How Much Do Commercial Real Estate Agents Make & How Is It Earned?
Real estate is a multifaceted industry that offers unprecedented flexibility and personal choice in deciding the trajectory of your career. Commercial real estate is a popular path that draws prospective agents for a myriad of reasons. No doubt one of the perks you’ve heard about is the commercial real estate agent salary.
How much do commercial real estate agents make? According to Indeed, the average base salary for a commercial real estate agent is $85,744 per year. Beyond the average salary and commercial real estate commission, working in this side of real estate can make for an exciting career. The following guide will explain what commercial real estate agents do, their various job titles, and how their compensation is broken down.
Did You Know?
According to BizJournals, the 2020 top U.S. commercial real estate market was Dallas-Fort Worth. While every commercial real estate market was impacted by COVID-19, North Texas was the least impacted U.S. market.
What Is a Commercial Real Estate Agent?
Typically, there are two types of real estate professionals in this field: commercial and residential. What is the difference between the two? This video helps to explain it, but commercial real estate agents deal with commercial real estate, such as a business acquiring land for a new office or an existing building. Residential real estate agents help people find and buy their dream home. In other words, the day-to-day responsibilities of a commercial real estate agent are completely different than those of a residential real estate agent. A commercial sales agent has to know the trends of the commercial real estate industry for their market, so there is more research involved, and they tend to be more data-focused than residential real estate agents. They also have to deal with more leases than the average residential agent.
Commercial Real Estate Agent Skills & Qualifications
One aspect that remains the same between commercial and residential real estate agents is the licensing process. As is the case when becoming a real estate agent, the licensing requirements vary depending on the state. You need to meet your particular state’s requirements, take and pass Pre-Licensing courses, pass your state exam, and then complete any required Post-Licensing education.
Since industrial real estate is more data-focused, you may need to be good with numbers and understanding large amounts of data to be successful in this sector. You’ll also need to be familiar with how leases work in order to be able to explain them to potential customers.
Commercial Real Estate Agent Duties
Now that you have a basic understanding of what you need to get licensed and the skills to become a commercial real estate agent, what are some common duties in this real estate career? Though these duties will differ from agent to agent, here’s a brief list to illustrate commercial real estate duties:
- Property or business’s valuations
- Property management
- Property leasing
- Selling/marketing a property
- Property purchase
- Feasibility studies
- Site selection
- Investment analysis
- Investment sales
- Asset management
How Are Commercial Real Estate Agents Paid?
As is the case with most careers in real estate, commercial real estate agents are paid on commission. It’s important to note that there are two sides to working for a commercial real estate commission. If you don’t make a deal, you don’t get paid. On the other hand, there is unlimited earning potential. In fact, the commercial real estate agent salary is the main reason it's one of the more popular real estate jobs.
Understanding Commercial Real Estate Commission
Trying to comprehend real estate commission can be a dizzying undertaking, but we can walk you through it! Due to antitrust laws, there’s no set commission percentage that is required to be paid by law. But most commercial real estate sales result in a commission that is anywhere from 4-8% of the sale price. The commission depends on the rate negotiated by the parties involved in the listing agreement, though the commission may be a flat fee on rare occasions. The percentage of the commission is generally set by square footage and the price per square foot. This methodology is one of the reasons why the salary range is so high. The bigger the land or property, the higher the commercial real estate commission.
What About Lease Transactions?
Another factor that plays a huge role in commercial real estate agent salary is the commission of a lease transaction. Lease transactions require the commission to be paid on the total value of a lease. For example, if a five-year lease has a monthly rent payment of $3,000, the lease value would be the total rent payments made over the five years ($3,000 X 60 months = $180,000). The commission would then be paid on the $180,000, and commissions are typically due once the lease is signed and the first bills (first month’s rent and security deposit) have been paid.
