A commission advance is beneficial for real estate agents because it helps them grow their business without having to put a strain on their scarce financial resources. Oftentimes, they must wait long periods of time until closing so they can finally get their hard-earned commission, which makes it hard to save funds for their businesses due to piled up costs.
A commission advance provider alleviates this problem by offering an opportunity to real estate agents to get an advance on their commission before the closing date so they can pay for expenses of transportation and marketing of their services. They must simply sell part of their commission to the provider at a discount. However, the market is full of providers and it’s important that real estate agents pick the best one based on their fees, rates and other factors before they make a decision.
Although a commission advance isn’t described as a loan, the process of applying for it may seem familiar to applying for a loan. This shouldn’t be the case in applying for a commission advance. A process that drags on for weeks isn’t in your best interests because you might as well wait for your pending commission. Avoid a provider with an application process that requires you to do the chore of giving supposedly necessary documentation. A sign of a good commission advance provider is that they keep their application fairly simple by sticking to the basics and only require a few details.
Applying for a commission advance shouldn’t be followed by days of waiting for your request to be approved. Again, it shouldn’t be like you’re getting a loan so it’s unreasonable that you should be made to wait like it is. If the commission advance provider you’re considering doesn’t provide approval on the same day, then it’s better to look somewhere else that does. This is because if they don’t there’s no knowing when you’ll finally receive your advance or even be accepted to get one. In real estate, time is of the essence and you don’t need to waste it by waiting for approval.
No Need For Credit Ratings
If you’re new to the real estate business then it’s important that you don’t fall in the hands of a commission advance provider that treats it like a loan by asking for your credit scores. Lenders ask for credit scores to ensure the applicant’s credibility to pay it back, but such a step in the application process for a commission advance is rather unnecessary. A pending commission that you’ll receive is enough to secure the deal so your credit rates shouldn’t be part of the discussion. If the provider you’re consulting asks for it then rest assured they’re not the right company for you or any real estate agent for that matter.
Range of Advance Amount and Base Fee
One sign of an unsuitable commission advance provider is that they insist on you lending a specific or minimum amount of money, even if you don’t need that much. If not this, then they’ll restrict your advance to a mere trickle of your commission, which makes it inflexible for real estate agents to pay for necessary expenses, let alone invest in their business. Also, pay attention to the clauses of the contract to ensure they haven’t imposed a minimum fee and do so by focusing on less obvious points of the agreement as well.
Getting Advance on More Than One Deal
Another aspect to consider is whether the commission advance provider you’re looking at can offer you advances on more than one agreement. Holding you down to just one deal is ineffective because real estate agents are managing various agreements at the same time and only receiving an advance on one can barely cut it. Doing so would disrupt the growth of your business so decide on a company that doesn’t put any restrictions on the number of transactions you can make. They should treat each agreement as separate and not make the amount that you’ll advance the basis of the transaction.
No Hidden Fees
Commission advance companies try to scam real estate agents into having to pay more from their pending commission by including hidden costs in their contract. The last thing you want is to reduce the value of the commission you’re going to receive so make sure to carefully read the binding agreement, which may hold some added fees. These are best described as hidden or surprises because of the fine print they are usually written in and how they can surprise you much later on into the agreement. Watch out for any large paragraphs on the agreement that your provider may try to wave off as ‘the usual’ and instead opt for a company that has a simpler contract where all clauses are written up-front.
Customer Service And Support
Even though a commission advance company may provide all the above, the way their representatives speak to you over the phone or answer your queries online is also important. Check their website and social media accounts and see how quickly they respond to any questions or feedback. A quick response should be appreciated while helpful customer care representatives are a plus as well.
After you’ve considered all the crucial aspects, it’s also important to learn about how much a commission advance provider’s service costs. Their prices differ from each company and it’s up to each individual to decide what is affordable for them and whether the service is worth the price. However, it should be remembered that commission advance providers shouldn’t charge too much for their services because of the crucial difference that it isn’t a loan.
Check Your Networks
Being in the real estate business means you’re connected to the network and what better way to check the credibility of a commission advance provider by asking your peers. That’ll ensure your peace of mind that you’re dealing with the right company to fulfill your commission advance needs.