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Basics of Real Estate Commission Advances

Basics of Real Estate Commission Advances

April 16, 2020

Basics of Real Estate Commission Advances

real estate commission advance companies

Real Estate Commission Advance

A commission advance is a financing tool that real estate agents and brokers often use to regularize the cash flow.

Are you a real estate agent or a broker?Then you might know about this financing tool, but for those who don’t know much about it, we are here with the basics of commission advance for realtors. To understand more about it, let’s quickly get into the details:

What is commission advance for realtors?

You can call advance commission for realtors as a financial tool or a service. It enables any realtor or broker to receive advance over transactions related to real estate. The commission is before the date when he would receive it.

The real estate agents rely on factoring to reach a specific amount of advance. As and when they get real estate commission advance, they get immediate access to the working capital.

The working capital is locked in the earned but unpaid commissions if they don’t get an advance. Then they use these commission advances to speed up their cash flow so they could grow their brokerage business quickly to meet their obligations. These obligations may include miscellaneous expenses, tax payments, unexpected liabilities, and other business obligations.

How do the transactions with an advance commission for realtors take place?

The transactions happen to take place when the buyers and sellers agree on the terms, and then a purchase and sale agreement is signed. This step is followed by the processes which are to be completed before executing the closure of the deal. These processes include title search, property lien search, inspections, and so on.

After you are done with the processes, a closure date is set, and after that, the commission advances are provided to the realtors where they get immediate funding of commissions earned.

These fundings improve the cash flow and grow the brokerage business. After the commission advances are provided, the closing is executed, and then the remaining funds are dispersed. These funds include proceeds to the seller and commissions due to the real estate agents and commission advance companies.

What type of deals qualifies for advance commission for realtors?

Real estate agents can receive commission advances on different types of transactions; some of them are listed below:

  • Residential home sales
  • Resale of houses
  • Leases on houses
  • Sale of new houses
  • Sale of pre-construction land or plot sales
  • condominium sales (new and re-sales)
  • Sale of commercial property
  • Commercial leases
  • Sale of industrial property and their leases as well.

How much does a commission advance cost?

When we talk about the rates of commission advance for realtors, they are highly transparent and competitive. It could be as high as 20% to as low as 3%, and it entirely depends upon the parties involved in the agreement. Moreover, there are many businesses whose advance commission for realtors depends on the sales and different types of costs involved in the process.

What are the advantages of commission advance for realtors?

Here are some of the benefits of advance commission for realtors:

Improves Cash Flow

Being a real estate agent involves a lot of money, as you always need to put money to keep your business running in the market. If your cash flow is disturbed, you may end up getting stuck in several deals, and you may need to wait for more cash to come in to close the deals. With commission advances, you don’t need to wait anymore, and you can keep your business running smoothly.

Reduces Your Dependence on Debt

You know that as a realtor, you need to put in money constantly to run your business for which many take debts and other loans. For some, this is not a feasible option because if you keep on taking loans, you may end up accumulating tons of mortgages for your business. With commission advances, you can invest in whichever area you want without getting under the burden of debts.

Quick Approval

Commission advance for realtors is the best funding they can have as they can get immediate funds from the party which they can use as per their needs. But, when you switch to some other alternative funding then, you may need to get involved in tons of paperwork which consumes a lot of time. On the other hand, advance commission for realtors is quick and easy to get approved with lesser paperwork than any other source.

Now that you know the basics of commission advances for realtors, are you looking forward to getting your commission quickly now? Get commission advances fast with Just Commission Advance. We offer commission advances on pending sales as well. Are you looking for someone to help you out manage your cash flow then, get started with us!