If you’re looking to build a career in real estate, the first decision you’ll need to make is whether you’re interested in commercial real estate or residential. Then, do you want to be a real estate agent, or take it one step further and become a broker?
What Does a Commercial Real Estate Broker Do?
A commercial real estate broker specializes in helping clients buy, sell or rent commercial properties. Those properties include office buildings, retail spaces, hotels, industrial spaces, multifamily residential properties and more. Sometimes commercial brokers also assist clients with navigating zoning issues, lenders, legal work with commercial real estate attorneys and appraisals related to commercial properties.
According to David R. Dunn, Strategic Real Estate Advisor at Real Estate Bees, “A commercial real estate broker makes sales calls, puts leases and contracts of sale together and shows property.”
The main difference between a broker and an agent, however, is that a broker can also own a real estate agency and employ other real estate agents. On a daily basis, a commercial real estate broker takes on a wide variety of work, said Ofir Shalom, a Financing Expert for Lev. Some of those tasks, Shalom said, include, “reaching out to potential borrowers, whether it be through cold calling, emailing on LinkedIn or other social media outlets, finding conferences to attend to network … managing existing relationships with clients” and more.
Brokers also need to consistently follow up with old contacts “because maybe they don’t have a financing deal at the moment, but maybe sometime in the future would be a better time to circle back and reach out,” Shalom explained.
And, of course, managing deals is a huge part of a commercial real estate broker’s day-to-day work.
Advantages of Becoming a Commercial Real Estate Broker
The main advantage to becoming a commercial real estate broker over a residential real estate broker is the earning potential. While getting into commercial real estate is sometimes more difficult and requires a longer learning curve, there’s a significantly higher potential for profit, as commercial properties sell for much more money than residential.
Dunn stated, “Unlimited income is an advantage,” referring to the limitless earning possibility in commercial real estate.
Because commercial properties sell for more money than residential, you also don’t need to make as many sales per year as you do for residential. Residential agents make lower commissions, and therefore need to make more sales. As a CRE agent, you have higher commissions, and therefore more flexibility to make fewer sales.
Commercial real estate agents also have the benefit of more traditional hours than residential real estate agents. Commercial agents and brokers typically work 9 to 5, while residential agents often work nights and weekends to accommodate the schedules of their clients.
What Are the Commercial Licensing Requirements?
The requirements to become a real estate agent in the United States vary from state to state, but typically you need to be at least 18 years of age and have a high school diploma or GED.
Once you’ve checked off those two boxes, you need to complete the real estate licensing coursework required by your state. Depending on where you live, you might need to complete anywhere between 60 to 180 hours of real estate coursework, followed by an exam with between 75 and 150 multiple choice questions.
However, to become a commercial real estate broker, there are no additional licensing requirements, said Shalom.
How to Become a Commercial Real Estate Broker in 7 Steps
To become a commercial real estate broker, there are a number of steps you need to take that differentiate you from a residential broker.
1. Meet the Eligibility Requirements
The first step to becoming a commercial real estate broker is to check your state’s eligibility requirements and make sure you meet them. Again, the most common requirements for working in real estate are being 18 years of age and having your high school diploma or GED.
2. Take Your State’s Required Courses
Once you’ve confirmed that you meet the requirements to become a real estate agent in your state, you need to take your state’s required courses.
3. Take and Pass the Licensing Exam
After you’ve completed the required coursework, you need to take your state’s real estate licensing exam, which usually takes about three hours. The exam includes a national and state portion, so different states have different questions. Again, the requirements vary by state, but usually you need to score around 70% to pass.
4. Find a Broker to Work For
Once you’ve passed the real estate licensing exam, it’s time to find a real estate broker who will accept you, Dunn said. One option is to work for a brokerage firm that deals with both residential and commercial real estate. Because learning the ropes in CRE takes longer, working for a firm that handles both will allow you to make some money with residential real estate as you learn the complexities of commercial real estate.
