How Does a Commercial Real Estate Agent Spend Their Work Days?
Although there are some parallels between residential and commercial real estate, the distinctions are enormous. Commercial real estate is often more difficult to make a livelihood than residential real estate.
Each transaction usually requires a large time commitment. It may be a juggling act when one important contract closes just to have another die suddenly, leaving you rushing in two directions at the same time. A career in commercial real estate, on the other hand, may be very satisfying and lucrative.
The Most Important Distinction
Assume you're selling a house to a married couple. The kitchen has won the wife's heart, while the husband is ecstatic with his new garage workshop. When you assist them in finding a house, you have already completed the majority of your work. They discover it on their own and fall in love with it.
With a commercial purchase or leasing customer, this isn't always the case. In normal commercial purchase or lease choices, much more in the form of financial assessments, market demographics studies, and environmental study is included.
Area statistics, data on the property's location, and the demographics of the nearby people and companies are generally more important to a commercial customer.
The Typical Workday
The typical day in the life of a commercial real estate agent differs significantly from that of a residential real estate agent. You'll almost certainly have to deal with:
- Making cold calls to company owners and managers
- Examining lease payments for local business buildings
- Breakeven ratios for one or more commercial assets are calculated.
- For potential multi-family purchasers, interpreting existing leases
- Examining population growth data in search of potential patients for a medical rental complex
- Reviewing a cap rate report for a small retail center's potential buyer
- Examining freshly released Chamber of Commerce local market statistics
- Visiting popular commercial properties to see what sets them apart from the competition
Commissions are large, but there are fewer of them.
Yes, commercial real estate may pay out a lot of money in commissions. Some modest re-zoned houses and buildings may be more affordable than luxury residences, but when dealing with shopping centers, malls, industrial sites, office complexes, and other retail assets, costs rapidly increase into the millions of dollars.
The trade-off is that moving a commercial property purchase from early interest to closure might take several months to a year or more.
The ability to determine a deal's take is one of the first skills that all agents must master. You can't make up for the time problem by completing too many additional transactions at the same time since these agreements need extensive due diligence. You can only work on a certain number of transactions at a time—at least if you want to do a decent job.
Don’t be a guppy in a shark tank.
If you transition from residential to commercial, you may be a shining star in the residential market, completing plenty of transactions and closings quickly, but a substantial chunk of your sphere-of-influence database will no longer be delivering business.
You're essentially starting from scratch when it comes to developing the relationships and prospects that lead to business. Commercial real estate entails a whole new realm of influence for purchasers, as well as a completely distinct property appraisal procedure.
Some agents may be surprised by the results of a "cold turkey" transfer, which involves eliminating one revenue source and shifting to another with a longer closure cycle. Because of income stream constraints, some people switch back. A better strategy could be to make a gradual shift and locate a mentor to assist you to get started in commercial real estate.
We at Pillar Real Estate Advisors employ a policy of teaming up with a new agent on day one. Having immediate projects to work on. while riding along on listing appointments and showings, gives a new agent the opportunity to learn firsthand the language, cadence, and culture of commercial real estate. Partnering with an experienced commercial agent will benefit both parties as the senior agent can free up time by having their new co-worker help with fieldwork, email backlog, and marketing efforts. The new agent steps into an active potential revenue stream from the beginning which not only shortens the initial earning curve of a carrier in commercial real estate but provides a platform for lead generation for a new buyer and tenant representation.