ARE YOU DESTINED TO BE A COMMERCIAL REALTOR®?

Commercial Real Estate vs Residential Real Estate 

Traditional sales professionals wear a multitude of hats during the client sales cycle. This is could not be truer than in the role of a residential Realtor®. Often clients will expect the agents to be a friend, a therapist, handy person, housecleaner, or life coach.  

A commercial Realtor® is quite the opposite. Commercial Realtors® are business allies, often playing the role of a business coach over an extended period to already astute business minded investors. In the case of a commercial Realtor®, achieving the client’s satisfaction is less about the emotional connection of a space, rather, it is the connection to the investment’s ROI (return on investment).  

 

Commercial Real Estate Agents & Specialized Training 

Commercial Real Estate Brokers are well-trained and seasoned and will mentor the CRE agent through their learning journey toward success and they help mitigate risks along the way – especially when those risks are associated with the complexity of transactions tied to business interests.  

When it comes to education, all real estate professionals will need to go through intensive training to earn their realtor’s license. Commercial real estate professionals have to adhere to educational requirements  and must have a college degree and be proficient in areas such as finance and property management. A solid understanding about things like the IRR or internal rate of return (link to our Terms page) Capitalization Rates (link to our Terms page) and the Gross Rent Multiplier (link to our Terms page) are all assets ahead of going through the general education classes. Once they earn their real estate license, after passing a complex written exam, most complete many hours of educational courses such as the Prestigious CCIM Certification.   

**Fun Fact: In 2019 Maven CRE’s co-founder Stephanie Maye, CCIM, FEA (LinkedIn) served as the CCIM Central Canada Chapter President.  

Timing is Key 

A commercial real estate deal can easily take a year to close or even longer. There are several reasons for this:  

• the monetary aspect alone usually entails getting financing for large sums based on business performance 
• there are often more stakeholders involved in the transaction 
• more arduous regulatory environment.  

Whether you term it as commercial property, commercial real estate, investment property or income property, this type of real estate is intended to generate a profit, either from capital gains or rental income. Wikipedia. This type of real estate typically sees fewer vacancies and turnovers than residential real estate, and term lengths are longer as well. Success in commercial real estate comes down to an in-depth understanding of the market, the risks, the numbers, analytics, and statistics. 

The value of commercial real estate is not only based on comps or similar surrounding properties. This method termed The Direct Comparison Method or Market approach is primarily used in residential real estate. Instead, the value of a commercial property is based on past profit history and future income potential. It is critical that commercial real estate investors understand the current market and factors that will influence potential income when determining the value of a property. 

 

Commercial Real Estate Focuses on Business 

Commercial real estate involves property that is sold, leased, or used to achieve a predetermined business objective. It is used as an investment to achieve an anticipated rate of return on the funds invested. Because commercial real estate often requires a comprehensive understanding of real estate law and the local market, many Realtors® choose to get to know the residential real estate market first. They will consider venturing into commercial real estate afterwards. Part of the draw to commercial real estate comes from the wide range of sectors within the commercial real estate field. This includes land, office, property management, retail, development, and investment. Another reason Realtors® make the career switch from residential to commercial real estate is the income potential. Bigger, more complex properties mean bigger commissions for commercial Realtors®.  

It can be argued that commercial Realtors® working in this specific market have more responsibilities than a residential real estate agent. Commercial real estate professionals are expected to have constant access to the latest market information and understand cap rates for properties and population growth reports. 

Success For Commercial Realtors®: A Qualitative Result Focus 

The quantity of sales may be higher for Residential Realtors®, and those transactions will often have short and often aggressive closings. Commercial Realtors® often have as many transactions as their residential counterparts at a much higher value with many more intricacies in a positive market.  

Commercial property is right for you if you are:  

• Not afraid to hustle. There is tough competition between commercial Realtors®. Those who want to be successful need to be creative to stay ahead of their competition 

• Familiar with what constitutes a particular type of commercial property 
• Knowledgeable about the several types of property in the area 
• Good with numbers and statistics, and can balance building professional relationships with clients with quick analysis and strategic planning 
• Confident with technology (tech stack savvy) and utilize both traditional and non-traditional marketing techniques 
• Experienced in the residential real estate industry and are looking for a new and business-driven challenge 

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