Working in real estate has many perks, but the biggest headaches can be having to wait on your commission for a sale well after you have done most of the work. Save your financial strain by considering a commission advance before the transaction closes. Below are some tips on choosing the right commission advance company:
1- Fees Are Clear :
There should only be one fee for your advance and no holdbacks, wire fees or processing fees. The person helping you through your commission advance application shouldn’t turn to you after you’ve signed on the dotted line to say, “But wait, there’s more.” And by more, they mean more stipulations, more hidden fees, and more money out of your pocket. If your transaction is delayed by more than 10 to 20 days then expect extension fees.
2- Simple Application:
Real estate commission advances services usually have an online application. The advance company you choose to work with should offer a quick application and a very concise and clear list of documents that can be uploaded. Express Cash Flow’s and eCommission’s commission advance agreement are 3-pages. Residential Advance’s agreement is 9 pages.
The documents for a commission advance are simple:
- Purchase and Sales Agreement
- Driver’s License
- Bank Account Information
- Broker and Escrow contact information
- Summary of Closed Transactions
3- No Credit Checks
Look for real estate commission advance companies that don’t require a credit check. Commission Advance companies provide you with funding based on a contract of sale and a pending commission, which you sell to them. Your Purchase and Sales Agreement is the collateral for the commission advance.
4 – Same-Day Approval
The approval and underwriting process should be quick with any real estate commission advance company. The longer process is usually gathering DocuSign signatures and getting confirmation from brokers and escrow companies.
5 – Pricing with the Right Commission Advance Company
Commission advance companies very by pricing based off the number of days to the closing, the type of transaction, production history and various underwriting criteria. Express Cash Flows commission advances are 30% better than most competitors.
6 – Fast Funding
Once the commission advance agreement is executed by the broker and agent then the commission advance company will forward the agreement to escrow officer or the settlement company to confirm that they will comply with the agreement and the irrevocable commission disbursement authorization.
7- Multiple Commission Advances
Every commission advance company is different but usually you can have up to 2 or 3 advances at one time; any more than that there might be issues. Some commission advance companies’ tranche or fund in 2 payments if the request is for a larger advance.
- Listing Advance – some commission advance companies offer Listing Advances, which is when there is no identified buyer but only a listing agreement with the seller. Choosing the right commission advance company is critical or listing advances, traditionally at least 2 or 3 listings are required to qualify for a Listing Advance.
- Commission Advance –A commission advance is when there is a buyer, escrow or settlement company and a set close date.
- Commercial Commission Advance –Apart from the details of the transaction, a commercial commission advance is no different than a commission advance on a residential property. The right commission advance company will review your documentation and if approved they will discuss pricing and terms. Once the agreement is executed, it is then sent to escrow or the settlement company for confirmation. After having received confirmation from the escrow company, the commission advance company will then fund.
As due diligence continues and closing approaches, it is the duty of the commercial real estate agent to keep the commission advance company informed of any changes to the transaction or delays. Once the transaction has closed, the escrow or settlement company then pays back the commercial commission advance amount (in addition to the fee) directly to the commission advance company, and the commercial real estate agent receives the balance.
Choosing the Right Commission Advance Company
- Express Cash Flow – Residential and commercial commission advances for agents and brokers. Up to $100,000 on transactions under contract. Express Cash Flow requires 5 active listings on the MLS to qualify for a listing advance. www.ExpressCashFlow.com
- eCommission – Residential commission advances only up to $15,000.
- Residential Advance – Residential commission advances only up to $25,000.
- Commission Express – This is a franchise model so in every metro area you will be dealing with a different owner and slightly different underwriting criteria.
- Real Commission – They advertise low rates but its extremely hard to qualify and the transaction must close quickly.
Choosing the right commission advance company that fits your needs and works with you as your transactions go through some difficult times is critical. There are some franchises that are local which may have different underwriting procedures but most of the nationwide commission advance companies like Express Cash Flow provide excellent service. Get your estimate at www.ExpressCashFlow.com.