If you find yourself wondering how to become a commercial real estate agent, you need to keep in mind that there are specific skills, duties, and considerations required to succeed in this career. And, of course, you need to have a thorough understanding of commercial real estate loans. In this article, we are going to take a close look at the requirements, steps, and career options available when becoming a commercial real estate agent.
What is a Commercial Real Estate Agent?
A commercial real estate agent is a licensed professional that guides his or her clients through the process of buying, selling, or leasing properties used for business purposes. Usually, these clients are investors looking to gain income from renting out the properties, such as hotels, stores, and office buildings. Typically the commercial real estate agent is versed in how to find investment properties. Commercial real estate differs from residential real estate, where clients are looking to buy, sell, or rent properties to live in them.
How to Become a Commercial Real Estate Agent in 8 Steps
If you are interested in becoming a commercial real estate agent, you would need to follow these general steps to embark on this career:
1. Research Your State’s Requirements
You can’t become a national real estate agent, - this means that you must meet the unique licensing requirements outlined by your state’s real estate regulatory body. A good place to start your research is to visit the ARELLO’s (Association of Real Estate License Law Officials) regulatory agency directory.
Here, you can review specific state requirements, such as:
- Education requirements
- Required courses
- Licensing exams
- Application process and fees
- Background checks
- Continuing education requirements
Keep in mind that certain states allow reciprocal licensing with other states. This means that you can receive a license in one state and be able to use it in another one.
2. Meet the General Eligibility Criteria
For most states within the U.S., the eligibility criteria involve the following:
- You must be a legal resident of the United States
- You must be at least 18 or 19 years of age
- You must have a GED or a high school diploma
On top of the general eligibility requirements, you would need to take the specific licensing coursework required by your state. However, the state may waive this requirement if you receive a post-secondary real estate certificate or degree.
Finally, once you are done with the courses, you may need to pass a background check.
3. Complete the Required Courses
If you are wondering how to become a commercial real estate agent, keep in mind that you would need to take specific courses, similar to what a residential agent would take. During your studies, you will learn the basics about the profession, real estate agent’s responsibilities, any relevant laws and regulations, information specific to your state, and learn about types of real estate investment.
While the specific course requirements vary from state to state, you can expect your total coursework to last anywhere from 60 to over 130 hours. In addition, some states also offer more specialized training related to the commercial real estate field.
4. Obtain Your Commercial Real Estate License
After you complete your courses, you will be able to register for the licensing exam, which typically costs between $100 and $350.
The exam takes approximately three hours and includes 75 to 150 multiple choice questions divided between two parts: a national section and a state-specific one. Each part of the exam is evaluated separately, and you must pass both in order to receive your license.
5. Join a Brokerage
To activate your real estate license, you must join a brokerage. One option is to work for a brokerage firm that deals with both residential and commercial real estate. While very lucrative, commercial real estate transactions tend to be very complex, taking months to close a deal. To make the transition easier, you may want to begin by working on the residential side of business to gain industry experience while building your professional network and learning important skills.
Of course, you can also start your career by joining a brokerage firm that deals exclusively with commercial real estate deals. These types of brokerages often provide salaried training programs for new employees, where you would be able to learn how to perform commercial transactions.
6. Join Professional Associations
Some real estate companies may require you to join a national or state real estate association. Even when not required, joining a professional association can help you to build your network, demonstrate your credibility, and benefit from other perks offered by the association. Many associations offer continuing education programs, training opportunities, information about how to invest in commercial real estate, and other valuable real estate resources and tools.
7. Choose a Specialization
As you become more familiar with the world of commercial real estate, you may decide to specialize in a more specific field. Depending on your interests or potential financial compensation, you may choose to focus on office, retail, or industrial real estate. Your specialization will show your expertise and set you apart from other agents practicing in a more general area. In addition, it can help you target specific types of clients.
8. Consider Becoming a Broker
Becoming a commercial real estate broker is the next step for many agents looking to run their own business. Similarly to commercial real estate agents, a broker guides the clients through the process of selling, buying, or renting properties. However, a broker is also able to open their own company and employ real estate agents.
In order to become a commercial real estate broker, you need to take the state-required coursework and pass an additional licensing exam. You will also need to renew your license every few years.
Frequently Asked Questions (FAQs)
What is a commercial real estate agent?
A commercial real estate agent is a licensed industry professional who assists clients in the lease, sale, or purchase of commercial properties. The agent understands how to find investment properties and often advises the clients on the best courses of action when it comes to commercial real estate investments. In general, commercial real estate deals with investment properties, retail properties, business, farmland, medical facilities, industries, and other types of properties.
How do real estate agents get paid?
Most real estate agents get paid through commissions. The commission fees come out of the seller’s proceeds and are typically around 4 to 6 % of the property’s sales price. The commission is then split between the listing agent and the buyer’s representative.
Where do real estate agents work?
The career of a real estate agent is known for its flexibility. While some agents work in a typical office environment, others work directly from their homes. Whatever the case, real estate agents spend a lot of the time away from their desks, traveling to see properties for sale, showing properties to customers, networking, and meeting with prospective clients.
What skills do real estate agents need?
Some of the key skills required to succeed in the real estate industry include:
- Drive, ambition, and charisma: real estate is a highly competitive field, and only the most ambitious ones are able to succeed
- Selling and negotiation skills: naturally, you would need to be able to negotiate the sales price on behalf of your clients
- Excellent communication skills: you would need to constantly interact with people and maintain a positive relationship with colleagues and clients
- Great organization skills: you may be dealing with multiple properties at the same time, which requires excellent time management and organization skills
- Willingness to spend time out of the office: real estate agents spend a lot of time viewing and showing properties, conducting open houses, and networking
What is the job outlook for commercial real estate agents?
The overall employment of real estate agents and brokers is projected to grow 4% between 2020 and 2030, which is a below-average rate. Despite the slower employment growth, about 47,500 openings for real estate agents and brokers are projected each year.
What is the typical work environment for a commercial real estate agent?
Most commercial real estate agents work in large companies in urban areas or in smaller firms in the suburbs. They spend a lot of time in the office or home preparing contracts and paperwork. At the same time, they are often away from their desks, showing and inspecting properties.
Real estate agents have an incredibly high level of social contact, as they are constantly interacting with sellers, buyers, and other agents by phone, email, or in person.
All-in-all, the profession is known to be demanding, stressful, and high-paced, - but many choose it for the convenient flexibility and attractive compensation.
Without a doubt, the complex world of commercial real estate is not for the faint of heart. While the industry does offer high commissions and a non-traditional work environment, becoming a commercial real estate agent has its own unique challenges like specialized educational and licensing requirements or high level of competition.
Luckily, learning how to invest in commercial real estate doesn’t have to be difficult, with numerous online lenders offering easy financing approvals and quick turnaround times. For example, with the Lendio business financing platform, you (or your real estate clients) will be matched with the best lender and lending product to help you obtain the necessary financing quickly and painlessly. As a result, you will be able to benefit from commercial real estate investments to the fullest.