Becoming a CRE Broker: Pros and Cons

CRE Broker

Since the real estate market began, buying and selling property as a broker has appealed to a wide range of people. It’s a desirable career for many reasons, two of which being the flexibility to create one’s own schedule, as well as unlimited earning potential.

As with any job, there is, however, a lot of hard work that goes into building a successful, profitable career out of commercial real estate brokerage. In fact, some people may find that they aren’t quite up to the challenge.

We’re going to share some of the pros and cons of becoming a commercial real estate broker for you to review and consider.

Let’s get started.

CRE Broker Pros and Cons

Pro: Consistency

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

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 effects of COVID-19, for example). 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 as a broker in the commercial real estate industry is your ability to set and regulate your own working hours.

This means that you can set aside time for activities and events that are not work-related but that are important to you. This 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 our next point.

Con: Potential for Extra Hours

While the idea of setting your own schedule might sound tempting, it may not always be all it’s cracked up to be. Part of your job as a broker is to help coordinate all of the moving parts that lead to a successful commercial transaction.

This considered, you may find yourself required to work around other people’s schedules. 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 develop 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 are financially secure for the foreseeable future.

Pro: Access to Off-Market Deals

As a broker, if you are also interested in personally investing in commercial real estate, a perk of being a broker is having access to off-market deals as well as the ability to find profitable investment opportunities before they become publicly available.

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 Life Cycle of Deals

When it comes to commercial real estate brokers, it’s important for them to consider the often long life cycle of deals. Commercial transactions take longer to complete than residential, as the process is much more complex. Therefore, the financial gains of a commercial deal can take a long time to materialize.

This game of patience is not for everyone.

Pro: Higher Commissions than Residential

While commissions will vary 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 typically sell for higher asking prices 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 going through in a timely manner. Oftentimes, this stress can be taken out on you, the broker. All this while also handling 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, typically because it is considered to be easier to tap into and can be done as a side job while your business grows. That leaves the commercial market with far more opportunities for you to stand out against the competition and market yourself in a unique light.

A Final Word

The decision to become a commercial real estate agent should not be taken lightly, as it comes with a lot of responsibility and 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.

Read on to learn more about what a day in the life of a Voit broker looks like.

David Cox | Industrial Real Estate Specialist
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