The license is the same for residential and commercial agents in California. The basic education is the same. Yet the skill set is different, the learning curve can be longer, and the rewards might not come as rapidly for a commercial realtor vs. a residential agent.
Interested in a career change or growth opportunities in your current real estate position? Here’s what you need to know if you’re looking for how to become a commercial real estate agent:
The minimum age requirement to become a real estate agent is 18 or 19 depending on the state. The level of education needed to become a residential or commercial real estate agent is a high school diploma or GED- you are not required to obtain a college education.
If you meet the minimum requirements, the next step is completing your real estate courses. You will then need to enroll in real estate courses, online or in person, and complete the amount of required instruction hours to meet the eligibility for the licensing exam. California requires 135 hours of instruction.
Upon completion of your courses, you’ll need to apply to take the real estate license exam and pay the corresponding fee. From the time you submit your application, you have two years to pass with a score of 70%.
Before you can operate as a fully independent agent, you’ll need to work under a commercial real estate broker to gain the right experience and build your portfolio. Working at a firm allows you to gain real world experience and understanding of the market.
If you’re committed to pursuing a career in the real estate industry but not quite sure whether you want to work in residential or commercial, there are a few key differences to keep in mind. For agents and potential agents who want to deal more with business people instead of consumers, the commercial space is a road worth traveling, says Gary Losey, a Commercial Senior Associate in our Carlsbad office.
After founding and operating multiple building supplies, services, and energy management companies for many years, Gary decided to become an agent in 2005. Utilizing the skills he developed as a business owner, he became a top commercial producer, and never looked back. We talked with Gary about how commercial real estate differs from residential, and what it takes to succeed in his chosen field.
In Gary’s case, it was his experience in industries that typically rely on commercial real estate. He founded and owned five traditional businesses that were primarily construction-related. So he became very familiar with the construction of different types of buildings, and properties, such as office, industrial, shopping centers, medical, as well as residential. He recently had a residential home in Del Mar in escrow for $2,550,000.
The primary benefits from that experience are threefold, Gary says. First is knowing how to operate a business, the finances, the expenses, the revenue-stream evaluation. So how to actually operate a business or multiple businesses is paramount. Second, and more important, is knowing how to write contracts. Gary has written and completed tens of thousands of contracts. The third is knowing how to negotiate, because commercial deals are highly negotiable, especially in large, high-profile deals.
Most if not all developers are attorneys, according to Gary, so commercial agents often deal with the attorneys in their development departments. Gary conducted transactions ranging from small $50 service calls to multimillion-dollar contracts and supplied lighting to over 3,000 new housing units per year. Having those three experiences is invaluable, he says.
As an example, Gary says, he concluded three or four deals last year that had over 300 different negotiated items each. His suggestion for new agents, if they don’t have that type of experience, is to focus on residential first, and become successful at it.
“My overarching recommendation probably would be to refer some deals out to an experienced commercial agent and ask if you can shadow them,” Gary says. “For example, I get asked a lot to mentor, and frankly I don’t do that, because it’s too challenging to go from a residential agent with zero experience to commercial. The distance is way, way further in order to be successful. You have to do a lot of deals. The gestation period for a commercial deal is much, much longer than it is in residential. The potential rewards are there, but the time in order to build up a base also is longer than it takes in residential.”
Gary believes having a large number of contacts might be the most important key to success. He was born and has lived in San Diego County his entire life. He attended San Diego State University, his father was a Navy Seal, and the family rarely moved. “So I know an enormous amount of people, plus my businesses had about 3,500 active clients at all times. An agent really needs to work on contacts if they expect to be successful in commercial real estate.”
Commercial agents have to follow the same licensing and education procedures as a residential agent. Even though many people think a different license is required for commercial, it’s the exact same license.
Gary’s take: “With the large brokerages, it’s a job, meaning full-time employment, not a part-time job. You have to be there. You have to be at all the meetings. You can’t go and come when you please. So you are having to put in anywhere from three to five years as, a lot of times what they refer to, as a runner or junior associate, and you’re learning every single day. It’s getting pounded into you.”
Whether it’s residential or commercial, consistency is incredibly important, Gary points out. It’s not the type of career where you expect to sign a few contracts and make a few big deals, then take some time off. “It’s constantly having to work the business,” he says. “It’s a profession and not just a catch-as-catch-can. In order to be successful, you have to be able to hit all the bases. Especially when it comes to leases, which are sort of the bread and butter of commercial.”