Should Commercial Agents Have a Separate License?

by Daniel on March 27, 2007 · Comments

in Commercial Real Estate, Industry Issues, News

I spent much of my day today at the Virginia Association of REALTORS headquarters attending a meeting of the VAR Commercial Alliance.  The Alliance is a committee comprised of commercial REALTORS from around the commonwealth who serve the function of addressing the unique needs of commercial REALTORS within the organization.

In case you are wondering what I am doing on the Alliance, I have been working towards gaining a knowledge and understanding of the practice of commercial real estate so that I may one day incorporate it into my personal practice.  My geographical area is one that is relatively under-served when it comes to commercial real estate, and it is something that has always interested me.  As a result of the commercial real estate education classes I have taken through CCIM,  VAR contacted me and asked if I would like to be part of the Alliance.  They thought that having a member of the Alliance who is just beginning a  commercial real estate career would be valuable.  I was flattered.  Obviously, I agreed.

Much of the meeting today centered around the possibility of creating a separate Virginia license for commercial practitioners.  Currently, there is no state in the country that has separate licenses for commercial and residential licensees.  The idea is that because commercial real estate and residential real estate require very different skill sets, the licensing laws should reflect this.  The other issue at play is Article 11 of the National Association of REALTORS Code of Ethics, which states that, “REALTORS shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence [. . .]“  Some interpret this to mean that a residential REALTOR who undertakes representing someone in a commercial real estate transaction (or vice-versa), may actually be violating the Code of Ethics.  The argument is that creating two licenses would help rectify this issue by helping to ensure that everyone has at least a basic level of training in the field in which they practice, either residential or commercial.

There are obviously a lot of issues with creating a separate license for commercial practitioners.  Without even getting to those issues, the first question that must be answered is, “is this really necessary?”  Personally, I can understand the need for ensuring that the people practicing real estate, either commercial or residential, should know what they are doing.  I still believe, however, that the impetus for change must come from the individual licensees, and not from the government.  There are plenty of great ways for agents to learn about the practice of commercial real estate.  I’m not convinced that government intervention is truly necessary.  That doesn’t mean I couldn’t be convinced of the argument, but as of right now, I think that the creation of a separate commercial real estate license falls under the same category as increasing any licensing standards.

But, hey, that’s just my opinion.  I want to know what you think, especially what other agents think.  Is it really necessary to have separate licenses for commercial and residential practitioners?  Let me know!

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  • That's really a good question... but do you think having a separate licenses will be the solution for this..??
  • This is a great question and one I have pondered before. Here in Austin, the commercial AND residential market are booming (bubble? what bubble?). That is great for REALTORS, but means that there are a lot of newbies on the scene. Sure, everyone starts out somewhere, but the phenomena here (and in any good market) is that of the agent who does EVERYTHING.

    For example, there is a small firm here that started last year in leasing, then grew to home sales and has now grown to commercial lots. I would say good for them, but I hear a lot of badmouthing about them because, let's face it, you can only wear so many hats and have ANY clue what you're talking about. Stretching yourself too thin leads to poor service (not to mention looking stupid for your limited knowledge).

    Naturally, these types will be weeded out as the market stabilizes, but the problem still exists. HOWEVER, your point about questioning government regulation is a good one. The bar for entrance into the commercial industry is set pretty high (as Jeff noted), but the bar for residential is set relatively low (per Jeff's "candy from a baby").

    I don't think the answer is separate licensing, it lies in setting the bar higher for entrance into ANY and ALL Real Estate licensing situations.
  • I am not sure if two licenses is the answer. In the appraisal industry it is teired so that you have to have a level that allows for commercial work over a dollar amount. You are more then welcome to contact me should you like more information on the subject. Good Post and Great Topic because it relates to change.
  • Daniel - I completed the CCIM courses in 1980 in a whirlwind nine month span. Their teachings have been crucial to my ability to not only understand most aspects of investment real estate, but to competently analyze it as well.

    I definitely don't want two licenses. Why? Because then I wouldn't be able to massacre home agents masquerading as 'income property' agents. It's like taking candy from a baby. :)

    Seriously though, if you continue with their courses to completion you won't be sorry. It's mostly hard and usable info, and very valuable in practice. I wouldn't be where I am today without it. Period.

    By the way, the fail rate for their first course, 101, is about half. No pressure though. :)
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