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Are commission advance fees tax deductible?

Are commission fees tax deductible? The answer is yes if your commission advance proceeds are used for your business expenses, the costs are tax deductible.  You may opt to use Express Cash Flow on every transaction or just when there are more bills than commission.

Commission Advance Fee Tax Deductibility

Because commission advances are used for business purposes, they are considered a tax-deductible business expense. The commission advance fees are similar to interest costs on a loan. Agents and brokers should include an itemized summary with their tax return detailing all advance fees paid to any commission advance service provider they used in the year.

As an independent contractor, owner of an LLC or Corporation, the fees you pay to secure a commission advance are a fully deductible business expense. It’s a true cost of doing business. For sole proprietors, this means recording the fees as a business expense on Schedule C of your tax return.

Business Expenses

Further benefits when receiving a commission advance is the fact that business expenses paid for with your advance proceeds are also tax deductible. For example, say you use a portion of your commission advance to pay for office rent. That rent payment is a tax-deductible expense, even though you used your commission advance to make the payment. The same holds true for any other legitimate business expense, such as purchasing marketing materials, car related expenses and meals.

Personal versus Business

As with any sole proprietorship, it’s important to keep your business expenses separate from your personal expenses for tax purposes. For example, client lunches can be tax deductible whereas paying for a kid birthday present is not.

See www.irs.gov/publications/p535 with the title Publication 535, Business Expenses.

Tax issues are complex and could change over time. As such, it’s advisable to always consult a tax professional prior to filing your taxes.

What are the advantages of using Express Cash Flow for Commission Advances:

Since 2015, Express Cash Flow has helped real estate agents and brokers in California balance their cash flow between closings.  Express Cash Flow can pay you now on a pending transaction to help you grow your business with a commission advance.

  • Low rates
  • Experienced and trusted partner
  • Advance up to 75% of your net commissions
  • No credit checks
  • Real-time processing
  • Personalized Experience
  • Multiple advances at one time

Get to the Application Page to receive a commission advance on unearned sales commission today. Express Cash Flow offers Commission Advances for real estate agents and brokers nationwide.

 

What Is A Commission Advance?

Key Takeaways:

  • Commission advance is getting the commission before closing
  • Commission advance is not a loan
  • It is commonly used to bridge the gap between closings
  • The price of commission advance varies wildly depending on how companies’ policy

1. Commission Advance definition:

By definition, a commission advance is a financial service whereby you sell a portion of a pending commission for a fee. In exchange, funds are advanced to you before closing. It’s not a loan. It’s simply access to the commission you’ve earned without the wait! Get your commission whenever you want.

2. Win-Win Pricing:

The fine print may vary, but the essence of each is the same. The first step is getting a property under contracts. Once you’ve done that, congrats, you are now potentially eligible for an advance. So let’s consider how the pricing works.

The one-size-fits-all model: 

Each company has different policy. Many have opted for a simple fixed pricing structure to avoid headaches. The telltale sign is a pricing slider on their website. This has both pros and cons. At first glance, while it seems to provide an easy estimate of how much a commission advance will cost, this one-size-fits-all pricing model leaves no room for negotiation. In fact, top producers can easily enjoy a much lower rates if their productions history is taken into the account. What if a realtor is just having a rough quarter and cannot fit in the pricing model? He/she will be denied immediately.

The Custom Pricing Model: 

Every transaction is different, so why have a one-size-fits-all? Custom pricing model use a risk-based pricing plan to review each commission advance request. That means the production history, details of the transaction, and closing dates, as well as other verifications are taken into consideration to create a tailored solution for that one advance. The question is: why do a lot of work just for a simple advance? It’s simple: once you look deeper into the case, the underwriter can see the agent as a real estate professional, not just a number in a spreadsheet. By adding the human factor to the mix, this model can approve more cases and also lower the rates significantly for top producers. It’s simple, the lower the risk, the better the rates.

Express Cash Flow is one fine example of custom pricing model. Once an application is submitted, ECF proprietary AI Modeling analyzes over 200 attributes to create a custom risk profile for your unique situation. Then, an underwriter will thoroughly assess the case to create a custom pricing model tailored to your needs. Some of the primary attributes to look at are:

  • Your production history
  • Details of the transaction
  • Expected closing date
  • Verification & review of all publicly available information

The result is up to 30% reduction in advance fee and a faster processing time since everything is automate in the beginning and the underwriter only need to review the information at the end.

