There are many factors to consider when you are thinking about taking an commercial commission advance.
In a business that is flush with cost benefit decisions, this is no different. Commercial transactions are typically quite complicated and can experience delays, while fixed expenses do not usually wait for transactions to close. What’s more, it can be immensely frustrating when the commission amount is so large to not be able to make small payments that would ordinarily create no issue.
Typically when a closing is delayed, the commercial real estate agent will know, or at least have a feeling, ahead of time. By targeting a revised closing date as opposed to the original closing date, the agent can utilize a commission advance to bridge them until the actual closing. While there is a fee associated with this, it is possible to mitigate these costs with strong transactional history, as well as details of the transaction that are in your favor, such as a large non-refundable earnest deposit. Your production as a commercial real estate agent and the details of your transaction aren’t the only factors that affect pricing, though. We’ll also want to review the purchase contract itself, the viability of the purchaser, and the closing date itself as compared to how much due diligence has been done and still needs to be done.
Apart from the details of the transaction, though, a commercial commission advance is no different than a commission advance on a residential property. Once our review of your documentation is complete, the commercial real estate agent will receive their commission advance agreement via Docusign, and once it is executed, it is then sent to escrow for confirmation. After having received confirmation from the escrow company, we will then fund your commission advance.
As due diligence continues and closing approaches, it is the duty of the commercial real estate agent to keep us informed of any changes to the nature of the transaction or delays, as well as advise prior to the closing date. Once the transaction has closed, the escrow company then pays back the commercial commission advance amount (in addition to the fee) directly to us, and the commercial real estate agent receives the balance.
Express Cash Flow provides commission advances for real estate agents and brokers. Check us out at Commercial Advances or call us at 844-818-2274.