Commercial real estate is a lucrative sector in the real estate industry. While those selling residential real estate can earn a good living, commercial real estate agents and brokers can earn far more. If you’re self-confident with good people skills, can work independently, and possess a persuasive manner, commercial real estate may prove a very profitable field.

The first step in the journey to a career in commercial real estate is obtaining your real estate license.

Licensing Regulations Vary by State

Every state has its own rules when it comes to real estate licensing. In Colorado, one of the most difficult states in which to obtain a license, requirements include at least 168 hours of Colorado Department of Regulatory Agency-approved real estate courses, offered in a classroom or online. In New York, only 75 hours of real estate education is required.

The educational hours required generally ranges from 40 to 100 hours, so Colorado is definitely an outlier. Keep in mind that Colorado’s 168 hours is equivalent to one week.Most people can complete the coursework, regardless which state you are applying in, within a matter of weeks or months depending on how determined you are to get started.

Some states allow reciprocity with licensees in other states, while others allow those with out-of-state licenses to complete the educational requirements in much less time. The minimum age in some states for obtaining a real estate license is 18, while in others only those age 21 and up may apply. Most states require a high school education or GED for anyone looking to take real estate courses.

What all states have in common, however, is the need to complete and pass the real estate licensing course from an accredited institution, and then take and pass your state’s real estate licensing exam. Most of these licensing exams consist of 75 to 150 multiple choice questions on topics covered in the coursework. Once you’ve completed these tasks, you can look for a position with a real estate broker. States require continuing education courses for those with real estate licenses, generally coinciding with a state’s two- or four-year license renewal.

If you are an attorney and have passed the bar exam, some states do not require you to take a pre-licensing course. Others will waive the need for taking the course if you have a bachelor’s degree in real estate.

For more information on real estate licensing requirements in your state, contact the state’s licensing commission.

Background Checks

Many states require background checks and fingerprinting before issuing a real estate license. After all, a real estate agent is entering homes and businesses when the owners are not there.

Some states, such as Maryland, allow only those of “good character and reputation” to obtain a license. Maine spells out the requirements more thoroughly, as candidates need “notarized recommendations from at least three persons stating that the applicant has a good reputation.”

In many states, a felony conviction rules out obtaining a real estate license, although some states specify such a conviction must not involve a crime that endangered the public.

Agents, Brokers, and Realtors – What’s the Difference?

The terms real estate agent, realtor, and broker are often used interchangeably. However, these positions require different educational attainments, and the title corresponds to what the licensee is permitted to do. States may have their own terms and qualifications for certain positions, but all such titles are regulated by the state.

• Agents. Licensed real estate agents are salespeople. They are also known as associates. Becoming an agent is the first step in a real estate sales career. Real estate agents must work under a broker to keep their license active.
• Broker. Brokers have education beyond real estate agent level and have passed their state’s broker exam. A broker may work independently or hire agents to work for him or her. Agents can do much of the work a broker does, but they cannot complete a real estate transaction. That’s the broker’s purview. In practice, the agents do the legwork, and the broker completes the transaction. Some states require at least one to three years’ experience as a real estate agent before an applicant can apply for a broker’s license.
• Realtors. Realtors are either agents or brokers who belong to the National Association of Realtors. These real estate representatives must abide by the Association’s code of ethics and pay annual dues.

Real Estate Commissions and Compensation

Real estate agents work on commission. Although the commissions for residential and commercial properties are similar – 4 to 6 percent of the sale price – commercial properties are usually worth more than residential units.

The real estate agent’s company receives half of that fee, but one-third or more goes to the company itself, not the agent. Even a high-end residential sale - $1 million or up – can’t compare to selling a shopping center for say, $100 million. Of course, novice commercial real estate agents aren’t going to start off buying or selling malls or skyscrapers, but they are goals to which you can aspire.

Although most residential real estate agents are only paid commissions, commercial real estate agents may start out working for a commercial brokerage as a salaried employee. Why the difference? Work in the commercial field demands a more complex skill set than residential sales and a wider learning curve. Rather than deal with individuals buying and selling homes, you’re dealing with experienced business people who place more demands on an agent.

Moving up the ladder in the commercial real estate field often means going from salaried employee to a combined commission/salary situation. It’s the top commercial real estate agents who work commission only. While many residential real estate agents work only part-time, that’s not the case with commercial agents, who usually work 40 hours per week or more.

What Commercial Real Estate Agents Need to Know

You’re involved in the buying and selling of real estate for business purposes. That means you need a firm grasp of local zoning laws, environmental regulations, and the current economic climate. While commercial real estate agents need only a high school diploma, many have degrees in finance, business, and related fields. Prior experience in property management, banking, or engineering is valuable if you want to work for a top commercial real estate firm.

Residential real estate closings usually occur much faster than commercial closings. A home closing is often complete within one to two months, while a commercial transaction may take six months or more. That’s an issue to keep in mind if you’re venturing into commercial real estate. It’s always wise to keep substantial savings on hand to tide you over while you’re waiting for the check to arrive.

Benefits of a Commercial Realty Career

Do you like being your own boss? Do you want relatively flexible hours in your work? Do you want the potential to earn a lot of money if you work hard? Those are just a few of the benefits of a career in commercial real estate. Beyond that, finding the right commercial property for a client is rewarding, both financially and psychologically. You’re dealing with a successful, well-informed clientele, and you’re providing them with an essential service.