The Commission Advance Conundrum
Like many businesses, a typical real estate brokerage may have a line of credit available when a cash crunch occurs. The brokerage can meet its recurring administrative payroll, pay office expense, and maintain regular budgets for recruiting and advertising. When transactions are slow, similar to a commission advance, the line of credit kicks in to offset expenses.
This arrangement is necessary for the brokerage business and businesses of all kinds to be successful. It is not hard to understand why it is also necessary for realtors as well. Realtors also have teams that require regular payment, regardless of the agent’s production. Most have listings that require advertisement and promotion. Since most agents are running their own business, they are also responsible for all of their own expenses, and that can get expensive.
The problem is, realtors who sell 24 houses a year do not typically sell two houses each month. Rather, there is a spike in production in April-September, and a sprinkling of transactions in all other months. During the slow months, agents have little alternative but to ask for an advance. If they go to their broker for this, tension can mount.
Realtors stuck in this situation often don’t know what way to turn, but just like in any business, there is a solution. A commission advance company like Express Cash Flow can provide an external solution to this problem. When a realtor goes to a third party company for a commission advance, what can be an informal arrangement becomes formalized. An amount is given as an advance, for a specific period of time, and there is a fee for doing so.
There is also a clearly laid out extension fee schedule, leaving no room for ambiguity. The best reason for using a third party commission advance company is that it removes the tension between agent and broker if a deal falls apart.
Yes! Get A Commission Advance!
More realtors than one would think utilize commission advance services. Some of the top producers whom are very well known and have massive marketing budgets use commission advances. If you have aspirations of success, a commission advance should not stop you.