Real Estate Agent/Broker
Real estate brokers and sales agents help clients buy, sell, and rent properties, both residential and commercial. Brokers and agents do the same type of work, but brokers are licensed to manage their own real estate businesses. Sales agents must work under a broker.
- Has a high level of industry knowledge and competence, must pass the broker’s exam.
- Is legally able to open a brokerage (“real estate agency”).
- Takes on nearly all liability for the real estate transactions.
- Bears the additional operating expenses like insurance and legal services.
- Commission check goes directly to the broker and broker pays the salesperson their share of the commission. It is usually around 50% of the commission after expenses. This varies per brokerage.
Salesperson (aka sales agent)
- Meets the minimal standards of industry knowledge, must pass the salesperson’s exam.
- Must work for a licensed broker.
- Has fewer responsibilities and accept fewer liabilities.
- Receives after-expense commission splits from brokers.
- Single-family houses
- Primarily used for housing and not to generate a profit.
- Titles: Real Estate Agent, Sales Agent, Real Estate Salesperson, Realtor
- Buildings or land intended to generate a profit.
- Different types of commercial real estate:
- Office Buildings: Includes single-tenant properties, small professional office buildings, downtown skyscrapers, and everything in between.
- Multifamily: Includes apartment complexes or high-rise apartment buildings. Generally, a fourplex or more.
- Miscellaneous: A catch-all category that includes any other nonresidential properties such as hotel, hospitality, medical, and self-storage developments.
- Titles: Real Estate Sales Associate, Broker, Real Estate Broker, Associate Broker, Broker Associate, Investment Associate
- Point of confusion: Sometimes, commercial real estate agents are called real estate brokers (even if they don’t have their broker’s license and can’t manage an office). I know, it’s confusing!
- Autonomy and control: You control your schedule, work effort, marketing. You get what you put in.
- “Feels good to find a family’s first home!” (Residential)
- Help people build wealth (commercial)
- “I get to learn about real estate!”: Most people tell you that regardless of your profession, it is important to know about real estate investing.
- Lucrative: You can make a lot of money if you work hard and are good at it.
- More business and investment focused. It involves property that is sold, leased, or used to achieve a predetermined business objective. It's used as an investment to achieve an anticipated rate of return on the funds invested.
- Considers the internal rates of return, capitalization rates, gross rent multipliers and other analytics.
- It is cut and dry and it is not an emotional decision.
- Clients are typically educated, well-informed, successful individuals and companies who expect their agents to be armed with the latest news and market analysis to help them make the best business decisions.
- Closing a deal takes longer than residential. A lease could take 6 months to close and you to get paid. On the other hand, the transaction size is usually much larger in commercial real estate so the commission paid out is much larger.
- Different specialties:
- Leasing (tenant side): Represents tenants or lessees by finding, selecting, and negotiating new space for clients’ businesses.
- Leasing (owner side): Represents building owners or lessors by working to lease out building space for the highest possible price and with the most favorable terms.
- Sales: Represents investors who want to buy and sell commercial property by finding opportunities that offer the lowest risk to the client, the best return on investment, and the best capitalization rate, which is the net operating income of the property divided by the sales price or value of the property.
- Revolves around the wants and needs of a homeowner. It involves property purchased for individual use, most often to provide housing for families.
- It is more of an emotional decision and the house must “fit” the homeowner’s liking.
- Clients are usually a husband and wife looking to buy a home.
- Closing a deal takes from 1-2 months. The transaction size is smaller than a commercial real estate transaction so residential real estate agents usually close more deals in a year.
- Different types of transactions:
- Primary home: You are helping a homeowner either buy or sell their primary house (the one they live in).
- Secondary home: You are helping a homeowner either buy or sell their secondary house which includes an investment property (a house they rent out) or a second “home away from home” house.
- On-site agent for builder: You are selling exclusively for a builder/developer (i.e. selling units in an apartment complex).
- Investment Properties: You will represent real estate investors buying or selling small multi-unit investment properties like duplex, triplex or a fourplex.
- Communication skills
- Computer skills: Microsoft Office, CRM (some kind of customer relationship management software), MLS (multiple listing service)
- Marketing skills
- Customer service
- Computational and math skills (especially for commercial)
- Knowledge of real estate laws, can read a real estate contract: be detail-oriented
- Understanding of finance: will help you client get a mortgage (residential), understanding how to read a spreadsheet and compute things like capitalization rate (commercial)
- Critical thinking and problem-solving: during escrow, there are always problems that arise and you must be able to solve them in a calm, orderly and swift fashion.
- Sales, cold-calling and pitching skills: you can not be scared of talking to new people and selling them on your services, a house, a building…etc.
- Corporate environment: suit and tie.
