How to Become a Commercial Real Estate Broker?

Let’s review some key things you should remember before learning how to become a commercial real estate broker:

Money

Commercial real estate brokers typically generate higher earnings than residential agents, according to data provided by the St. Louis Federal. As per July 2021 figures from the St. Louis Fed, the median US house sold price has reached $434,200 as per July 2021 and at a 6% fee split 50/50 commission would equal $1434200×3% =130026 in commission earnings for both parties involved in each deal.

The average per-square-foot price for office buildings sold in the US is currently $285. For an office complex measuring 10,000 square feet, that would generate a sales commission of $71,250 ($250 PSF x 10,000 SF = $2,850,000 x 2.5%) with 50% divided among agents as the fee.

These examples do not take into account fees related to hiring brokers, administrative support personnel, or sales team members. In addition, commercial sales deals tend to come up less often than residential ones.

As is common with commission-based jobs, new brokers may experience long periods without making money. Much like residential agents, yet few commercial real estate brokers receive regular paycheques as such.

Sales Skills

Commercial real estate success hinges upon having top-of-the-line selling abilities. Be ready to spend most of your working hours persuading leads that they should choose you as their commercial real estate broker.

Know who the power players in your market are to successfully win clients and deals. Evaluate what the competition is up to while gathering leads through networking or cold calling.

Education

Every state mandates licensing requirements to sell, lease, or manage commercial real estate properties. However, the exact educational requirements vary based on where one lives. On average, classes typically average 90 hours plus a final exam administered by their state government.

Once licensed, CRE (commercial real estate broker) brokers need to stay abreast of what’s happening in their market by reading trade publications, studying economics and finance courses, networking with other commercial real estate brokers, and continuing formal education to renew their licenses every two to four years.

Employer 

Most commercial real estate broker careers begin by working at one of the larger CRE firms like CBRE, Cushman & Wakefield, or Avison Young in the US.

Working for one of the major commercial real estate players in your market can provide an ideal way to learn about the commercial real estate business, but be ready for hard work in terms of “dialing for dollars” and chasing leads. Although this task might appear arduous at times, putting forth effort will ultimately pay dividends down the road with enough perseverance.

Residential Brokers vs Commercial Real Estate Brokers

Many real estate agents begin their careers working exclusively in residential. Over time, however, some may discover it would be wiser for them to transition over to commercial. When this occurs it’s important to remember there are distinct differences between residential and commercial real estate brokers that should be kept in mind.

CRE brokers require more specialized training, with knowledge of financial investment concepts such as cap rates, net operating income, ROI, and IRR essential to the job. In general, they work 9 am – 5 pm Monday-Friday while residential agents often have night and weekend hours of availability.

CRE brokers typically complete fewer total deals due to limited commercial properties on the market, taking longer for transactions due to commercial real estate escrow closing times being months or even years long, unlike residential transactions which usually close within 60 days or less; however, commissions tend to be larger for CRE brokers in both sales and leasing transactions.

How To Become a Commercial Real Estate Broker In 5 Steps

Now that your research has been completed, let’s go over what needs to happen to become a commercial real estate broker:

1. Research the CRE licensing requirements in your state. To be granted a license, certain criteria must be fulfilled such as being an inhabitant, meeting certain age and education thresholds, attending prelicensing education sessions, and passing an exam.
2. Enroll in a real estate school. Most state real estate departments provide resources on required courses and hours on their websites; classes typically cost under $1,000 total and you may take them either in a classroom setting or online.
3. Pass the exam and apply for your license. Every state’s department of real estate requires successful passage of its final examination, typically consisting of multiple-choice questions that necessitate using an easy calculator for answers. Be ready to present proof that you have taken all necessary courses. Some states also require fingerprinting and background checks as part of this process.
4. Choose an area of specialty. Common commercial real estate asset classes include large multifamily and hotels, retail space, office space, industrial land or land parcels. Each of these may provide opportunities to become sales or leasing brokers within that category. Brokers in these categories represent buyers or sellers as buyers or tenants respectively while landlords or tenants may represent you too. While some CRE brokerages will allow this flexibility, the most successful professionals tend to specialize in an area.
5. Hang your CRE license at a brokerage. Apply for employment with an established CRE brokerage that serves the market or field you desire; some large brokerages specialize in sales, leasing, and property management while boutique firms may focus solely on certain asset classes or transaction types (for instance office leasing or apartment sales).

Commercial Real Estate Client Expectations