However, working for a brokerage firm that does both also means there’s a risk that residential real estate will occupy most of your time, and you won’t get the chance to work with many commercial properties. If that’s a concern of yours, then you might want to find a firm focused solely on commercial real estate.
“The best thing to do is find a brokerage firm that has a good training program,” Dunn said. Sometimes, those firms even have salaried training programs that will allow you to learn the ins and outs of being a commercial real estate broker while still getting paid. It’s important to note that those firms are highly competitive, though.
Networking is perhaps one of the most important steps to becoming a commercial real estate broker. It’s essential to establish relationships with other agents and brokers, buyers and sellers of real estate, and other commercial real estate professionals like those in property management, insurance, and more.
You can join professional associations, like the National Association of Realtors (NAR) to meet others in your field. Some of these associations also offer training opportunities or continuing education for agents.
Also, try to join community organizations, even if they’re not directly related to real estate. You never know who you might meet or where your next sale might come from.
Much of the work of a commercial real estate broker, Shalom said, involves “putting yourself out there, cold calling every single day, reaching out to new people and circling back with old clients.” All of this counts as networking and Shalom added, you need to be consistent.
Networking “needs to be daily,” Shalom stressed. “It can’t be an every couple of days type of thing.”
Shalom acknowledged that while it would be helpful to be outgoing, at the very least, you should “be able to communicate well with people”
If you’re interested in commercial real estate, it’s a good idea to specialize in a specific type of commercial real estate, such as office, retail or industrial. When you specialize, you can stand out among other agents and build expertise in a specific type of property. This way you’ll be able to target your clients efficiently.
3 Expert Tips for Becoming a Commercial Real Estate Broker
There are a few things you can do as a potential broker to make sure you succeed in the business:
1. Have Six Months of Income in the Bank
Commercial real estate agents often don’t make much money as they get started and learn the ropes of the trade. For this reason, Dunn recommended to new agents: “make sure that you have six months of income in the bank.”
While the earning potential is high for commercial real estate agents, that first year of work will not yield much.
2. Be a Self-Starter and Work Hard
“You must be a self-starter and have plenty of self-motivation,” Dunn emphasized.
Working in commercial real estate takes plenty of hard work and drive. If you’re not motivated, you won’t succeed. However, taking initiative to make sales and find new clients will help ensure your success.
“You need to show you have grit,” Shalom added. “I would say a tip for people is to never stop hustling. The more you hustle, the more fruit you’ll see. And ultimately it’s a numbers game. The more people that you get in touch with, the more successful you will end up becoming.”
3. Know How to Sell
A job as a commercial real estate agent or broker, above all, involves selling.
“Ultimately, this is a sales position,” Shalom emphasized, so “you need to be good at being able to sell.”
As a commercial real estate broker, not only are you selling property, but you’re also selling yourself, your company and your service. To be successful at that, you need to be personable, friendly and someone people can trust.
4. Know Your Company
Shalom also advised having knowledge of the company you work for or want to work for. This knowledge includes building relationships with your co-workers, making sure you like the company culture and being in an environment that promotes growth.
“If you want to be successful,” Shalom said, “I think the best is if you have great mentors and people behind you to push you to where you need to be.”
This mentorship comes from being at the right company and knowing what your own goals are.
Become a Commercial Real Estate Broker: FAQs
How much do commercial real estate brokers make?
Commercial real estate brokers, according to Dunn, can make at minimum $100,000, with salaries sometimes going up to the millions.
How long does it take to become a commercial real estate broker?
According to Shalom, anyone with a real estate license can become a commercial real estate broker.
“It’s not necessarily the most difficult thing to become a broker. It’s difficult to be successful as one,” Shalom argued.
Some companies do require you to have some experience before you can become a broker, but it really depends on how your individual company is structured, Shalom said.
Follow the Steps and You, Too, Can Become a Successful Broker
By following all of the above steps and networking as much as possible, you can ensure your success as a commercial real estate broker. While breaking into the commercial real estate industry is often more difficult than the residential space, the payoff, in the end, is worth it, as you will make higher commissions with fewer sales.