How Commercial Real Estate Agents Split Commission
The split of a commercial real estate commission plays a significant role in agents' total compensation. The practice of splitting commissions also makes it difficult to grasp what the average commercial real estate commission is. The most common splits involve the commercial real estate agent, their brokerage, and any other agents involved in the deal. Here are some of the ways commercial real estate commission can be split:
- 100% - The rarest of the commission splits, you’ll most likely see this split with commercial real estate Brokers. In this scenario, the Broker would receive the entirety of the commission. When it comes to commercial real estate Broker salary, a 100% share is the ideal scenario.
- 50/50 - This split is exactly as it sounds. The commercial real estate agent gets half, and their brokerage gets the other half.
- Tiered commission plans - CommissionTrac explains that tiered commission generally begins with the Broker keeping 50-60% of the gross commission, then moving up as they hit new tiers or breakpoints. These tiers and breakpoints are typically based on either the overall gross production by the agent or the agent’s net production.
- Gross - Similar to a tiered commission plan, a gross commission split creates breakpoints at specific grossed commission figures. The agent’s tier determines the net value they receive versus what their brokerage firm keeps.
With large commercial properties, agents often work in teams, which impacts their take-home commission. But, as noted earlier, the more expensive the land or property, the higher the commission - so there’s often enough of a commission to go around!
How to Increase Commercial Real Estate Income
As you gathered by now, commercial real estate is extremely lucrative. However, scoring the highest commissions and boosting your commercial real estate salary doesn’t happen overnight. With time and effort to gain years of experience, the following ideas can help grow your income as a commercial real estate agent:
- Specialize
- Utilize your network
- Provide excellent customer service
- Be selective about deals
- Continue training and gaining experience
Specialize
Aside from gaining the necessary licensing and experience, the best way to make yourself stand out (and get the best commercial real estate agent salary) is to find an area in which to specialize. Focus on a specific type of property or area of commercial real estate that most interests you; that’s how you can become an “expert.” Instead of finding multiple areas of commercial real estate in which your performance is average, pick one that allows you to separate yourself from the rest of the crowd and excel.
Utilize Your Network
No matter the path you take in real estate, networking is paramount to your success. Commercial real estate is no different. In fact, it might be even more important given the size of the transactions and the top-tier people/companies involved. Making connections with the people of influence in your community both within the industry and outside of it will help you get a leg up on your competition.
Provide Excellent Customer Service
Word-of-mouth marketing is one of the most powerful tools for commercial real estate agents. Even in a digital world where human-to-human interaction is limited, great customer service is critical to your success. If you want to make at least the average commercial real estate salary, provide excellent customer service. Treating clients well and understanding their needs may land you your next deal, if not a referral down the line.
Be Selective About Deals
Given the size of the transactions and the amount of planning each deal requires, commercial real estate agents have fewer transactions than residential real estate agents. That means you’ll need to spend more time on a smaller number of large deals that can pay off significantly more than numerous small deals. The small number of deals means you need to be selective about what you decide to undertake. Vet your clients as much as possible before signing any paperwork and address their expectations for the deal early on to ensure everyone’s on the same page.
Continue Training and Gaining Experience
Continuing Education is likely required to maintain your real estate license. On top of Continuing Education, commercial real estate agents should also become Certified Commercial Investment Members (CCIM). According to the National Association of REALTORS®, a CCIM is a recognized expert in the commercial and investment real estate industry. The designation process ensures that CCIMs are proficient not only in the theory of commercial real estate but also in its practice. Having such a distinction can further boost your reputation as you expand your knowledge base, which can lead to an increase in your commercial real estate salary.
FAQs
How much do top 1% real estate agents make? ›
Top producers earn around $112,610 a year to start, according to the BLS. 1 Mega-stars could earn $500,000 per year and up.
What part of commercial real estate makes the most money? ›Properties capable of bringing in the highest return on investments are typically those with the highest number of tenants. These properties include RV parks, apartment complexes, student housing, office buildings, and storage facilities.
What type of real estate agent makes the most money? ›Real Estate Broker
A career as a real estate broker is one of the highest paying and lucrative professions in the real estate industry. On average, experienced brokers take home a six-figure pay. You can only achieve this number once you get a significant amount of good reputation.