 

3. Get your money faster!

If you are approved, you’ll be presented with an offer of an advance on your commission. You will receive the commission advance agreement via DocuSign that you and your broker will sign (or by you, if you are your own broker). You will be funded within hours via wire and not ACH. A good commission advance company will be able to fund you the same day. You should expect simple paper work, no credit checks, and most importantly, no massive stack of loan documents to sign. At Express Cash Flow, the entire process from Application to Funding can take place within 4 hours. There are no partial holdbacks like some other companies.

 

4. Paying back the advance:

Technically, when you get funded, everything is taken care for you. The advance is automatically paid back when the escrow or settlement company closes. The amount is equal to the advance plus the fee. That means you never pay anything out of pocket. You get the much-needed liquidity to grow your business and thrive.

 

5. What if escrow falls out?

It is nothing to worry about. While doing market research for commission advance, we found out most companies are smart enough to give the advance to those who are likely to close the deal. After all, advance companies want to make money and avoid any foreseeable risk. At Express Cash Flow, after more than $3 billion property worth of advance, we have a 99.5% closing rate of all advances. Our AI underwriting model optimize the process and reduces the risk of deals falling through. Even if the deal falls, you can simply switch your advance to another escrow for a minimal fee (no hefty penalties or immediate payback requirements).

6. How much of my commission can I advance?

You can advance up to 75% of your *net* commission. Your net commission is determined by calculating the total gross commission, and then removing the portion due your broker, plus any office, TC, franchise or referral fees, i.e. the money that would be going into your pocket. So if you have a $500K transaction with a 2.5% commission and are on an 80/20 split, your gross commission would be $500K*2.5% or $12,500. Your net commission would be $12,500*80% or $10,000, and we would be able to advance 75% of that ($7,500). You can take less than this if you’d like, but $7,500 would be the maximum advance amount

 

 7. Is there a minimum advance amount and a minimum fee?

Yes. Statutory guidelines dictate that the minimum advance amount is $2,500, so you’ll need to be earning a net commission of at least $3,000 in order to qualify for an advance. The minimum fee, which usually applies on advances of up to $5,000 for less than 30 days, is $400. Please note that this for every outgoing wire, so if you want $5,000 for 25 days or $2,500 for 2 days, the fee will still be $400. Proper planning can help you get the most efficiency out of our fee structure.

 

Summary of Benefits of Using Express Cash Flow:

  • Get to 75% of your commission on the same day
  • No credit checks
  • No out of pocket charge
  • No hold-backs, no hidden fee
  • Agent friendly pricing
  • Personalized service

We know you don’t all need a commission advance, but we could all use a little extra cash every now and then, and we hope you think of Express Cash Flow whenever the need arises.

Apply for commission advance today.

 

Zillow logo

Top Zillow Profile Optimizing Tricks

 

A Zillow profile is the cornerstone for lead generation which helps convert prospects to contracts.  Placing your profile in the right location is key…marketing costs differ by zip code.  While 75% of a real estate agent’s business comes referrals and word of mouth, you still need a solid Zillow profile.

1.      Start with a Professional Photo that Matches all your Other On-Line Profiles

Start with the photo. Use a high-quality head shot. Avoid logos, yard signs and team pictures. A clear, individual headshot seems to work best.

2.      Introduction and About Us

Add your experience, specialties and skills.  This should include your geographic area of focus, and any particular specialty you have, like short sales, REOs, probate or buyer representation.  Also include your team and their profiles.

3.      Add Your Listings and Past Sales

This is usually done automatically but you can manually add your listings if you have recently switched to a different MLS.  You’ll want to highlight all of your best transactions, even if they didn’t occur on the MLS.  

4.      Professional Information

Have a complete and updated profile of your office address, cell phone, brokerage name, social media websites and our real estate license information.   Add a Facebook, LinkedIn, Twitter, Website and for the Blog us Instagram.  Make sure the links work after you have completed your profile.

5.      Update your other social media profiles for consistency

Have the same profile picture, brokerage and links that work.

6.      Include an intro video

Prospective buyers and sellers want to get to know you in a 30-60 second video.  Who are you and what are you going go to do for them.  Why are you better than other agents?  Also market this video on Facebook, LinkedIn and Instagram.

7.      Ratings and Reviews – Get 5 Stars

This is huge!  You’ll want to ask past clients to review your skills for Local Knowledge, Process Expertise, Responsiveness, and Negation Skills along with adding some commentary.  Respond to every review — positive, negative or neutral. You’ll look professional and focused on customer service (stay positive!) fora complete Zillow Profile.

8.      Add other Members of your team to your profile.

If you have a team add their full profile to yours, and make sure to add the properties they sell to your page to boost your portfolio even further.

9.      Become a Zillow Premier Agent

The Zillow Premier Agent program is designed with the simple purpose of bringing agents more buyers, more sellers, and more business. Each service tier is loaded with innovative and powerful features aimed to generate more traffic to your brand and your listings — helping you sell homes faster.  To help finance your marketing check out www.ExpressCashFlow.com.

