Ep. 26: What Is The Difference Between Residential And Commercial Real Estate Agents?
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Ep. 26: What Is The Difference Between Residential And Commercial Real Estate Agents?


Hello everybody thank you for coming. Robert Rico here California Realty Training. So glad you made it to our video blog this
week and we’re hope you’re enjoying them; learning something from this real estate world
you may be getting into. Today we are going to talk about joining a
commercial real estate career or getting involved with a residential real estate career. Now with the license, with the real estate
license, you have the ability to do both if you like. You can do commercial sales or you can do
residential sales, however they’re both quite different. For example, commercial sales. When it comes to commercial sales you can
make tons of money in that because commercial sales are huge commercial properties that
you will be selling, you will be presenting. For example, just today I went online and
looked up businesses for sale. There was this one business I caught, they
were selling it for a “mere,” now watch this, a “mere”, this is Los Angeles now, a “mere”
11 million dollars. Now a typical commission is, we’ll say it’s
3% per side. 3% for the buyer’s agent and 3% the seller’s
agent. So let’s assume you’re representing the buyer
in this. Now 3% of 11 million dollars is a lot of money
if you do the math. It’s $330,000 for one deal. That’s fantastic, however when it comes to
a commercial career you may not hit your first deal or close your first transaction until
several, several months, possibly more than a year, two years, maybe three years. It’s a lot of incubating when it comes to
commercial sales because these are huge, huge transactions. Selling apartment buildings, selling a shopping
center, selling a hill, selling a hospital, all these kinds of things are what you’ll
be dealing with when it comes to commercial sales. And when it comes to residential sales it’s
a little easier, a little more soft. Somebody gets their license, they join a brokerage,
they get involved in a residential career, they represent a seller of a home, they represent
a buyer who wants to purchase a home. Commercial sales you get paid huge. You get paid massive. You have a great time doing it, however it’s
far and few between. Residential sales, hey you get your license
and you could probably, probably close a transaction within the first few months. Particularly if you tell you sphere influence
as to what you’re doing in this real estate career that you got involved in, that you’re
ready to make it happen. Now let’s talk about the qualities required
for a commercial real estate agent. A lot of these commercial agents are more
of a corporate environment. The environment is very, very corporate like,
which is very, very serious. They’re up in a huge office, everyone’s on
those phones, doing all their cold calling, doing all their research on the property,
on the apartment complexes, strip malls, all that kind of stuff. And they expect you, they expect the commercial
agent to know a little bit more than the typical residential agent. For example, they expect you to know a little
bit about internal rates, about the capitalization rates, which is also know as cap rates. Gross rent multipliers and whole bunch of
other analytics. Let me give you an example. I had a good friend of mine, his name was
Paul. Paul, to me, was one of the great commercial
real estate agents that I knew. And one day he was walking by my office and
I had never done commercial real estate. I’ve always been committed to residential
sales because, to me, it’s rather simple, cut and dry, I find somebody, put them in
a house, close the transaction. Or I represent a seller, sell their home,
close the escrow, not a big deal. But anyway, one day Paul was walking by, I
say, “Hey Paul stop for a minute. Come on into my office.” He came into my office. I said Paul, “I’m interested in knowing just
a little bit about commercial real estate. Would you mind explaining to me how it works,
selling a piece of commercial property.” He said, “Rico it’s very, very simple.” And he went to my little white board and he
started explaining to me gross rent multipliers. He started explaining to me the cap rate. I said, “Paul. Stop. I don’t want to hear nothing more.” It just sounded so confusing. It’s a complete different terminology. Complete different language, if you ask me. That I just knew, that it would be so challenging
for me that it would not be a good fit for my type of career. Now when it comes to commercial real estate,
please pay attention to this. They expect the commercial real estate agent
to be patient, there’s a lot of incubation there with your client. They expect the real estate agent to be confident. You must be confident. Hey, I think when it comes to residential
sales you need to be confident. You must be social. And you must be persistent. You must be persistent. Now these qualities will definitely get you
to where you want to be, particularly if you are persistent and you don’t give up when
it comes to this commercial or residential sales. Ladies and gentlemen if you think you are
cut out for a commercial real estate career, now you know a little bit about it. Is it challenging? Yes. Is it rewarding? Absolutely. But only you can make that determination. Thank you for coming to our video blog. We hope to see you next week. If you have a comment please leave it below. Please subscribe to our page. Have a great day.

2 Comments

  • SleeplessinOC

    They don't typically pay 6 percent for a deal that large though. A couple reasons I don't want to do residential is because having to work nights and weekends AND the crazy amount of competition. It seems everyone and their mom is licensed.

  • Kenneth J. Jones

    Your audio is awful. You're voice is also being overpowered by your background music. By the way, NOBODY is paying 3% per side on an $11 million deal. It's more like 2% per side or there about. Still, not a bad payday.

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