5 Commission Advance Guidelines for Real Estate Agents

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Real estate professionals often depend on their commission payouts to support themselves and pay their bills, so when they sell a house, it can be tough having to wait for that payment to come through.

Real estate commission advances allow these professionals to be paid immediately for a commission payout that might have taken much longer. It allows real estate professionals to be in control of their cash flow in an industry where such control is often out of their hands.

1. Benefits

For real estate professionals working to grow their business, it can be difficult to do so when a firm deal has a long closing period. Real estate commission advances allow real estate agents to receive their commission payout as soon as the deal is firm, which allows them to regulate their income a little better.

Real estate commission advances are also a great choice to make versus other loan or advance services because the rate charged for borrowing is significantly lower. It facilitates the payment of bills, debts, and allows real estate professionals to expand their business. In addition, approval rates for commission advances are extremely quick, unlike other forms of advances or borrowing.

2. How it works

Once a real estate professional’s home sale is firm, they are eligible for a commission advance. In order to get approved for the advance, the professional would have to complete an application and send it through to the commission advance company, along with documents that prove the deal is, in fact, firm.

Within hours, the company will send back some documents for signature. Once those have been signed, the real estate professional will receive the advance in their account by the next business day. Once their commission comes in, they can pay back their advance as per the agreement, however they could pay it back sooner if they were able to, without penalty.

3. Cost

Real estate commission advances generally cost a small percentage of the amount being requested, and the company takes that off the top of the loan. For instance, if a real estate professional is requesting $5,000 of their commission, and the rate is 5%, the borrower would receive an amount of $4,750 in their account.

Loan percentages can vary greatly, so borrowers should shop around for the best price. Some companies will also match lowest rates, so if a borrower likes a company, but finds a better rate, they may be able to borrow at that rate by proving that lower rates are available elsewhere.

4. Timing

Commission advances are all about timing. Because a firm sale on a home can take up to four months, or even longer, until it is completed and processed, time is not on the side of real estate professionals. But with commission advance loans, they can receive their money within a matter of one or two business days.

The advance can be for a period of up to and more than 120 days, although rates get higher the longer the advance.

5. Additional fees

Advance commission companies may also have additional fees attached to the initial cost of the loan. There are companies that offer a “what you see is what you get” experience, while others charge admin fees, wire fees to transfer the money into the borrowers bank account, application fees to even submit an application, or holdbacks.

It’s another feature to watch out for when searching for real estate commission advance services. If borrowers are going to be subjected to fees for their commission advance, they should at least be aware of what those fees are, and how much they are going to cost.

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