Commission advance companies give realtors and brokers access to working capital that might otherwise be tied up in pending transactions that take weeks – or months – to close.
What should you look for when comparing commission advance companies?
All commission advance companies basically provide the same service, a financing tool realtors can use to get an advance payment on commissions they have already earned. However, all commission advance companies are different, and understanding what to look for can help you make the most of this debt-free financing tool.
The amount offered to you in an advance (usually a high percentage of the pending commission amount) as well as the cost of factoring commissions (usually a low percentage of the pending commission amount) is important, but it only gives you part of the picture. By comparing the offers and programs of two or more commission advance companies side by side, you can maximize the benefits of factoring real estate commissions whether you factor a commission on a one-time basis or you are looking for a commission advance company to work with over the long term.
5 Factors that Impact the Benefits of Commission Advance Financing
1. Advances and fees
The advance amount is the amount of working capital offered to you by a commission advance company. It is usually expressed as a percentage of the amount of the pending commission.
For instance, if you factor a $6,000 commission with a 93 percent advance rate, you receive $5580 as a commission advance.
Want to try the math yourself? Use the Commission Advance Calculator here to see how much working capital you could unlock from pending commissions by factoring them instead of waiting for transactions to close.
Enter the amount of a pending commission you would like to factor to see how much working capital you could unlock with commission advance financing:
Fees – and hidden fees
Fees (also referred to as financing fees or factoring fees) also impact your ability to maximize cash flow by factoring commissions instead of waiting for transactions to close, and for escrow and title companies – or other brokers – to release commission funds.
Some commission advance companies charge fees for notifications, account management and set up, due process, and other administrative tasks that drive up your financing costs. Some companies even offer what looks like a low rate but is in reality a compounding rate (assessed weekly or daily from day one) that dramatically increases factoring fees depending on how long the transaction takes to close and for the parties involved to release commission funds.
We want to earn your business by being an effective financial partner, which means transparency in our fee structure. In most cases a low factoring fee will be your “all in” cost when you choose Corsa Finance, but depending on how you choose to have funds distributed, a wire fee may apply as well. We would be happy to provide you with a free quote, including a rate schedule – scroll down and request a quick quote below or apply online.
From the application process to the request for an advance on a specific commission to the ability to submit documents electronically, the speed at which commission advance companies process your submissions is important.
We understand that speeding up cash flow and taking control of your pipeline is your ultimate goal in factoring commissions for an advance, so we look for reasons to say “yes!” – often providing same-day answers and funding in 24-48 hours – or even less.
In addition, commission advance financing is not dependent on your credit score, so there are no checks on your credit. A low credit score that might make it difficult for someone to obtain traditional financing shouldn’t impact your ability to get an advance on pending real estate commissions.
3. Contract requirements
Commission advance minimums can come in more than one form. One type is that a pending commission must rise to at least a minimum dollar amount to qualify for financing.
Another type is that you, as the realtor, must agree to factor multiple commissions or even all commissions earned over a period of time. Or that you provide notification of a desire to stop factoring commissions (or factor with a different commission advance company) months in advance, with financial penalties for canceling your contract.
We offer clients flexibility to factor only those commissions they want to factor, and we are one of the few commission advance companies that will give an advance on small commissions as well as large ones. And we don’t require clients to commit to long term contracts. We want you to stay in control, so you can always do what is best for your business.
4. Use of funds
Since they are business revenue, tying use of funds to business purposes makes sense, and commission advances can be used for nearly any type of business purpose. Realtors may want to gain fast access to working capital for many reasons, such as:
- marketing and advertising – including both digital and print
- holding home buyer or seller attraction events
- paying for property staging, photography, video or drone videography – or other vendors
- meeting payroll for office staff or assistants
- paying state and/or federal taxes
- paying for a new work vehicle, or for work vehicle repairs, maintenance, etc.
- traveling for business, such as attending conferences
- continuing education and licensing expense
- lease, office and operating expenses
5. Customer service
High advances and low fees can’t make up for poor customer service, slow decision making or delays in funding. When comparing commission advance companies, consider the level of service offered and the relationship that you want to have with your account manager.
At Corsa Finance, we are interested in knowing more about your business and how we can help service its financial needs over both the short and long term. We want to earn your repeat business and referrals, and we know the only way to do that is by providing a high level of professional and courteous customer care.
Get a free, no-obligation quote:
We would be happy to provide you with more information about factoring real estate commissions or give you a free, no-risk quote to help you decide if an advance would be beneficial to your agency. Contact us at 855-882-6772 or complete the form below and we’ll reach out to you with answers.