hours of the following courses
90 hours of the following courses
75 hours of the following courses
If you don’t see your state listed here, or want to learn more about real estate licensing courses, you should check out Real Estate Express, which offers a number of affordable courses to help you meet state licensing requirements, exam prep support, and professional resources that can help you prepare for the next step in your real estate career.
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2. Pass the Test & Get Your Commercial Real Estate License
Once you’ve completed the coursework required in your state to be eligible for a real estate license, you need to pass your state’s licensing exam. Exams are generally administered by your state and will have anywhere from 75 to 150 multiple choice questions covering the topics you learned during your licensing course.
Did you know: While the tests are not that difficult if you study hard, pass rates generally hover around 50% to 60%. If you want to make sure you pass your test on the first try, then you should strongly consider buying a real estate exam prep package or real estate practice exam software to help you study more efficiently.
Once you’ve taken your test, you may need to wait a few days to a few weeks to get your results and finally receive your license.
3. Find a Commercial Real Estate Brokerage to Work For
Once you’ve passed your test and received your real estate license, you can now pursue a career in residential sales or leasing, commercial sales or leasing, or even appraisal or property management. However, to legally, and successfully, start conducting business as a commercial agent, you must first find a sponsoring brokerage offering the experience you need.
To do this, there are two tried-and-true options:
Option 1: Look for Teams Handling Rentals & Sales
Since getting your first deal in commercial real estate can be more complex than residential real estate, you may decide to cut your teeth at a firm that allows you to do both. In a large city like New York or San Francisco, rentals can be an extraordinarily lucrative and quick source of income while you develop your commercial real estate knowledge and clientele.
This is because a commercial lease can take months to close, while most residential leases close in a week or less. A brokerage that handles both residential and commercial transactions, therefore, can mean quick cash for rent and groceries while you work toward getting your first commercial deal.
The only slight drawback here is that very few brokerages are evenly split between commercial and residential sales and leasing. Most are either all or mostly residential, or all or mostly commercial. That means while you may get a quicker, easier source of income, you’re probably not learning from a very experienced commercial broker.
Option 2: Look for Brokerages With a Salaried Training Program
The second way to start your career in commercial real estate is to join a commercial real estate brokerage that has a training program for new associates. Generally speaking, most training programs will last a year or more, and some brokerages offer salaries to their trainees, which means no need to hustle for deals right away.
The only drawbacks here are that brokerages that offer salaried training programs are generally pickier about who they hire. That might mean a longer job hunt, and, possibly worse, a lower than expected training wage. Depending on your location, skills, and the company you’re applying to, you might get anywhere from $30,000 to $45,000 per year as a trainee. Many training programs are unpaid.
Visit our article on how to choose a real estate company to work for to learn more tips.
4. Become a Member of Industry Associations
While not all states require agents to join an association, many brokerages do as a condition of joining the agency. This is because these associations provide their members with added credibility in the marketplace. Additionally, this is a good idea because each association offers different networking and continuing education opportunities, as well as discounts on software and services you may want to work with.
Are you interested in becoming a thriving real estate agent? If so, the first thing you must ask yourself is whether you want to work in commercial or residential real estate. Granted, because more people are likely to buy or lease a place to live versus a place to run a business, it is easier to get into residential real estate — where there will always be more potential clients and transactions.
However, commercial real estate can also bring in a substantial number of clients by potentially offering investors steady returns and better cash flow than residential properties. It also brings in more money for agents. In fact, according to Glassdoor.com, commercial agents had an average salary of $90,914 nationwide, whereas the average salary for real estate agents was $50,897 – this number being skewed towards residential real estate agents . So, if you want to earn more, you need to understand what it takes to become a commercial real estate agent, as well as the pros and cons of the business.
The first step to success in any field is to understand your product and know what you’re selling. Commercial real estate (CRE) refers to properties meant to generate income. These include places where companies conduct business, multifamily structures and hotels, among others. They’re usually owned by investors who collect rent from each business/tenant that operates on the property.
What is a Commercial Real Estate Agent?
According to the Association of Real Estate License Law Officials (ARELLO), there are about 3 million real estate agents in the United States. Those who deal with CRE are specialized and are called commercial real estate agents as opposed to their counterparts, residential real estate agents, who specialize in residential properties. Specialization is necessary because CRE transactions are often more complex than residential transactions.
