The Real Estate Encyclopedia
Is Commercial Real Estate Right for You?
Category - Specialized Real Estate - Commercial Real Estate
Is commercial real estate for you? As mentioned in the introduction, commercial real estate is one of the truly pure entrepreneurial businesses remaining in America today. It is one of the few areas left where an individual can actually go out into the world and achieve fabulous success on his or her own. Perhaps more than any other business endeavor, it rewards effort and punishes indolence. There are no regular paychecks in commercial real estate, and there is no safety net. It is the kind of field that attracts the ambitious, calculating, risk-taking extrovert. Unlike residential real estate, it involves dealing with other business people who tend to be more objective, rather than emotional, in their decision making.

There is a tremendous amount of money to be made in commercial real estate. How much you make really depends on how hard you work. Consequently, commercial real estate attracts hard working and aggressive people ó people who want to get ahead in the world, not people looking for a safe place and a steady paycheck. It comes as no surprise then that it is a highly competitive business in which many fail. The old adage in commercial real estate is that 10 percent of the brokers make 90 percent of the money.

The profession of commercial real estate essentially involves selling and leasing commercial property. In order to accomplish this, a commercial broker must engage in a wide range of activities including listing and marketing property; providing real estate advice; representing principals to find suitable property; evaluating property for listing purposes; writing up offers to lease or sell; and negotiating deals. Most of these activities require significant interpersonal skills as well as skills in financial analysis, sales, research, and problem solving. During a typical day, a commercial broker might

  • Prepare an ad or brochure
  • Write up an earnest money offer
  •  Order a preliminary title report
  • Show property
  • Answer prospect inquiries on listings
  • Inquire about other listings for a client
  • Deliver documents
  • Make a listing sales pitch
  • Obtain information from a governmental agency on a property
  • Negotiate the terms of an offer to lease with a lessee and lessor
  • Deal with an attorney regarding the title exceptions in a preliminary title report
  • Arrange for an environmental report for a property being sold
  • Deal with an architect or space planner on the tenant improvements for a lease
  • Analyze an investment property for an investor client
  • Arrange for credit information from a lessee on a lease
  • Make cold calls on prospects
  • Write status reports to clients
  • Update the list of contacts
  • And, hopefully, pick up a commission check from the escrow company.

A brokerís life is often hectic with phones ringing, offers to write, calls to return, things to get done, deadlines to meet, appointments to attend, and properties to show. 

Brokers earn a living by collecting fees on the sales and leases they complete or by charging set hourly fees for counseling. There are no regular paychecks, which makes for an uneven and uncertain income. Since commercial transactions take time to complete (itís not unusual for a deal to stretch anywhere from two to six months beginning to end), there can be extended periods of time when there is no money coming in. Consequently, it is important to be able to budget. It is also helpful if you can muster enough cash up front to get you through the first year or so of the business.

Incomes vary from year to year and from broker to broker depending on the market, the level of competition, sheer luck, and so forth. While firm income statistics are difficult to come by, itís safe to say that overall, good commercial brokers make a good living. An educated guess would be that many commercial brokers earn between $30,000 and $60,000 per year, while quite a few make more than $100,000 on a regular basis, and a surprising number (mostly long-time, experienced brokers) make between $150,000 and $500,000 annually. And then there are always those few star brokers who make lots of money, sometimes in excess of $1,000,000 per year. Itís not uncommon for an experienced broker, earning $200,000 per year, to make a few unusually large deals and reach the top category for one year.

Do you possess the characteristics to make it in such a field? An honest self-appraisal can help you decide and perhaps avoid future disappointments. The following personal qualities are some of the predictors of success in the business.

  • Self-motivated
  • Aggressive
  • Hardworking
  • Honest
  • Intelligent
  • Influential
  • Competent
  • Tough


External Links
Real Estate Information Sources - Real Estate Articles
Specialized Real Estate - Commercial Real Estate
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