What do you need to know to get started in Commercial Real Estate?
By Chris Kinnett, F.C. Tucker Commercial & Troy Tornatta, Hahn Kiefer Real Estate Services
What requirements must I meet to apply for a real estate license?
According State of Indiana: You must be at least 18 years of age, have a high school diploma or GED, complete an approved 90-hour real estate pre-licensing course, and pass the licensing examination.
Do I need a high school diploma to get a real estate license?
Yes, effective July 1, 2014, all applicants for a new real estate license must have a high school diploma or its equivalent.
That’s the short answer, but as many of you already know the real answer is always a bit more involved. It’s important to note that a Commercial Real Estate (CRE) broker is an independent owner of their own business. Commercial agents can represent buyers or sellers, assisting with the selling or leasing a commercial property. These agents are typically independent contractors, not employees of a company, and work on commission. Depending upon the size and depth of the market, an agent may specialize in a certain product type (retail, office, industrial, investment — such as apartment complex brokerage) or a certain geographical market. But, you are the CEO, you set your own strategic plan, goals and objectives. You are responsible for networking, marketing and most importantly….SELLING. So, what do you need to know before making this type of career change or decision?
Linda Day Harrison, creator of theBrokerList along with platform provider, Buildout, published their findings from the national commercial real estate survey, The DNA of CRE. Looking at the data the average Commercial Broker, of those who participated in the surveyed, just about 70% had more than 11 years of experience, yet these same pools of respondents accounted for 87% of those earning more than $500,000 GCI(Gross Commission Income). However, it should be noted that just over 2% of those with less than 1 year of experience earned over $500,000 GCI. So, there are still opportunities to earn high commission dollars when you first start out, but the longer you stay the better your chances of earning more……(Wow that was cliché).
There are many who might suggest that you should specialize in apartments, retail, industrial or office when it comes to earning commissions. The survey findings suggest otherwise however. For example, while multi-family was the focus for 14.19% of all respondents, it also represented 14.6% of all those earning greater than $500,000. The deviation was not significant enough to suggest focusing on multi-family would be better than focusing on some alternative product type. This was true across all product types. Additionally, if you decide to work in a tertiary market, you will not have enough inventory to specialize in any one area.
Now here is REALLY where to start. Talk with local brokers, network with local realty boards and ask a managing broker for an interview. If you are still in school, ask to intern for the summer at the broker’s office or go with a broker on a sales call (by invitation only of course). Experience the day-to-day routine, challenges, paperwork, legal challenges of the gig, but most importantly focus on the opportunity. Each CRE broker has a reason they like the business. Evaluate the various (SWOTs…..as they call them) Strengths, Weaknesses, Opportunities and Threats of the job should help clarify your level of interest. And the most important part is to reference this article as the sole reason you started in real estate and the critical piece that started your success. There will be a part 2.
Resources and further reading: Realtor Mag: http://realtormag.realtor.org/commercial/feature/article/2007/01/getting-started-commercial-real-estate ; Rod Santomassimo, 8 Keys to High Commercial Real Estate Commissions – Part 1: http://www.massimo-group.com/high-commercial-real-estate-commissions-1/ inf_contact_key=02a2be38766ee42e4066600a6798dd0dbdd4937875c920ae3b4a0c93c639b50c ; DNA #CRE Report – 2016 http://dna-of-cre.buildout.com/ .