Commercial vs. Residential Real Estate and The Key Differences Between The Two
A career in real estate is a very rewarding industry to become a part of primarily because of the
connections you build, as well as the flexibility and benefits. From helping people find their dream homes to locations to start their own company, a career in real estate sales will be full of new beginnings.
However, If you are considering becoming a real estate agent, you will need to decide at some point
which sector you would like to sell in. There are two main categories of real estate: Commercial and
Residential, and the difference between the two comes down to the type of property the agent specializes in.
Commercial real estate agents specialize in the buying and selling of Business properties. Residential
real estate agents specialize in the buying and selling of residential properties. Both types of agents are
required to get the same pre-licensing education, but once you decide to specialize, you will be required
to take on additional training in order to effectively deal in either commercial or residential real estate.
Key Differences
When it comes to choosing between a career in commercial real estate or a career in residential real
estate, there are 7 main differences to consider. These include:
- Salary Range: Commercial real estate agents tend to make considerably more in terms of annual
income compared to residential agents. This is because the property values and commissions
tend to be higher and because the residential real estate market is more sensitive to fluctuations. - Hours: Commercial agents tend to work 9-5 or 40 hours per week because of the type of
clientele represented. Residential agents tend to do a lot more after-hours work. - Training: Typically training for commercial vs residential agents looks very different. Commercial
agents tend to work for commercial brokerages and require more specialized training. This role is
math and analysis intensive and will likely require deep understanding of business concepts, like
Net Operating Income (NOI), profit and loss, tax strategy, Return on Investment (ROI), Cap Rate,
and Internal Rate of Return. - Volume: There are far more residential properties than there are commercial properties and
because of this, there are fewer real estate transactions on the commercial side per year. - Transaction Length: The transaction on a residential property is relatively simple. A typical
transaction will take 30-45 days to close. Commercial transactions can last up to a year, and are
rarely done in less than 60 days. - Commissions: Because commercial properties sell for much more than an average home, in
general the commissions are much higher on a commercial sale. - Hiring Requirements: Another key difference to note when choosing a specialty, is that
commercial brokerages tend to have stricter hiring requirements, making it harder to get into. The
typical residential office culture is usually more laid back in comparison to the corporate
commercial sector.
Although the differences in income, hours, and training usually skew agents one way or another, you can
always decide to try one specialty out for size and change your mind later on. We recommend writing
down your career goals, and choosing the area you are most passionate about, and one that will lead to a more fulfilling and sustainable career in real estate.
Want to get your Real Estate career started on the right foot?
At Sea Coast Academy, we offer affordable dedicated online and in-person courses designed to prepare
you for your new career in real estate in North Carolina and South Carolina. Contact us today to get
started!