When the need arises to smooth out the peaks and valleys of your income, using a real estate commission advance service has become a standard way of balancing cash flow. Commission advances have now been a common practice for real estate agents for over twenty years. Over time we have learned some of the best ways for you to get the most for your money when doing a commission advance and would like to share a few of the top tips that the pros know.
1. Commission advance fees are based on the time until the scheduled closing date. Remember: the shorter the time until closing, the lower your fee will be. If you have multiple pending contracts, it may be advantageous to do the advance on one of your properties set to close sooner rather than later.
2. How much do you need right now? If you are fortunate enough to have a large commission waiting to close, you have the option of doing an advance on just part of that commission. This way, you will only pay a fee on the portion you decide to advance. Take a few minutes to calculate how much of your commission you need to advance now to meet your current cash flow needs. The balance of the commission would be paid to you as usual when the property closes. This is a great way to keep your costs down while smoothing out your income.
3. New construction: As we all know, it can be a long wait for a new construction property to be built, to close, and to receive your commission. Since commission advance fees are based on time, a potential solution to keep your cost down is to advance now only the amount you need to meet your business needs for the short term. Doing a second advance on the same property at a later date (when the fees would be lower, since it’s closer to the scheduled close date), keeps costs down.
4. If you have multiple pending contracts and some hot listings, take a moment to plan out your best estimate as to when you believe they will close. This will give you a clearer idea about which pending contract (or contracts) you may want to use for an advance.
5. Relationships matter: Pick a commission advance company that can meet your needs today and into the future. Over time, you will build up a track record of successful closings with your commission advance company. Then, if you happen to have a pending contract that may be a bit out of the ordinary, you will have the credibility to get the advance approved without delay.
Since 2004, RealCommissions has been the cost-effective solution to balance income and help top performing agents build their real estate careers.