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I Get The Residential To Commercial Question Again……… And I Go Off!

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I have been asked the question on and off several times over the past few years.

“So Duke I read your stuff online and I love it but I am curious.” “How do I make the transition from residential to commercial?”

“Is there a seminar I can take?” ” Is there an online course you would recommend?” ” Are there a few YouTube videos that you think might help?” “How about a few websites that will spell it out for me?”

Well first off I wish you good luck in your new career choice and I will try to help you in any way that I can. Thank you so much for thinking of me as a source that may be able to help you.

For a start there are not that many online”training” environments for #CRE. Residential is at least 5 years ahead of commercial in that regard. Now before you say “wow what an opportunity for a niche play.” Think about who some of the players are.
Let’s take a look at just some of the major players in #CRE…. I SAID SOME!
Take a look at the rosters in your market area. Impressive is it not?
By The Way.
Highlights. 76% male. Average age 57. 66% bachelors degrees or higher. Average 24 years in real estate with at least 15 years commercial.
Now ironically most of the major firms do not belong to NAR. I am just throwing out some numbers here but my guess it that the experience and degrees numbers get higher as do the number of males in those firms. The age….hell sometimes it seems like 100 would be a good average.
Stating the obvious.
No one and I mean no one took a two-day seminar class created a twitter account and took over the #CRE world. The boys just didn’t show up yesterday and throw up a couple of deals on the board. It is a very closed and competitive environment. Not trying to negative but just stating a reality.
 So you don’t think that this is your competition….bullshit not only are they the competition…they already own the clients that you think you can get!
A few raw thoughts…with the intent to help.
If you think you can just show up and dabble until you hit some big clients. Don’t even start.
If you come into your market and say that you do both resi and commercial…the commercial people will SLAUGHTER you…and enjoy it.   I was just at a SIOR Conference in Palm Springs. 400 hardcore brokers. They are some of the best in the business.Period. Biggest single deal of the year 563 million.
Of course you say that is not what you are going after..I understand but…most brokers bread and butter is 5- to 15 thousand square feet. That is everyday on the street commercial real estate.
They have their own set of rules.
They use their own contracts.
There is no real MLS system.
If it does exist most likely 30-50% of the properties are not in the system.
They pay you when the mood strikes them…and if they say otherwise…hold your breath.
Wait am I talking about brokers or building owners… uh….both!
Well so far I don’t feel like I am helping that much. Maybe my mind is too closed.
So you want to get online sit at your computer and at your leisure learn commercial real estate.
Kind of like how to put a headlight assembly ( Mom I am getting to it be patient) on a Volvo S80
Two minutes and Poof your done.
Ok enough with the I am a commercial God attitude.
So you want some actionable items…. here you go.
1. Commit to a defined market.
2. Study research and physically walk that market until you can recite the owners, potential clients and their lease/sale timing and terms in your sleep.
3. Find a mentor. Look at the demographic above. They are literally dying to find new talent. I was in a class…..you should have heard them whine for new talent.
4. Give up residential…forever.
5. You have kids to feed! Get up in the morning knowing they need food from a commercial deal you make.
6. Go and get recruited to a firm that fits you. They may be begging for talent. They don’t just take anybody. I have been in those rooms. A+ game or there is no game at all. It may take 5 interviews with the same firm before they decide.
7. Quote from a well-respected friend of mine ” If a residential person calls me about a deal they are essentially offending me and my firm.” We are the commercial real estate professionals.” ” Don’t ask for a referral we already have them or the building owner in our database”  “I can 100% guarantee that.”
Is this helping?
I know that you hear about the big money deals.
You see the suits.
You smell the power.
The shark invested waters are deep and cool.
Can you do it?
Will you do it?
No really…will you actually do it?
Look in the mirror.
Think you have what it takes. Yes?No?
Maybe your wife does!
Comments points of view and opinions are always appreciated.
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  • Allen Buchanan

    Duke,
    On the one hand, resi brokers saved my bacon three times recently by repping buyers on TOUGH listings…did a crappy job of repping their buyers, however as in ALL cases their buyers paid more than my seller would have accepted…good for my seller.

    On the other hand, what’s with the contracts, disclosure and reams of paper? If you rep a buyer on a commercial deal, DON’T use resi forms! Our sellers WON’T sign them!

  • Thanks for the advice duke

  • Duke,

    Your comments may seem harsh to many but this is harsh business and no reason to sugarcoat reality. Action item #3 is the key! There are plenty of successful brokers who have done it differently but I can assure you the best way to a “successful career” is by teaming up with a great mentor

    IF you are able to find that mentor do not be greedy when it comes to commission structure. DO NOT expect to make a fortune in the first few years. If you are truly looking at #CRE as a career then treat it that way and get the best experience, education and training regardless of cost (CCIM!)

