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For real estate brokers and agents, delayed commissions are not uncommon. As a result, agents are often forced to use personal funds to cover the costs associated with marketing and selling other properties while waiting on commission payments. In the 1990s, some companies began offering advanced payment of real estate commissions. With this option, real estate brokers and agents could collect their commissions without having to wait on the deal to close. Millions of dollars in commissions have been paid to real estate professionals since then, and California commission advances created an easy remedy for cash flow slowdowns for agents and brokers alike. There are misconceptions about the commission advance industry, however, and listed below are the most common ones. Good Credit Is Required Most companies do not check your credit. A commission advance is not a loan. All that is required is your full name, contact information, the amount of commission advance requested, and the purchase agreement to get the process started. It’s a Lengthy Process Unlike a loan process, the commission advance process generally takes one business day, and the funds can generally be used by the following day. It’s a Gamble Only about 10% of single family residential sales fall through. However, if that happens, the amount from the failed commission can be taken from future escrows, or you can pay it from your own pocket. High Fees Fees for advanced commissions do vary within the industry. Reputable companies only charge one fee, and that fee should depend upon the type of real estate transaction. It is usually based upon a percentage of the commission. There should be no hidden fees. Reputable companies offering California commission advances will be open to your questions about the process. Most offer the option of advancing commissions on several deals at one time.
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