- Cutthroat, highly competitive
- Full-time, not part-time profession
- Different types of commercial real estate attract different personalities:
- Retail: Usually dealing with landlords who own strip malls and their tenants are mom and pop stores and major retail chains alike. More salesman like.
- Industrial: Usually more down to earth and blue collar, the type to wear button down collars and boots with their suits as they’ll be walking through warehouses and industrial plants all day.
- Office: Usually corporate, business-like. Mostly resembles the stereotype of a “banker”.
- More casual office environment
- Some people work part-time and have another career.
- Ability to handle the ups and downs of the real estate market: You can go several months or even a year without closing a deal. You must be flexible and know how to learn fast. When the market crashed, those who knew how to work on foreclosures and short sales profited from the downturn in the market.
- Time Management: You need to know how to manage your time because after training, you will be in control of your own schedule.
- Financial Management: You will not be paid every 2 weeks. You will usually only get paid when you close a deal. Can you go to work every day and know that if you don’t kill anything, you don’t eat? Can you deposit a 6-figure check and not blow it all because you might not be getting paid for the next 8 months?
- Investment into marketing: Most agents have to spend their own money to market their services and properties (depends on the firm you work for).
- HS Diploma required.
- Bachelor’s or Associate’s degree highly recommended.
- For commercial real estate, they will look for a Bachelor’s degree in Business, Finance, Economics, Real Estate or something related.
- Must be licensed by state:
- Salesperson: requires a course, examination and continuing education courses.
- Broker: requires a course, examination, continuing education courses and 1-3 years working as a salesperson OR a Bachelor’s degree.
Click here for a list of programs.
- Join the real estate club.
- Work a job that requires a lot of cold-calling or sales.
- 14.8% with HS Diploma
- 9.7% with Associate’s
- 35% with Bachelor’s
- 8.4% with Master’s
- 1.9% with Professional
- Have a basic understanding of commercial real estate jargon: internal rates of return, capitalization rates, gross rent multipliers and other analytics.
- Read relevant trade publications and news websites and know the trends in the local, national and global real estate market and economy.
- Ask your professors or anybody you know in commercial real estate for a lead or an informational interview.
- Network at the events put on by local trade organizations (see list in Recommended Resources).
- Apply to one of the big, well-know commercial real estate companies like Cushman & Wakefield, CBRE, Marcus & Milichap, Sperry Van Ness. In the commercial real estate world, name brands matter. Being trained at one of these big firms gives you credibility and the training programs at these companies are top knotch.
- For the interview:
- Prepare: Research the company, the specific people you will be interviewing with and the top management of the company. Visit the company’s website, review their annual reports and recent press releases and do research on their company online. What makes them different? Know about their training program. Any big deals they worked on.
- Show energy in the interview: The job is competitive and cutthroat. Only the strong will survive.
- Listen well.
- Dress professionally and conservatively.
- Follow up with a thank you letter.
- When you are applying and interviewing for residential real estate agencies, you are interviewing them just as much as they are interviewing you. Why? Because if you work for a real estate agency, you are not getting paid a salary. You are working on commission. So an agency is only as good as its agents. It’s a two-way relationship. You need to figure out what kind of set up works for you. Some agents want no support, no supervision and high commission split (which means the agent keeps more of the commission). Others want more support from their agency and don’t mind the broker taking more of the commission in exchange for their support. It really depends on you. Do your research.
- Make a list of agencies you want to talk with. This means figuring out what kind of agency do you think you will strive in. High-end? A certain part of town? A certain brand of agency? This will be easy to do because most real estate agencies have ads all around town and television and radio advertising.
- Make appointments with the broker-in-charge. The larger agencies have recruiting managers.
- Ask what type of real estate training the firm provides and how much it will cost?
- Ask what their turnover rate is. This is a good indication of how much support and training the agency gives their agents. Support comes in many ways: training, leads, marketing and advertising supports.
- Ask how leads are distributed.
- Ask the broker for a list of start-up expenses. Are you required to join professional organizations? Pay for your own MLS? Are there membership fees? Do they pay for advertising expenses? Office-related expenses? Does the firm provide office space?
- Ask about the commission split structure.
- Passion and pride: Those who can weather storms of the real estate market are those who love real estate and are passionate about it.
- Persistence, grit: Lots of rejections and cold calls, can you handle that?
- Market yourself and create your own brand
- Be proactive and a hardworker: You must be a go-getter. Deals don’t magically fall into your lap. YOU make things happen.
- Specialization: Don’t try to be a jack of all trades.
- Read lots of books on sales and learn from other industries.
- Be a “glass half full” kind of person.
Alternate careers: Mortgage Broker, Sales Associate, Investment Banker