Pros & Cons to Becoming a CRE Broker

The thought of buying and selling real estate as a broker has appealed to a wide range of people since the market began. Perks such as the flexibility to make one’s own schedule and unlimited earning potential make it easy to understand why. However, there is also a lot of hard work that goes into building a successful and profitable career out of commercial real estate brokerage and some people may find that they aren’t quite up to the challenge.

Pro: Consistency
While the commercial real estate market has certainly seen its fair share of ups and downs, there is also a certain guarantee that it will eventually bounce back. After all, people will always need appropriate places to house their businesses, store their goods, direct their consumers, et cetera.

Con: Market Fluctuation
The downside of this, of course, is that these market fluctuations are also inevitable, and they can occur rather suddenly (take the current situation of Covid-19, for example, and its effect on the current commercial market). Unforeseen circumstances such as this can quickly impact your ability to make a profit, which can be jarring if you aren’t properly prepared.

Pro: Flexibility
One of the biggest positives about working for yourself in the commercial real estate industry is your ability to set and regulate your own working hours. This means that you can always make sure that you set aside the time for the other stuff that is of importance to you. That being said, it is not recommended to treat your commercial real estate license as a side job. It takes time and energy to fully understand the market, which brings us to the next point.

Con: Potential for Extra Hours
While the idea of setting your own schedule can sound tempting, it’s not always all it’s cracked up to be. Part of your job as a broker is to help coordinate all of the moving parts that add up to a successful commercial transaction, and you may find yourself required to work around other people’s schedules, as well. This might mean heading in to work on the weekends, staying later during the evening, or putting in extra hours beyond what you were hoping to work in a given week.

Pro: Unlimited Earning Potential
Another great benefit to working as a commercial real estate broker is that you are fully in charge of your own earning potential. Your income will be directly related to how much work you put in, the types of properties and clients you choose to work with, and the reputation that you gain in your community through the building of positive professional and personal relationships.

Con: No Safety Net
As previously alluded to, however, there is also no safety net if the market does hit a turbulent patch. Working as an independent broker requires a lot of pre-planning so that, in the event that the market does take an unexpected turn, you know that you are financially secure for the foreseeable future.

Pro: Access to Off-Market Deals
If you are also interested in investing in commercial real estate, personally, one of the big perks of being a broker is your access to off-market deals and the ability to find profitable public investment opportunities before they become widely viewed. As a broker, there is no requirement to offer these deals to clients and you are welcome to purchase them for yourself before other investors have a chance to.

Con: Long-Term Results
While investing in commercial real estate is certainly a valuable component in any wealth-building strategy, the financial gains can take a while to materialize. In other words, you may have to sit on properties for a while before they appreciate in the manner you were hoping for. Brokers need to be mindful to make smart investment decisions and not follow every impulse to purchase available properties.

Pro: Higher Commissions than Residential
While commissions will vary greatly based on location, property type, and individual broker, a residential broker will typically collect an average of 5-6% on property sales. A commercial broker, however, can charge commissions up to 10% of the total transaction. You must also consider the varying costs. Commercial properties will typically go for a much higher asking price than the average residential property.

Con: Stressed Out Clients
The closing process can be a very stressful time for your clients, particularly if their business is depending on everything happening in a timely manner. Oftentimes, this stress can be taken out on you, the broker, who also has your own stress of coordinating all of the components to get the deal closed and keep your clients happy at the same time.

Pro: Fewer Competitors
The vast majority of real estate agents choose to go the residential route, specifically because it is considered to be easier to get into and can be done as a side job while business builds. That leaves the commercial market with far more opportunities for you to stand out against the competition and market yourself in a unique and flattering light.

The choice to become a commercial real estate agent should not be taken lightly, as it comes with a lot of responsibility and a lot of pros and cons to consider. If you do choose to pursue this as your career path, step into your new role confidently by taking the time to navigate the potential pitfalls beforehand and coming up with a plan to ensure your success.

David Cox | Industrial Real Estate Specialist
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