Real estate agents have to face many challenges in their profession arising from the volatile nature of the market that puts a lot of strain on the finances. Firstly, the income of real estate agents can fluctuate drastically, and there could be some months with no sales at all. Secondly, they have very scant financial resources to support them during the lean period.
The real estate industry, well known for its volatile nature, makes the traditional financial institutions and banks take a conservative approach that denies real estate agents of traditional financing opportunities. The financing options available to other types of businesses remain a distant dream for real estate agents. However, the availability of advance commissions courtesy the financial solution provided by some financial companies have come as welcome relief for real estate agents.
An opportunity to reorganize finances
The stress and worries arising from the financial uncertainties that real estate agents have to face seems to have lessened considerably due to advance payment of commissions. The financial company provides the service of arranging an advance to real estate agents for the commission that they would receive later from the sale deal they have undertaken. It provides an excellent opportunity to access cash instantly that would normally take time to reach. The quick availability of cash comes as good help in meeting the business expenses of advertising and marketing that forms the backbone of the real estate business.
Selling the commission for a discount
Although the financial company provides the advance, the arrangement is actually like selling the commission, in whole or in part to the company. By charging some fees, which can have many different structures, the company agrees to pay advance to real estate agents who have to pay it back within 30 days regardless of whether they receive the commission or not. While taking the advance, the agent must make provision for meeting the commitment to pay back, which can otherwise have a negative impact on their credibility.
The attractions of advance commission
- Simple process – Unlike loans and other credit facilities, the process of awarding advance commission is much simplified and speedy that does not require elaborate documentation or filling up of lengthy forms. A simple online form with a few details of the real estate agent, the broker, and the deal is all that is required.
- Speedy approval – The approval process is very speedy and usually takes about 24 hours from the time of receiving the application before the money reaches the bank account of the real estate agent.
- No credit checks – The process of granting advance does not entail any credit checks of the applicant, but only the approval of the broker is necessary. Since the process of giving advance is different from granting loans, credit scores become irrelevant.
- Tax benefit – The fees that real estate agents have to pay to qualify as a tax-deductible expense, which makes the offer even more attractive.
With advance commission, real estate professionals are now getting the improved financial support that was missing earlier.