If you’re considering a career in real estate, there are a wide range of niches you can choose to specialize in. Two of the most common are residential real estate and commercial real estate. Both niches can provide you with a lucrative and rewarding career that also gives you the flexibility for great work-life balance. Determining whether you should pursue a career as a residential or commercial REALTOR® will depend on your unique strengths and areas of interest. The following overview will help you understand the differences between these specializations so that you can make the right decision.
Before diving into this comparison, it’s important to explain the difference between a REALTOR® and a real estate agent. While many people use these terms interchangeably, they refer to different things. Both terms refer to licensed real estate professionals who help clients buy, sell and lease commercial or residential property. However, a REALTOR® is also a member of the National Association of REALTORS® (NAR), the largest trade association in the country.
The responsibilities of real estate agents and REALTORS® are virtually identical, as are the educational requirements. The only additional education required of REALTORS® is 2.5 hours of NAR Code of Ethics training every three years. The discussion below applies to both real estate agents and REALTORS® since their job responsibilities are essentially the same.
One of the primary differences between these specializations involves the property types and client bases handled by residential and commercial REALTORS®. Residential real estate agents work with individuals looking to buy or sell homes and focus on properties intended for personal use, such as:
Commercial real estate agents focus on properties used for business purposes, including:
Their clientele includes business owners, investors, companies and property developers.
Commercial real estate transactions, on the other hand, are usually more complex and involve longer timelines, more extensive due diligence, complex financial analysis, and larger monetary values. To be successful, commercial REALTORS® need more extensive expertise in:
Commercial and residential REALTORS® hold the same real estate license. You can obtain your license through the Division of Real Estate under the Colorado Department of Regulatory Agencies (DORA). In order to get your real estate license, you must complete all required educational coursework and pass the Colorado real estate exam.
The educational requirements are identical for both residential and commercial REALTORS® in Colorado. You must complete a minimum of 168 hours of coursework covering a wide range of subjects associated with the real estate industry. After completing your educational requirements and getting your license, you can choose to focus on a specific niche. This is the time when you’d determine whether you want to specialize in residential or commercial real estate.
Often, the kind of practice you establish will be determined by the brokerage you join. If you’re interested in being a commercial REALTOR®, you will need to join a brokerage that allows or specializes in commercial real estate, as many brokerages focus exclusively on residential real estate.
Due to the increased complexity of commercial real estate transactions, it’s common for individuals specializing in this niche to pursue additional educational opportunities that will round out their knowledge of:
In addition, it’s common for commercial REALTORS® to obtain specialized certifications such as:
Obtaining these certifications provides commercial REALTORS® with increased credibility and expertise in their field. In addition, it gives them access to specialized tools and resources, and it provides networking opportunities with other commercial real estate professionals.
Residential REALTORS® typically have more frequent transactions since residential properties tend to sell faster. This means you will typically receive a larger number of commission checks per year, providing you with more steady income. But commissions for residential real estate transactions are typically smaller than for commercial real estate transactions since residential property values are lower than commercial property values. You can earn a very good living as a residential REALTOR®, but it will be dependent on your ability to build a strong client base and close a significant number of deals each year.
Commercial REALTORS® typically only close a few deals a year since these transactions can take much longer to close – sometimes a year or more. The slow-moving nature of the commercial real estate industry means that you will most likely only receive a few commission checks a year. This can impact your month-to-month cash flow, but your annual earnings will still be strong. Since commercial real estate transactions involve properties with much higher values, each commission check is typically larger than with residential transactions. This is why the earning potential is so great with commercial real estate.
Some income considerations to keep in mind when deciding between these options include:
Ultimately, success and income potential in both niches will depend on your skills, network and dedication. Both residential and commercial real estate offer opportunities for high earnings, but the path to success may differ.
Whether you’re considering a career in residential or commercial real estate, Colorado Real Estate School can set you up for success. Our online real estate courses contain all the essential information you need to pass your real estate exam and build the foundation for a thriving business in either niche.
All our online real estate courses are created and taught by local, licensed real estate professionals who can help you understand the current trends impacting real estate agents in Colorado. You’ll also benefit from an online format that makes it easier to work through all course materials at your own pace, allowing you to create a study schedule that aligns with the other responsibilities in your life.
When you take our online real estate courses, you’ll have access to our exclusive VideoConnect Success Learning System™ containing the largest library of video content available. These video lessons are highly engaging and provide an authentic classroom experience in a remote setting.
At Colorado Real Estate School, we prioritize your success, and we’ve backed that commitment up with our TruSupport Pass Guarantee™ which provides you with all the support you need to pass your exam and get your real estate license. If you don’t pass your Colorado real estate exam on the first try, we’ll provide you with extended access to all course materials. You’ll also be paired with one of our instructors who will analyze your test results to help you develop a customized study plan that emphasizes the concepts you found most challenging. This approach will help set you up for success when you retake the exam.
Contact us today to learn more about our online real estate courses.