    Have you heard of the “10,000 hour rule?” – no where is it more applicable than #CRE. If you have not, read Malcolm’s Gladwell’s Outliers

    If you decide to take the jump bring with you lots of persistence; know when to use patience; celebrate the small victories throughout the transaction; learn to manage the highs and lows especially the HIGHS because the falls can be very difficult.

    • Scott,
      Preach it brother!

    • Rod Gee

      I agree #3 is key. Especially if you are starting out in a smaller firm without access to field training/methodologies.

  • Randy Krise

    I am a commercial broker. I am a CCIM. If you wish to practice commercial real estate do the things stated above but also get involved with CCIM. You can take an intro course which will immediately open your eyes. An untrained commercial agent makes more than the average residential agent with very little weekend work. Go to http://www.ccim.com and get started. Randy krise, CCIM

  • I am a commercial mortgage broker. The same is true for residential mortgage brokers. They see the size of the potential commission and think that they can do it. I mean, it can’t be that much different than what they are doing now! Wrong!!! I liked your comments. A lot of them apply to the residential mortgage broker too.

  • Mike in TN

    “If you come into your market and say that you do both resi and commercial…the commercial people will SLAUGHTER you…and enjoy it.” Thanks, I thought I was getting some weird looks. LOL

  • JD Crouse

    Love the candor! I get similar questions from people wanting to invest in CRE backed notes – that’s a whole ‘nother animal…

  • Joyce Gutzeit

    This is so on point…it’s a tough arena. As a female Broker with 12 years in commercial real estate and lucky enough to have trained at CBRE, don’t expect an engraved invitation into this industry.

  • Christine

    Your comments are partially true, especially in bigger urban markets, but are not as applicable in smaller to mid size markets. In my MSA there are several all-commercial firms, but also many residential agents doing commercial as well. When I hear of someone who wants to switch to commercial from residential, I encourage them to take some intro CCIM courses, which ARE available both online as well as in classroom format. I also try to be the broker that is helpful to the residential agent who needs some advice, and by doing so I get their referrals for larger deals they don’t feel they can handle. I don’t feel that its as hard as you say to break into the business. If one truly has the desire it is not such an insurmountable goal.

  • I’m a 50 year old with about 15 years of residential experience and now transitioning to commercial. To this day I don’t know why I did not look into commercial real estate earlier. I’ve sold commercial real estate before (multi-family,office buildings and business entities), needless to say they closed by the grace of God. I really had no formal training and it would not have been possible without the help of other residential Realtor’s that just happen to have more experience than I did. All my sporadic commercial deals had been +1m deals.

    Your points are right on! And knowing what I know now, I would highly encourage anyone starting out to take the commercial route, but only if there is a real desire to succeed and work hard. The money is good, but not for the faint of heart.

    The commonalities that I’ve noticed in commercial Realtor’s are:

    – Professional business demeanor

    – Higher education or aptitude- Higher than a High School Diploma or more than just a few seminars under their belt. Math skills are essential.

    – Hold a brokers license- Not necessary but it seems to be the minimum standard.

    So I’m now concentrated more on commercial and will soon cut the umbilical cord from residential, but I thought I would share my recent experience as it relates to the subject.

    I just got a new 34K sqft warehouse listing for lease (Miami, Fl Industrial is my specialty) and you should of seen the feeding frenzy at the board of Realtor’s commercial have’s and want’s meeting.

    The moderator was a CBRE Industrial so called expert, and the rest are almost all 100% commercial Realtor’s. They could all tell I was a new face and fresh blood. Soon after my introduction and product presentation, I got peppered with questions. After about the third question I felt like telling them don’t ask unless you have a buyer or tenant. But I continued and when it ended I felt I was in a victorious dog fight. They were expecting me to stumble or to not have the answers, but I proved all of them wrong. The silence after the questioning was great.

    Disclosure- I had done my homework prior to the meeting. The experts had nothing on me. It helped that I had taken the course- ACP – Accredited Commercial Practitioner Certification. This is a very basic course, but great for someone just starting out, and have taken the intro. CCIM course, and now pursuing the CCIM designation. I’m also constantly learning on my own. Great books are out on the subject. I should point out, books and classes are great, but nothing replaces face to face interaction. It is paramount in commercial real estate.

    I believe having a mentor is essential, but be cautious and selective, lot’s just want to take advantage of you to improve their own bottom line. Make sure your selection is based on the persons character not perception.