- Commission advance is getting the commission before closing
- Commission advance is not a loan
- It is commonly used to bridge the gap between closings
- The price of commission advance varies wildly depending on how companies’ policy
1. Commission Advance definition:
By definition, a commission advance is a financial service whereby you sell a portion of a pending commission for a fee. In exchange, funds are advanced to you before closing. It’s not a loan. It’s simply access to the commission you’ve earned without the wait! Get your commission whenever you want.
2. The Advance Pricing:
Each company has different policy, but they all require the same thing: The first step in the process is getting a property under contract. If you’ve already done that, congratulation, you’ve satisfied the pre-requisite for a commission advance. Now it’s the time to consider the pricing.
The one-size-fits-all model:
Each company has different policy. Many have opted for a simple fixed pricing structure to avoid headaches. The telltale sign is a pricing slider on their website. This has both pros and cons. At first glance, while it seems to provide an easy estimate of how much a commission advance will cost, this one-size-fits-all pricing model leaves no room for negotiation. In fact, top producers can easily enjoy a much lower rates if their productions history is taken into the account. What if a realtor is just having a rough quarter and cannot fit in the pricing model? He/she will be denied immediately.
The Custom Pricing Model:
Every transaction is different, so why have a one-size-fits-all? Custom pricing model use a risk-based pricing plan to review each commission advance request. That means the production history, details of the transaction, and closing dates, as well as other verifications are taken into consideration to create a tailored solution for that one advance. The question is: why do a lot of work just for a simple advance? It’s simple: once you look deeper into the case, the underwriter can see the agent as a real estate professional, not just a number in a spreadsheet. By adding the human factor to the mix, this model can approve more cases and also lower the rates significantly for top producers. It’s simple, the lower the risk, the better the rates.
Express Cash Flow is one fine example of custom pricing model. Once an application is submitted, ECF proprietary AI Modeling analyzes over 200 attributes to create a custom risk profile for your unique situation. Then, an underwriter will thoroughly assess the case to create a custom pricing model tailored to your needs. Some of the primary attributes to look at are:
- Your production history
- Details of the transaction
- Expected closing date
- Verification & review of all publicly available information
The result is up to 30% reduction in advance fee and a faster processing time since everything is automate in the beginning and the underwriter only need to review the information at the end.
3. Getting the money, speed matter:
If you are approved, you’ll be presented with an offer of an advance on your commission. Once accepted and approved by your broker (or by you, if you are your own broker), you will be funded anywhere from several days to just a few hours. A good commission advance will be able to fund you the same day. You should expect simple paper work, no credit checks, and most importantly, no massive stack of loan documents to sign. At Express Cash Flow, the entire process from Application to Funding can take place within 4 hours.
4. Paying back the advance:
Technically, when you get funded, everything is taken care for you. The advance is automatically paid back when the escrow closes. The amount is equal to the advance plus the fee. That means you never pay anything out of pocket. You get the much-needed liquidity to grow your business and thrive. Read the commission advance agreement carefully to detect any hidden fees.
5. What if escrow falls?
It is nothing to worry about. While doing market research for commission advance, we found out most companies are smart enough to give the advance to those who are likely to close the deal. After all, advance companies want to make money and avoid any foreseeable risk. At Express Cash Flow, after more than $3 billion property worth of advance, we have a 99.5% closing rate of all advances. Our AI underwriting model optimize the process and reduces the risk of deals falling through. Even if the deal falls, you can simply switch your advance to another escrow for a minimal fee (no hefty penalties or immediate payback requirements).
As an overview of Express Cash Flow Commission Advance, here are some main takeaways:
- Get to 75% of your commission the same day
- No credit checks
- No out of pocket charge
- No hold-backs, no hidden fee
We know you don’t all need a commission advance, but we could all use a little extra cash every now and then, and we hope you think of Express Cash Flow whenever the need arises.