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Real estate brokers are courageous people due to their abilities in coping up with the financial adversities they often face. Those aware of the kind of uncertainties in real estate business would know what the statement means. The real estate market is perennially volatile that sets it apart from all other businesses. And as it happens, the risks perceived by investors for the real estate industry are too high. You do not know what the fate of would be backing some brokers because it is not certain when they can pay back the money.
Since risk analysis precedes any approval for business finance, the real estate industry fares very badly on this count that keeps the traditional options of business finance out of their reach. No business financing company would show any interest to provide funds for real estate broking business. As if it is not enough, the uncertainty of income coupled with delayed payment of commissions makes it very tough for brokers to run their business. The payment cycle of commission stretches up to the time until the deal closes and how long it can take is not always certain. However, anything between 60-90 days is an industry average.
Liquidity of business is important
Although real estate broking business is different in many respects from other businesses, the operational principles, especially from the financial angle, are the same. Cash flow is the lifeblood of real estate brokers to sustain their business, and they have to fight hard to remove the stresses that can throttle the flow. The only way of doing it is to keep replenishing cash regularly to maintain good buoyancy that keeps the business afloat, but then cash is elusive for real estate brokers. They have to wait for cash that infrequently comes due to the delay in cashing out commissions. Moreover, there are uncertainties in the market that affect sales as sometimes the pipeline of clients can become completely dry.
Hard work pays
To overcome the uncertainties of the market, real estate brokers have to work hard and devise aggressive marketing strategies to create a healthy base of clients so that deals keep on happening at regular intervals. Not only brokers have to avail the opportunities that come their way, but they also have to work towards creating opportunities that generate leads. By following leads closely and nurturing it well, they can gain mileage in marketing that brings in more revenue. Investing in advertising and online marketing provide added advantage to reach out to the larger section of clients. To carry out promotional and marketing activities in a planned way, brokers have to arrange funds by utilizing their income from commissions.
Instant commission cash out
To cut down on the delay in earning commissions, brokers have to turn to commission advance companies for realtors. These companies offer tailor-made financial packages exclusively for the real estate industry to support brokers. The companies offer the solutions with the objective of allowing brokers to maintain a balance in cash flow that is essential to run the business smoothly. The arrangement allows brokers to earn the commission immediately upon signing a deal as the documents form the basis for the companies to pay a sizeable advance to brokers according to the amount of commission involved in the deal. How much commission is payable would depend on the sales figure and selling abilities of brokers because higher sales entail higher payouts. Gone are the days when brokers had to wait for months to earn their commissions, which are still payable only on completion of deals.
Speedy disbursal of cash
The best thing about commission advance is that any broker carrying out a legitimate business is entitled to it and it does not take into account the personal credit score of the individual. Credit checks are meaningful when approving loans, but since this is not a loan but advance, it is logical that credit scores become irrelevant. The process is very speedy because it hardly takes 24 hours from the time of applying to the time the cash reaches your bank using the online transfer of funds.
Contracts that qualify for commission advance
The advance commission companies accept almost all types of contracts related to properties when considering for advance payment. Just as the companies do not discriminate brokers, provided they meet the eligibility criteria, advance commission companies accept all types of sales contracts about townhomes and residential property of single family as well as condominiums. Even property that is newly constructed and Real Estate Owned property that belongs to a lender also qualify for commission advance.
Most commission advance companies do not charge any upfront fees, but only the processing and underwriting charges with some other small fees that are usually below 10% of the commission paid in advance.