Myth #1: Only failed agents who don’t have enough sales
need a commission advance?
Myth #2: Commission Advance is expensive.
As businesspeople, we all know for-profit companies live on service fee and commission advance is not an exception. There are two types of fees attached to the commission advance service when you use Express Cash Flow:
- Advance Fee: This is where you sell a portion of your commission for a fee in exchange of you getting part of your commission before closings. You can receive up to 75% of your net commission.
- Extension Fee: When a sale gets delayed or falls through, commission advance companies will charge an extension fee. Depending on the case, this can be minimal or can be an enormous amount that you must pay back. There are usually grace periods of 10-30 days.
Therefore, the final cost of capital for the commission advance will be: Advance Fee + an Extension Fee if applicable.
At Express Cash Flow, we calculate the total cost on a case-by-case basis to get you the most affordable solution. There is very limited replacement risk if the transaction falls through for top producers and new average agents get to have their commission to grow their business by spending more on marketing.
While you may think getting a commission advance is expensive and risky, think again. The most important matter is how you spend your advance money, which makes a commission advance an expensive or affordable solution:
- Use it for Marketing: Many top producers see opportunities to boost marketing effort to expedite the sales of large properties. This way, they can grow faster and get better return on investment (ROI). Without a commission advance, they cannot increase the marketing spend and sales simply slow down and stop. This create a feedback loop that will further slowdown the entire pipeline. Therefore, whenever you see opportunities, take a commission advance then give your business a boost especially at the beginning of the selling season. This is the most “affordable” commission advance when you factor in the ROI.
- Use it to pay for business expenses: everyone has to pay the bills and when they are due, you have to take care of them on time. But most realtors will have trouble getting a bank loan if they fall short in a given month. Traditional banks cannot and will not do that because of your income uncertainty.
This is where things get a bit tricky. You spend money to get money to pay your bill… It sounds a little silly, but you have to consider: what will happen if I’m late on my rent, my credit card, my payment to my assistant and all of my contractors…? You know the consequences, so we won’t list them here (they are scary, and we all want to avoid that, don’t we?). A commission advance guarantees that you get your money on time, every time, so you don’t run into trouble. Keep your business afloat and going forward. This is a fair trade off to use commission advance. Of the choices available, a commission advance is the best choice.
Myth #3: If a sale falls through, it’s over.
Express Cash Flow has become the leader in real estate commission advances with transactions completed on over $3 Billion of property. Therefore, we know a thing or two about deals falling through. We have sophisticated underwriting process that analyzes more than 200 factors leading to sales close. That’s why the majority of our advances are fully paid on schedule. And even if the sale falls, you can simply replace it with future transaction. You’re only charged a small extension fee for the outstanding advance.
Myth #4: I can just get commission advance through my broker.
Result: PLAUSIBLE but Not Recommended
Myth #5: Commission Advance is a loan
and will hurt my credit score.
Myth #6: If I take a commission advance,
the whole world will know that I’m in need of money.
Commission Advance is a great financing tool to bridge the gap and avoid the ups and downs in real estate industry. It takes money to make money, so use your commission advance wisely.