Brand new real estate agents may be tempted to try their hand selling both commercial and residential properties, operating as so-called resimercial real estate agents. But don’t be too quick to choose this dual realtor existence. Commercial and residential real estate are very different and splitting your focus right out of the gate could be risky.
Easy entry doesn’t mean easy
It is a relatively fast process to become a real estate agent. Would-be agents don’t have to have a four-year degree. They can head straight to real estate school and be licensed in just a few months. Arizona requires that students complete 90 in-classroom hours, which typically takes three months. But ease of entry does not mean selling real estate is easy. It does mean that many agents enter the business with zero experience in the industry. Many veteran real estate brokers will tell you the key to success, especially early on, is becoming an expert in either commercial OR residential real estate, not both.
Pick a side: Residential or Commerical, at least to start
Kurt Nishimura, founder of the Greater Phoenix chapter of the Asian Real Estate Association of America (AREAA,) has a long history in both commercial and residential real estate. He began as a commercial broker and expanded into residential when the recession nearly wiped out the whole industry. Nishimura, who serves as AREAA’s national commercial chair, advises agents to steer away from being a resimercial agent.
Nishimura explains, “Commercial real estate is very complex and within that discipline are a multitude of sectors and each of those sectors has agents who specialize in just that one area.”
So many sectors so little time
To give you an idea, let’s look at some of the sectors of commercial real estate. Some of these include retail, multifamily, mixed use, office, industrial, hotels, medical office, storage, distribution centers, special use or some combination thereof. But each of these sectors has niches. Retail, for example breaks out into restaurants, merchandise stores, big box retail, etc. Restaurants can be further categorized into fine dining, family dining, fast food and more. Commercial real estate agents find their niche and specialize.
Residential real estate offers similar specializations: new builds, horse property, historic, condominiums—you get the idea. As with commercial real estate, successful residential agents become thee expert in their specialty.
Pick your niche and run with it
Nishimura advises, “Rather than try to be an expert in two completely disciplines, pick one and then network and find a trusted sphere of influence in those different sectors, to whom you can refer your business. ”
Resimercial can cost you
Resimercial agents can also take a hit financially. The residential multiple listing system, (MLS) will cost a real estate agent less than $500 a year. The annual fee for access to the commercial MLS runs a minimum of $500 a month for an individual agent. A member of a commercial team of agents will pay a discounted rate, but not much. This can make being a half-time commercial agent difficult and expensive.
If you must go resimercial…
If you are a residential agent trying to transition into commercial, or just a newly licensed agent who wants to broker commercial real estate instead of residential– start by finding a seasoned mentor. The real estate classes you take to earn your license do not teach you about commercial real estate, just residential. Commercial deals have their own lingo, documents and issues. Partner with an experienced commercial agent who would be open to letting you assist with smaller deals as you learn the ins and outs.
Go after the expertise you may be lacking by continuing your education. While the skills for negotiating and selling transfer from selling residential, commercial real estate, as we noted, comes with its own unique language and issues. Unlike with residential real estate transactions, a commercial agent has to understand revenue streams and capitalization rates. They have to be able to advise a client on whether a property is a good investment. A good start is to become a Certified Commercial Investment Member (CCIM). Earning this designation takes agents through advanced coursework in financial and market analysis and gives you professional credibility. And don’t stop there. You will see a slew of initials after the names of successful commercial agents, indicating higher level expertise, including advance designationscluding the ABR (Accredited Buyer’s Representative) and the ALC (Accredited Land Consultant).
Whether you are a commercial, residential or resimercial real estate agent, Landmark Title Assurance Agency is ready to provide its expertise. We have commercial and residential teams who provide escrow and title services. If you have any questions or need assistance, please contact our office at (602) 768-2800 or visit us at our website.