Why Being a Commercial Real Estate Agent is More Lucrative than Residential Home Sales

I have done both.  Here is the difference –

Commercial investment real estate is all about business and numbers.  When you sell an apartment building or a shopping center, you are selling a rental business.  There is little to no emotional attachment from either the seller or the buyer.  The seller wants to make a profit on the sale and have a plan to deal with the tax ramifications. 

The buyer wants to know three things:

• Does it cash flow?
• Can I finance it long term?
• Can I manage it in such a way as to increase profitability over the long term (10 years +)?

If the buyer can say “yes” to those three things – it’s a good deal for the buyer. 

Plus, your buyer will evaluate the numbers of the property FIRST before they ever want to see the property – no waste of time showing clients properties they haven’t already said they want.

Correspondingly, whether you are dealing with selling residential properties, its all about emotions.  The sellers almost always have an emotional attachment to their property and will give you a million reasons why it is nicer should be priced higher than other properties in the area.  Buyers are looking for specific things in their “perfect home”.  Add to this that the financing is based on the buyers personal credit and this makes it far more difficult and time consuming to get a deal done.

Here is the best argument for commercial investment sales – would you rather sell a $400,000 house for a 2.5% commission or a $4,000,000 rental property at a 3% commission (or whatever you can negotiate).  Plus, when you match your seller to your buyer, you don’t have to split your commission with another agent to get the property sold!  This is a huge advantage – more money, less work, less aggravation, no open houses, far fewer showings, less wasted time!