Exploring the Ins and Outs of Commercial Real Estate Broker Salaries
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
Exploring the greater world of real estate often leads investors to other career paths, such as becoming a commercial real estate broker. If you’ve heard the term "broker" online and wanted more info on what that means, this is the guide for you. Like other paths in real estate, a broker is an independent entity that works on commission, not a traditional salary.
But what are they really, how do they get paid, and what does it take to become a real estate broker? Let’s dive in.
What is a commercial real estate broker?
A commercial real estate broker is someone that helps investors find properties for rent, as well as properties for sale. They are prevalent within the commercial leasing space, as brokers will work with landlords to get a tenant to sign a lease. If the broker brings a tenant to the landlord, they earn a commission for this work.
Tenants can also use a broker to represent their real estate interests, going out to search for properties to rent. This is an exciting area of real estate where you can earn a commission for helping people and keep your finger on the pulse of commercial properties available in your area.
As long as you aren’t openly courting any conflict of interest, there’s nothing that says you can’t be a real estate investor yourself and also a commercial real estate broker.
How do they get paid?
As mentioned earlier, brokers are paid on commission. In the case of brokers working in the commercial leasing space, this is typically 3% of the rent paid over the life of the lease. This can add up to be quite a commission in the commercial realm.
According to the U.S. Bureau of Labor Statistics, the average commercial real estate broker salary is roughly $60,370. Keep in mind that this is an average across the board. Like in any industry, there are people that are making more (and less) than that.
Broker Requirements
Becoming a broker is appealing to many people, as it does not require a college degree. Of course, the more exposure you have to things like business operations, finance, technology, and good recordkeeping, the more successful you’ll be in the long run. You do have to become a real estate agent before you can become a broker.
Everything is based on the requirements for your state, but all states have licensing requirements. For example, in New York, you have to be a licensed real estate agent for at least two years before qualifying for licensure. You also have to take a separate course for brokers on top of your salesperson (agent) training.
Advantages of Becoming a Broker
If you’re already a real estate agent, becoming a broker opens up your world. CRE is so vast that there’s a little bit of something for everyone. It’s about gaining subject matter expertise in whatever commercial niche you like. Are you intrigued by large multifamily units? You can specialize in that. Or maybe you’re into warehouses instead of multifamily, and that’s what interests you the most.
Instead of having to split commissions with another agent, as a broker, you’re getting to keep more money in your pocket.
Disadvantages of Becoming a Broker
If there’s one thing that a broker has to deal with inside the world of CRE, it’s high stakes. Sure, the commissions on a three million dollar building are much higher than a typical duplex in a B-level neighborhood, but guess what else is also high? The stress levels. Your clients are looking to you to take care of them during the entire transaction.
Word of mouth can build your broker’s reputation, but it can also break it. Even if you’re just trying to get tenants into buildings, you’ll find that you are juggling many different balls in the air to close an agreement.
There are no guarantees as a broker, and it’s essential to make sure that you have enough cash reserves to handle lean times where you aren’t making as much. It will also take you a bit of time to build your reputation up.
Should you try it?
So, here’s the classic question: should you become a broker? If you’re already a successful commercial real estate agent, then it may be time to consider moving up to the broker level. Agents have to report to a brokerage, but a broker is truly their own machine. This also means that you can work with agents and earn a commission for your trouble, even though you aren’t working with the client directly.
As always, your own risk tolerance will play a heavy role in whether or not this is the right field for you.
Your experience as a real estate investor will certainly help you connect with future clients. After all, clients do respect someone that also has proverbial skin in the game. You understand what it’s like to acquire properties on your own. As a broker, you can help buyers tap into a much larger network than what they’d have on their own.
Considerations for the Future
Exploring the ins and outs of commercial real estate broker salaries is more than just looking at the money. You have to also think about the type of career path that you want to build. If you’re actively trying to manage your properties, you may find that you really don’t have the time to get deeper into real estate as an agent first. After all, a broker is essentially just an agent with an expanded set of responsibilities.
Take those responsibilities seriously. Make sure that you’re getting deeper into your community, including joining professional associations devoted to real estate agents. The National Association of REALTOR®s is a powerful trade association group that advocates for this profession and connects you to other real estate professionals bound by their code of ethics.
Ultimately, only you can decide what your next steps look like. Yet, if you find that you’re looking for your next challenge, taking the steps to eventually become a commercial real estate broker is a great challenge to take on.
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