Salary Ranges for Commercial Real Estate Brokers
The salaries of Commercial Real Estate Brokers in the US range from $23,400 to $795,620 , with a median salary of $175,561 .
Multi-million dollar homes in Los Angeles and other areas mean there are real estate agents making well above the average salary. Star real estate agents in the state of California can make millions annually. These agents need to average at least $50 million in sales annually with an average commission of 2%.
Is it hard to make a lot of money as a real estate agent? ›Real estate agents can make good money. According to the Bureau of Labor Statistics, the median annual salary for real estate agents was $48,930 in May 2019. The top 10% of real estate agents earned more than $111,800 in May 2019. Keep in mind that you have some say in how much money you make as a real estate agent.
Can you get rich in commercial real estate? ›A good commercial real estate broker has the potential to earn significantly more than $250,000 per year within two years of entering the career path.
How do people get rich in commercial real estate? ›Commercial real estate investments can earn money through income or appreciation. Income is produced through the operation of the building, often through tenants making rental payments, while appreciation is earned through an increase in the property's value over time.
How to get rich off commercial real estate? ›- 5 Ways to Make Money in Commercial Real Estate.
- Buy REITs. ...
- Become a landlord. ...
- Become a limited partner. ...
- Invest in a private equity fund. ...
- Real estate crowdfunding.
While ZipRecruiter is seeing salaries as high as $144,439 and as low as $20,983, the majority of Luxury Real Estate Broker salaries currently range between $58,068 (25th percentile) to $117,113 (75th percentile) with top earners (90th percentile) making $131,752 annually in California.
What is the 1 rule in real estate? ›
The 1% rule of real estate investing measures the price of the investment property against the gross income it will generate. For a potential investment to pass the 1% rule, its monthly rent must be equal to or no less than 1% of the purchase price.
What agents get paid the most? ›Examples of agents who consistently yield high annual salaries are mercantile agents, specifically brokers and federal government special agents. Brokers yield average annual salaries of $97,073, which is $46.67 an hour.
How much commission do most real estate agents make? ›Real estate commissions typically range between 4% and 6% of a property's sale price. This amount is further divided between the brokerage and the agent who worked on the sale.
Is commercial real estate more profitable? ›Depending on the area and certain economic factors, commercial properties can have an annual return off the purchase price of up to 12%. By comparison, single-family-home properties usually have an annual return off the purchase price of 4%, tops. Professional relationships.
How much does a real estate agent get paid an hour? ›The average real estate agent salary in Philippines is ₱ 360,000 per year or ₱ 144 per hour. Entry-level positions start at ₱ 339,762 per year, while most experienced workers make up to ₱ 630,000 per year.
How long does it take to get rich with real estate agent? ›It can take about six months to start making money as a real estate agent. Everyone is different, but six months is around the time many agents make their first sale. To start making consistent money, you should plan for about a year. To make a profit, you should plan for up to 18 months.
How long does it take to become a millionaire as a real estate agent? ›By continually flipping or renting the homes you live in, your net worth will probably hit the $1 million dollar mark within another 10–15 years and you can continue to get rich in real estate, while everyone else you knew at age 25 is still plodding along with little to nothing in the bank.
What degree is best for commercial real estate? ›A college degree is not required, though it may be helpful to have a degree in business, finance or marketing. To earn a real estate sales license, take coursework from an accredited institution and pass a licensure exam.
How long does it take to start making money in commercial real estate? ›How long does it take to make money in commercial real estate? It can take six months or more for commercial real estate agents to make money from sales as commercial transactions tend to take longer to close than for residential properties.
Does real estate create 90% of millionaires? ›Some of the most successful entrepreneurs in the world have built their wealth through real estate. In fact, it's estimated that 90% of all millionaires invest in some form of real estate.
Why are most millionaires in real estate? ›
Millionaires invest in real estate because it creates wealth. If you purchase a property as your principal residence, it creates equity as you pay off the mortgage.