10. Other Real Estate Marketing Ideas

https://www.zillow.com/agent-resources/blog/100-real-estate-marketing-ideas/

Conclusion

Build a complete Zillow profile and be sure to revisit it every few months (set a quarterly reminder on your calendar, or you will forget!) and update as necessary.  When you get a lead be very responsive…within 5-10 minutes otherwise the prospect might move on.

 

This post is brought to you by Express Cash Flow – Helping you grow your real estate business by providing you with cash today.

Express Cash Flow, Commission Advance

 

 

#1 Best Tool For Real Estate Agents

Best Effective tool for Real Estate Agent Lead Targeting

Benutech, a lead generation company based in Costa Mesa, CA has developed the #1 best tool for real estate agents to grow their business. Benutech hones in on life events that cause people to sell their homes like: Divorces, Notice of Defaults, Probates, Tax Defaults, FSBO’s, Estate Sales, Empty Nesters, Bankruptcy, Affidavit of Death etc.  With Benutech’s ReboMatic product, you are 5 times more likely at acquiring listings than with typical farming.  ReboMatic is the best tool for Real Estate Agents.

In order to succeed in today’s highly competitive real estate market, you need to stand out and you the best tools out there. You still need to be aggressive with marketing, but you need to be smart about how you are marketing as well. One way to make your marketing more efficient is to target only the homes that are most likely to sell and not waste time on the others. Sound too good to be true? It isn’t!

The automation of acquiring listings is a good enough reason to use their products on its own.  However, the price makes it a no-brainer.  Benutech has a variety of ReboMatic products that range from $600-1,000 per month. However, with ReboMatic, the agent will automate their marketing campaign, generating far more business.

Superior Product

While any title rep can pull a farm, there is something to be said for using the automation of the ReboMatic platform instead. While there are other data aggregators that attempt to predict sales, no other company has the combination of data, tools, and marketing efficiency than ReboMatic. What’s more, if you don’t want to come out of pocket to pay for their services, you are able to finance them through current and future transactions.

Flexible Financing- ReboExpress

Unlike other subscriptions that must be paid monthly or quarterly, ReboGateway understands the cyclical nature of the real estate business. You can finance ReboGateway through ReboExpress, a new financing option offered by Express Cash Flow. This allows you to manage your cash flow and budgeting much more effectively, and is one of the many benefits of ReboGateway.

Express Cash Flow, Commission Advances

Should Realtors Get a Commission Advance?

Express Cash Flow, Commission AdvancesThe 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.

A Solution!

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.

Attractive blonde young woman at the wheel in her new car

Realtor Tips – Buy vs Lease Vehicles

Realtor Tips - Buy vs Lease Vehicles
Realtor Tips – Buy vs Lease VehB

Realtor: Buy vs Lease

A typical realtor makes well informed decisions when it comes to the vehicle they are going to drive.

In today’s economy, if car dealerships had it their way, everyone would be leasing their vehicles.

For starters, the shorter term life cycles of leases guarantee more transactions will happen, keeping dealer volume high.  When a customer returns a vehicle on lease to the dealership, multiple transactions happen.  In addition, customers enjoy the perks of a short term lease, such as a full manufacturer warranty, and customer loyalty is always the goal.  This is the dealer’s best case scenario.

Do Your Homework

Any realtor looking for a new ride will want to map out goals ahead of time.  Having a plan of what you want will help avoid the pitfalls of an unethical salesperson.  If you are going to consider a lease, keep in mind that realtors drive more than almost any other profession.  In fact,  National Association of Realtors (NAR) estimates the average realtor driving in excess of 30,000 miles annually for business alone.

Dealerships often offer leasing as an attractive option due to a lower monthly payment, but this can be misleading. The monthly payments may be lower and tempting, but so is the annual mileage allotment.  Exceeding this mileage allotment will result in extra payments, and possibly even a higher payment than the purchase option.

Let’s see which real estate agents should NOT lease:

Any agent who drives more than 17,000 miles per year. NAR estimates that its own agents average about 30,300 miles annually for business-related driving. If you do that much driving from open houses to showings, or if your lease is not set up correctly (cannot afford the payments of high mileage lease), don’t get talked into leasing a car. Since leasing companies charge between 15 – 30 cents per mile you drive over their standard limit of 10,000 miles annually, a 7,000 mile overage could end up costing as much as $2,100 at the end of the lease.

The Decision

If you are not into changing cars every three years, and would like to buy one and drive it until you are ready for a change.