Furthermore, CRE agents often represent both buyers and sellers, as well as lessors and lessees. And, in addition to receiving commissions, they are also sometimes salaried by their brokerage. The scope of work may also vary because there are diverse niches in the CRE industry. For instance, besides selling, buying and leasing, CRE agents may also be property managers, appraisers or real estate developers.
How to Become a Commercial Real Estate Agent
1. Obtain a Real Estate License
All real estate agents must obtain a license from the state in which they wish to practice in order to represent buyers and sellers, as well as lessors and lessees in property transactions. This is the same license regardless of whether you want to sell commercial or residential properties. To obtain the license, you must:
Meet the State’s Eligibility Requirements
Each state has its own licensing requirements and regulatory offices. Common requirements include a minimum age, background check and a high school diploma. You should also check to see if your state has a reciprocal licensing agreement with other states, which means that obtaining a license in one state could allow you to practice in another state, too.
Take approved prelicensure classes
Required courses vary by state in terms of hours and content. For example, New York requires 75 hours of courses, whereas Texas requires 180 hours. The courses cover topics like real estate fundamentals and laws, along with national and state-specific topics. These courses have a difficulty level similar to a first-year college course and are usually priced between $150 and $500, depending on the state and format (such as live, online or independent study).
Pass the exam
Exams are usually administered by the state and contain between 75 and 150 multiple choice questions. And, because pass rates are around 50-60%, pre-exam study guides or programs are recommended. States will post the results about a week later and issue the license a week after that.
2. Find a Real Estate Brokerage Firm with Commercial Deals
Once licensed, it’s important to find a brokerage specialized in commercial real estate to gain experience in the market in which you intend to practice. If you’re interested in commercial, these are the two best options:
A Real Estate Brokerage That Works in Both Commercial & Residential Real Estate
The potential for steadier income is in residential transactions, which are easier to obtain and faster to close whether your client is renting, buying or selling. Plus, as a new agent, you’ll likely also find it more difficult to source commercial deals with little experience. So, in the meantime, you can learn from the commercial deals of other agents and build a client base of your own as you work toward becoming a commercial real estate agent.
The disadvantage here is that few brokerages have deals split evenly between commercial and residential. This can mean that you might have less exposure to commercial transactions than you would in a brokerage specific to commercial real estate.
A Real Estate Brokerage That Works Exclusively in Commercial Real Estate
The advantage of a brokerage that is focused strictly on commercial real estate is that many usually have salaried training programs for new associates. These programs can last a year or more and, therefore, allow trainees to focus solely on CRE and not rely on residential deals for income while learning the ropes.
However, the disadvantage is that brokerages with training programs are also harder to get into because there’s more competition. But paid trainees can expect to earn about $25,000 to $45,000 per year before making their first commercial transactions. Keep in mind, though, that some training programs are not salaried.
In addition to the two methods mentioned above, another way to jumpstart your career in CRE is by interning in a commercial brokerage before becoming licensed or by working in its marketing department.
3. Join a Professional Association and/or Become a Realtor
Many commercial real estate firms require their agents to join a national or state-level professional association, like NAR, ULI or REBNY. This is one of the most important tips to becoming a successful commercial real estate agent because these associations offer continuing education, networking opportunities, and supply and service discounts (such as manuals, software and more). You can also become a realtor by joining the aforementioned NAR, the largest trade association in the U.S. with more than 1 million residential and commercial real estate professionals. Realtors are agents who subscribe to NAR’s code of ethics, and NAR membership will also add to your professional credibility.
With so many types of commercial properties, it’s important to specialize to help narrow your focus and develop a deeper understanding about your niche. Specialization also helps you better target your intended clients and build your reputation in your chosen field. You can specialize in various types of properties — such as office, retail, industrial and more — and further sub-specialize in specific uses, like laboratories, for example.
5. Create a Marketing Strategy
Mentorship and professional organization allow you to learn the local commercial real estate market, but it’s also important to create a marketing strategy. This should identify the type of properties you want to focus on, how you plan to target clients, a unique selling point (USP), a budget, marketing formats, and success benchmarks. You can also expand on this further by referencing general marketing plan guidelines for a roadmap to generate leads.
6. Explore Additional Career Options
As a commercial agent, you can also work in several areas besides sales, including development — which is purchasing land and building on it, arranging financing, negotiating tenant leases, and supervising the process — or in salaried property management (which includes handling day-to-day operations, such as repairs, staffing and so on).