A commercial real estate agent is a professional who specializes in the buying, selling and leasing of income-producing commercial real estate properties. These properties can vary, ranging from hotel, residential apartment, student housing, shopping center, plaza, warehouse, industrial lot, agricultural land, and office building. Similar to most sales jobs, this profession offers lucrative reward at the expense of the time dedicated to pursuing leads and the years of effort put in for network building.
Education & Training
The requirements for becoming a commercial real estate agent include the following: a high school diploma, being over the age of 18, and passing of the general written real estate licensing exam within the province of interest. It is also preferable to have a few years of actual working experience in the real estate industry. In addition, some universities, trade school and colleges are offering training programs in the commercial real estate field. The type of course they offer vary from school to school and year to year.
Similar to other sales jobs, commercial real estate agents get paid commission on a percentage of the transaction value, net of broker’s cut along with other fees and deductions. Since it is common for the value of a commercial property to be in the millions, even a small percentage will translate into a lucrative paycheck. It is not uncommon for a veteran in this business with a very established network to have a consistent flow of deals, thus generating hundreds of thousands of dollars in earnings per year. Keep in mind, this line of work is no joke and requires tremendous amount of time and effort. The lucrative income level is achievable, however it takes a very persistent, self-motivated individual to succeed in this industry.
Typical Working Style
The due diligence and the legal process for a commercial property will take longer than that of a residential property, for there is considerable amount of money at stake. The parties involved must exercise prudence to ensure the quality of the investment is in line with its dollar value. The commercial agent facilitating the transaction must study the property thoroughly, namely checking property history, zoning regulation, lien against the property, insurance, as well as current market condition and recently closed deals of similar property, as any of these factors could play a major role in the negotiation process, and can translate to big difference in valuation.
In addition, the attractive features of commercial property are different from that of a residential property. A typical commercial client values a purchase purely based on its economic value, which is derived from common metrics such as the cap rate, cash on cash return, and gross rent multiplier. As for residential clients, they would be more concerned with the visual aspects of a property, for instance, the direction of the windows at which they are facing, the noise level, the neighborhood amenities, etc. If they “fell in love” with a property, they could be willing to pay a premium, since the property appeals on an emotional level
Although commercial property values much more than residential property, but there are fewer listings of such, thus less opportunities. This means the agent will be required to spend a good chunk of the day looking for new leads, meeting prospects, following up and etc. This market segment is also dominated by major corporate player such as RioCan Reits and Canadian Real Estate Investment Trust.
There are agents who work on both commercial and residential deals. However, the ones who specialize in commercial real estate generally have a better understanding of client needs and have more business sense than the ones dealing solely in the residential field. Therefore, commercial clients are more likely to hire a specialist than not. From experience, commercial real estate agents tend to focus on developing their reputation only in the commercial real estate community, as this will help them construct the image of a true specialist thus gaining a competitive edge over other agents.
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