One of the most significant challenges real estate agents have relates to managing their funds. After all, you cannot control the timing of when deals will close. Some deals, for example, may be delayed by several weeks over a seemingly small matter. You may need access to the real estate commission advance from the sale for personal reasons, such as to pay your mortgage. You may also need the funds to pay for marketing or other business overhead you are responsible for.
Commission advance companies give you the incredible ability to access most or all of your commission weeks before the closing date for a fee through real estate agent commission advances. By learning more about how to effectively use these services, you can incorporate them into your business activities with great benefits.
Understanding the Cost of Services
One of the first factors to consider before you reach out to commission advance companies relates to the cost of services. The fee charged varies by company, you can generally expect to pay approximately eight to 12 percent of your commission in fees to an advance company. As you can see, this equates to a considerable amount of money. Some real estate agents will use commission advances on each deal they do, but the net results over the course of a year may be the loss of tens of thousands of dollars. With this in mind, real estate agent commission advances should be used sparingly and on an as-needed basis only.
Knowing When to Draw Commissions in Advance
The last thing you want is to pay your personal or business bills late, and there may be instances when you need a specific deal to close on time to pay your bills in a timely manner. After all, paying late fees and additional interest charges can cost a small fortune. Real estate agent commission advances can be used to help you make ends meet until a deal closes. They can also be used to help you keep your business running smoothly. For example, you need marketing to go out on a regular basis to keep a steady stream of calls and leads coming your way.
It is not advisable to halt operations while you wait for a deal to close as this can impact your future ability to earn money. However, there may be other ways to pay for some of your expenses other than to use a commission advance. For example, if you only need access to a small amount of money, it may be more affordable to rely on a credit card and to pay the balance off in full once your deal closes.
A real estate agent commission advance can be highly beneficial in many instances, but there is a cost associated with an advance. With this in mind, they should only be used when a critical need for cash is present and when more affordable solutions are not available.