If pre-owned is an option. You can save several thousands of dollars on a one-year-old, low mileage pre-owned vehicle.

It’s practically impossible for buyers—who on average only buy three to five cars in a lifetime—to keep track of it all and be informed enough so no one takes advantage of them. There are many loopholes and facts to be aware of and so make sure you do your homework before going into the dealer.

About Us:

Express Cash Flow provides commission advances for real estate agents and brokers.  Check us out at www.ExpressCashFlow.com or call us at 844-818-2274.

Top Real Estate Agent IRS Audit Triggers

Real Estate Agent IRS Audit Triggers

As the calendar year ends, every real estate agent will look back at how the year went financially.   Your income (or profit) is almost always in an inverse relationship with your tax obligations.  As a real estate agent, you will want to take as many steps as possible to avoid an audit.  With that in mind, here are the top audit triggers, and what you can do to avoid them.

Income Audit Triggers

  1. Income Numbers Don’t Match. Make sure your 1099’s match up to what you report to the IRS.  This is the fastest way to get a letter from the IRS because the IRS will automatically detect a discrepancy.
  2. You made a lot of money this past year. This one is simple, and it is good.  You want to make a lot of money as a real estate agent, that’s probably why you got in the business.  However, increasing your income also increases the amount of your income the IRS could stand to gain by auditing you.  If you are making a lot of money during the year, make sure you can prove everything that you are taking as a deduction.
  3. You made a lot less money this past year. This is not as good.  If you made a lot less money, an audit could be even more devastating.  If you are legitimately reporting all income, you shouldn’t have anything to worry about, but if there’s a chance you might not have reported everything (even by accident), this won’t look good in an audit.

Deduction/Employment Audit Triggers

  1.  As A Real Estate Agent, You’re Self Employed. If you are a real estate agent, this likely applies to you.  Even if you’ve set up your business as a corporation or an LLC , you will still fall into a higher risk category than someone earning a paycheck from a large company.  Be extra cautious about the deductions you take, an make tax liability payments promptly.
  2.  You deduct your home office and/or vehicle. You should!  But as a real estate agent, you have to do this one right.  You should get clear with your CPA on exactly how much is allowable for home office and vehicle deductions, as going over these thresholds can be a red flag that results in an audit, regardless of how much income you make.  Be very careful to follow these guidelines.
  3.  Meal/Entertainment Deductions. Yes, these deductions are allowable, but under strict guidelines.  Are you spending amounts that are “excessive” or “lavish”?  Are you spending amounts that are too large in proportion to your gross income?  All of these things can be red flags that trigger an audit, and you will find yourself in a difficult situation trying to justify these expenses.  Meals and entertainment costs are deductible up to 50 percent if they are ordinary and necessary to your business.
  4.  You were particularly generous this year! The IRS is always on the lookout for people who inflate their charitable donations and use a range based off a percent of income that is reasonable.

Bottom line if you have questions about a deduction that you can take ask your CPA, its better to then going through an audit.

About Us:

Express Cash Flow provides commission advances for real estate agents and brokers.  Check us out at www.ExpressCashFlow.com or call us at 844-818-2274.

#CommissionAdvance, #Real Estate, #Realtor, #businessCredit, #BusinessCash, #BusinessCashAdvance

Top Ten Realtor Facebook Tips

Top Ten Facebook Tips and TricksThe Best Facebook Tips for a Realtor to Connect:

  1. As a realtor, your Facebook profile picture should stand out!  One of our best realtor Facebook tips is to have a professional headshot. Include all contact info including your phone number and email address.
  2. Let the world know you are their “Go to Realtor” in your introduction section.
  3. Join local community groups to connect with your customers, partners and prospects.
  4. Make sure your friends and co-workers know to “Like” and “Share” your post to reach more prospects. (Text them to “Like” it)
  5. Publish articles to show your knowledge of the industry.
  6. Contribute and comment to blogs and posts that industry leaders make.
  7. People love pictures and video! Get as many pictures of your listings and closings as possible on Facebook.  Do a video of you at your listing.
  8. Ask a title rep for all the homeowners in your farm and ask them to connect to your Facebook business page. This will take time but well worth it.
  9. Search leaders in your community and connect with them to share locally relevant info.
  10. Don’t forget that Facebook should be used for a balance of business and personal posts… too many of either will turn off your followers. Also watch your frequency, maybe 1 posts a day.  The best time to post is mid-day to get the most “Likes”.
About Us:
AgentBranch.com is a real estate recruiting platform for real estate agents and brokers.
ExpressCashFlow.com provides commission advances for real estate agents and brokers.
Real estate agent at work in California

Finding the Best Commission Advance Company

Real estate agent at work in CaliforniaThis 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.