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Commercial vs. Residential Real Estate: Understanding the Difference

By: Space Selectors   August 26, 2019

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Are you looking into a career in real estate, but unsure as to if commercial or residential is the right path for you? There is a lot that goes into becoming an agent, and a lot to consider before deciding on which path to take. While there are similarities, there are also many differences. Taking a closer look can help you see which is the right fit for you.

 

The most obvious difference between being a commercial agent or residential agent is the type of real estate properties that you will work with. There are two types of properties that agents deal with: residential properties and commercial properties. These different types of properties have different purposes and different client bases. Other differences you will learn more about our education, sales, earnings, and training & commercial investment properties. Both fields require social abilities, courage, and patience. The two types of real estate agents serve different purposes and have a different client base. Other differences between the two are based on factors such as education, sales, earnings, and training. But, in general, both fields require courage, social abilities, and patience. So let’s take a closer look.

 

Education of Commercial vs. Residential Real Estate Agent

 

While a license in real estate is required for both commercial and residential real estate, a benefit for residential agents is that they are not required to have a college degree. Commercial agents, on the other hand, are expected to have a college degree, preferably in the field of business or finance. Being able to formulate a business plan is also helpful. This is because he or she is expected to have a deeper knowledge of the professional terminology, such as capitalization rate, internal rate of return, real estate analytics, and gross rent multiplier. This means that a commercial real estate agent will need to be able to apply what they have learned in college into the field, as this is what a commercial property investor whether buyer and sellers will expect.

Commercial vs Residential Real Estate

Commercial vs. Residential Real Estate: Commercial Property Investing, Training, Buying, Selling and Property.

Training for Commercial Real Estate VS Residential

 

Both residential and commercial real estate agents are required to complete training and classes in the field of real estate. However; if you go into commercial real estate, you will be required to complete more training through mentorship programs than being a residential agent.

 

Can you do both commercial and residential real estate?

As previously mentioned, the main difference is the type of property each agent is working with. Residential real estate agents work only with residential properties. While a commercial real estate agent is qualified to deal with both residential and commercial properties including real estate investors. Commercial real estate agents work with larger properties which could be apartment buildings, shopping centers, or other huge real estate properties even tenants.  This helps shed some light on while they are expected to have a college degree – they are constantly dealing with properties that require full knowledge of the economic situation, cap rate, rate of return, and gross rent multiplier.

 

Do commercial real estate agents make more than residential?

In residential real estate, there is a lot of potential for a great rate of earning. However, those earnings and success of the agent can rely heavily on two external factors: a hot market and clients who are willing to pay. This can be challenging for residential agents. Typically, we see that a commercial real estate agent can earn more annually due to the higher commissions on sales, and the fact that his/her work does not depend on some of the market conditions. Another factor that determines the difference between a residential and commercial real estate agent is that there are typically more residential properties, and historically they are easier to sell because they take less cash flow and maintenance.

Do commercial real estate agents make more than residential?

 

The clients: commercial properties, real estate investors, homes & building benefits

 

One thing is for sure, someone is always looking to buy or sell their house. So residential real estate agents will always have a good size client base wanting homes or a building with tenants and returns. Even if they are looking to rent vs buy, you still have that larger base to work with. On the other hand, a real estate commercial building can take much longer to sell. This is because a commercial property, unlike residential property, might get affected by the economic situation in the area. A major reason you hold on to a commercial property is because of better returns and cash flow. So, there isn’t always someone looking to sell or buy in a commercial setting. The client base for a commercial is more business-oriented compared to investing in real estate residential properties like homes.

 

Working Hours

 

Another factor that can sway someone into either commercial or residential real estate is the hours they will be working. Residential real estate agents are never really off work – or they shouldn’t be. They can expect to work at any time of the day as it depends on showings and off-work hours. They are adjusting to fit the needs of buyers and sellers and their schedules. A commercial real estate agent, on the other hand, typically works within business hours, five days a week.

 

Job Duties of Commercial Real Estate vs. Residential Real Estate Agent

 

As with all jobs, there are specific tasks that need to be completed daily. Yet, there is a difference when it comes to residential vs commercial real estate agent’s job duties. A commercial agent typically will have more tasks, but their field requires more knowledge and information from them. This includes knowing the numbers of the properties they are viewing or trying to sell. A residential agent is working more with each client and more general job tasks that don’t require knowing such specific details.

 

Conclusion

 

In the end, it is up to you for which side of real estate you want to be in. There are many factors to consider – job flexibility, hours, earnings, and so much more. It’s best to take your time and think through all the factors. You need to be honest with yourself about what you need and want, and see which is the right fit for you.

 

 

Most Popular Questions & Answers

What is the difference between commercial and residential real estate?

Is commercial property better than residential?

 

If you are still looking for some guidance on which path to choose, fill out our survey to have one of our experienced professionals reach out to you! We are here to help and provide you with the knowledge and tools to begin your career in real estate!

Other Locations we Serve in in the Greater Denver Area: ThorntonAurora, & Arvada.

 

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