What are the 4 ways to make money in real estate? ›There are four main money making strategies for real estate investors: buy a property and wait for it to appreciate in value; rent out a property to tenants or businesses to generate cash flow; invest in residential properties; invest in real estate projects or find other work in the industry.
What of millionaires made it in real estate? ›“90% of all millionaires become so through owning real estate.” This famous quote from Andrew Carnegie, one of the wealthiest entrepreneurs of all time, is just as relevant today as it was more than a century ago.
Does commercial real estate do well in recession? ›As most markets witness a decrease in capital during a recession, real estate still stands as one of the most stable investments proving its recession resilience.
What is cash flow for commercial real estate? ›Essentially, cash flow is the money that comes in from rent minus the money you have to spend on property expenses like mortgage payments, insurance, taxes, and repairs. Positive cash flow means that your rental property is bringing in more money than it costs to operate, giving you a tidy profit each month.
Can you get rich quick with real estate? ›Can real estate make you rich? It can, but it's not a sure bet. The real estate market has boom and bust cycles, and real estate investors can lose money as well as make money.
How much do Realtors in GA make? ›On average, real estate agents make $84,459 per year according to salaries reported by Indeed users.
Who is the top real estate agent in the US? ›| Rank | Name & Company | Sales |
|---|---|---|
| 1 | 1. Justin Tye Active Realty, Inc Corona, CA | 3536 |
| 2 | 2. Matt ONeill Matt ONeill Real Estate Mount Pleasant, SC | 3392 |
| 3 | 3. Joy Daniels Joy Daniels Real Estate Group Harrisburg, PA | 1782 |
| 4 | 4. Jose Medina Keller Williams Legacy Group Realty North Canton, OH | 1707 |
| Years of experience | Per year |
|---|---|
| 1 to 2 years | $70,250 |
| 3 to 5 years | - |
| 6 to 9 years | $89,331 |
| More than 10 years | $87,521 |
The 50% rule is a guideline used by real estate investors to estimate the profitability of a given rental unit. As the name suggests, the rule involves subtracting 50 percent of a property's monthly rental income when calculating its potential profits.
What is the 80% rule in real estate? ›
The rule, applicable in many financial, commercial, and social contexts, states that 80% of consequences come from 20% of causes. For example, many researchers have found that: 80% of real estate deals are closed by 20% of the real estate teams. 80% of the world's wealth was controlled by 20% of the population.
What is the golden formula in real estate? ›In case you haven't heard of the so-called Golden Rule in house flipping, the 70% Rule states that your offer on a property should be no greater than 70% of the After Repair Value (ARV) minus the estimated repairs.
How much does a commercial real estate agent make in Atlanta? ›The average Commercial Real Estate Agent in Atlanta, GA makes $197,621, 5% above the national average Commercial Real Estate Agent salary of $188,670. This pay is 14% lower than the combined average salaries of other metros Washington, DC, Boston, MA and Denver, CO.
Can Realtors make 7 figures? ›Earning a 7-figure income as a commercial real estate agent isn't impossible, and the most successful agents manage to achieve that with consummate ease. That is mainly because they have gone through different stages and made all the right moves to get the success they deserve.
What is the highest paying occupation? ›| Rank | Occupation | 2021 Median Wages |
|---|---|---|
| Employment column two Annual | ||
| 1 | Anesthesiologists | $208,000+ |
| 1 | Cardiologists | $208,000+ |
| 1 | Dermatologists | $208,000+ |
...
5. Michigan.
If you do a Google search for “which real estate company has the best training”, Keller Williams is guaranteed to be at the top of the list. Keller Williams education is one of the key components that make our agents the best in the real estate industry.
What is the median salary of a Realtor? › How long does it take to start making money as a real estate agent? ›It can take about six months to start making money as a real estate agent. Everyone is different, but six months is around the time many agents make their first sale. To start making consistent money, you should plan for about a year. To make a profit, you should plan for up to 18 months.