This past summer, the U.S. Census Bureau reported that single-family housing sales were at a higher level than they’d been in nearly 10 years. That’s good news for those who depend on the real estate market to make a living. Strong markets don’t always mean you are able to avoid a cash crunch, though. In order to quell cash flow issues before they become a burden, you might consider a commission advance company.
Commission Advance Company Factors
A real estate commission advance company is designed for agents or brokers to access to funds due at the closing of a transaction. Because a real estate professional’s commissions are their receivables, they use them to pay expenses. These include payroll, advertising properties, and other marketing and promotional tasks. There are a variety of commission advance companies in California, so you should be looking for the best one.
Here are some qualities to look for in your search to find the best advance company.
Look for a company that identifies itself as a financial business, specifically working with real estate professionals. All transactions should be confidential, and the buyer or seller in the real estate transaction should have no knowledge of your advance.
Every real estate transaction is different, and the fee attached to your advance should reflect the individual transaction—not a one-fee-fits-all price. Look for a company that offers customized advance solutions that fit your business needs.
No Credit Check
Verification of the publicly available information about your real estate transaction should be the only check that is needed. A credit check is usually not part of the process.
The application and verification process shouldn’t take a week to complete. Most offer online applications. Once the application has been completed and the details of the property and the transaction have been reviewed, your advance should be ready for depositing. Some companies even offer same-day processing.
Because real estate professionals may have multiple deals in the works, look for a commission advance company that allows multiple advances.
Option for Early Payback
Every commission advance company should offer an option for early payback before the closing with no penalties or additional fees.
Reasonable Minimums and Maximums
Most advance commission companies require a minimum commission size before approving an advance and allow commission advances up to a specific amount.
Contingencies for Closings
Closings don’t always occur as planned, and the company should have a written extension policy. Ask about this policy before agreeing to an advance.
Check with other real estate agents or brokers about their experiences with advance commission companies, and avoid those that had questionable practices or poor customer service.
All California commission advance companies operate under the guidelines of the state’s Division of Corporations. You should ask as many questions as you need to feel comfortable.