Commercial or residential agent...which is better?

11 Replies

Hey BP members, I'd appreciate your feedback and insight based on your personal experience working as a real estate agent.

I'm at a crossroads in my young real estate career...I'm trying to decide if I should follow the commercial or residential path..

Which side are you on? 

What led you to choosing one over the other? 

How many years have you been an active agent? 

In your experience, what's the good, bad and ugly in each field? 

I know successful people in both fields. I'm assuming you are or want to be an investor. Which field do you want to invest in? I work in commercial RE, and it's taught me I do NOT want to invest in commercial RE (and by commercial, I mean retail or business buildings, not 5+ residential unit buildings). So if I were getting my license, I wouldn't be looking at becoming a commercial agent.

I hope you get some responses from actual agents who can provide more insight than I can. 

@John Andrews i've been primarily a residential agent since 2003 and decided to get my license as I begin investing in residential real estate. I've also had interest and have sold some commercial, by that I mean mixed-use, warehouses, multi-family, nothing too complex. My perception of the difference is that residential will offer you the opportunity to handle more transactions and get paid more often because they have a shorter time to close. Commercial properties generally take much longer to close -can be a year or more Although with a much higher commission. I also understand that Commercial Broker‘s may put you on a salary and have you do all the grunt work while you are learning, and take a large part of your commission. In the past you either worked commercial or residential however, so along as you are skilled and experienced, some brokers permit you to do both. You also want to consider what type of people you want to work with… First time homebuyers? Seniors, investors, developers, etc. There are pros and cons working with each but your personality may be better suited to ‘hand-holding' or analyzing properties for investors. I love both but after 17 years of residential, i find commercial more interesting. Best of luck!

If you have no experience with commercial real estate, it will take much longer to get a handle on that business than residential. Commercial real estate does not run, market, or act like residential at all. Some of the best commercial agents and brokers have been doing it for years and know exactly where to go to get a property rented or sold. As a residential agent, every time I tried to dabble in commercial I screwed it up. It is MUCH more complicated than residential and much harder to break in. In residential there are 100 new agents every day in every town and there are Broker Open Houses and Open Houses to meet people and interact and there is plenty of business to go around. In commercial, it's tight because there isn't a ton to go around and much less camaraderie and little to no opportunities to connect. If you are even on knowledge, you will have much better growth potential in residential.

@John Andrews Having done both its a depends. Commercial agents do fewer deals but bigger one and far more complex in general. My wife likes residential better because she likes sharing in the homebuyers experience and also deal flow is steadier and easier to do alot of deals. On the commercial side you deal with leasing and or much larger deals and I don't have to deal

with clients that have no value for my network or my experience because I am generally dealing with seasoned investors or people

who want to get on my A list. I also work more

9-5 M-F hours because my clients don't want to work outside those hours because they are full time business or real estate owners in general. My wife gives up alot of night and weekends because most of her clients have 9-5 jobs. Commercial in my opinion is much slower sales cycle to get your first deal. You can make alot

of money in both so I would not let money steer your decision but which you enjoy more.

I have been working as a residential agent for 6 years now.  I primarily got into that space, because I was passionate about single-family investing.  If you are early in your career, you have the luxury to decide where your passion pulls you towards.  I would just trust your gut.

Im primarily a residential agent, who also does commercial. However the commercial stuff I do is strictly of a residential nature, apartment buildings. I do not touch office space, restaurants, strip malls or anything of that nature.

Residential in my area, I dont think is all that more easy than commercial like it is in some areas, because our residential contracts can be up to 100 pages long here in the DC area, and thats being done by the agents. When Im doing commercial, Im actually just passing off a lot of the paper work to the lawyers to do, so on the paperwork side commercial ends up being easier for me.

That being said...this goes I think for residential...the failure rate for the industry is 87%.  The top 5% of agents control about 90% of the market.  The median income is only about $50k.  Im in the top 1% of the profession, just squeaking into that top 1%.  The difference as well between what I make at the bottom of the 1% and the people at the top is enormous, and that comes from the pooling basically of most of the business pooling in the top.

Its a great profession, but most do fail out of the industry altogether.

@John Andrews

If you start in real estate with little to no network at all you should start in residential. It would be much easier for you to work with buyers and sellers especially first time home buyers where you can get away with newbie mistakes in the beginning.

When your in commercial your dealing with a different breed of clientele. Buying and selling commercial properties is more income driven and not emotional like residential. Then again in the early stages you will likely be dealing with more lease transactions then sales..

Also there is so many different asset classes in commercial that will likely narrow down your specialty.

@John Andrews Honestly, I think it also depends on your temperant as a person. 

I know, total u-turn on the conversation here, but think about it. 

With residential, you have to deal with a lot of emotion as your clients make the important purchase of their life. Do you like small talk and people, in general?

With commercial, it's a little bit different because the numbers are the numbers, and most clients are all over the place emotionally.

This emotional element is something to consider as well, know thyself. 

Hey BP members I hope you all are having an amazing holiday season.

Thanks for all of the insight you provided..I’ve made the decision to focus on the commercial side of the business. When it comes down to it..I’m not a residential agent.. I know I’ll get bored in the residential world.

Specifically, multifamily investment sales in Palm Beach County and Broward County..from 5-100 units will be the target market.

If I can help anyone answer any questions please reach out here or DM me.

I’ll follow up soon with the announcement on which brokerage I’m partnering with. Although I’ll be focused on multifamily, I can help with any niche whether it be a land deal, hospitality, industrial, etc etc.

Thank again for the input. Make 2020 a great year!