Real estate agents are keen to close the deals as quickly as possible so that they can cash out the commission earning quickly. The commission that real estate brokers earn is essential not only because it is their livelihood but also because they need the money badly for financing their business. Real estate brokers have to stay out of the purview of traditional business funding because banks and financial institutions do not entertain them. Real estate business is too risky for traditional financiers to sink in their money and they prefer to keep away from it. Brokers have to take the self-financing route and organize their funds in a personal capacity to keep the business running. They pump back the money that comes from commission earning back into the business. Brokers might even use personal credit cards and garner funds from friends and relatives for use in business.
Although the personal financial exposure becomes too much, as long as they keep earning steady commission, things are well under control. But real estate brokers face the problem of erratic earning that becomes more uncertain due to the volatile market. The commission too reaches them quite late as they have to wait for the closure of the deal that takes a few months and this compounds the problem further. In such circumstances, finances are under immense stress as big gaps in money circulation become visible and this can affect the business prospects adversely.
Tailor-made financial support
To overcome the financial uncertainties, companies have come forward to help brokers with timely finance. The company has launched a scheme of buying the commission of brokers as soon as they strike a deal so that brokers receive the cash immediately. The broker has to present the deal documents to the company that proves the genuineness of the commission that they earn for it. Based on the documents, the financial company agrees to release upfront a major part of the commission in exchange for a small service fee. The arrangement known as commission advance has placed brokers in good stead as they do not have to borrow money or seek external funds but can make use of their own money for the business.
Retain the control of the business
When brokers face delays in realizing the commission earning, the going gets so difficult that they might even approach some venture capital to infuse funds to keep the business afloat. While they do get money, in the process they have to give up the control of a business that goes to the investor.Those aware of venture capital investor would know that they take an interest in investing only if they have their say about the business by gaining its control. With commission advance now being easily available, brokers no longer have to knock at the doors of investors and risk losing the business to them. This a huge benefit of commission advances for brokers.
No worries about debts
Since brokers use their own money from commission earning to run the business, they turn financially self-sufficientand do not have to depend on borrowing, which is the most widely accepted method of business funding. The flow of cash acquires a steady state when brokers have a pipeline of deals that keep maturing in sequence. It provides great relief from the worries that one has to face when taking loans that can often become so much unmanageable that it could sink the business. As brokers can stay away from debt and free from worries, they can concentrate on the business in a better way and work towards making it grow by increasing the profitability.
No credit checks required
Unlike loans that entail a lengthy processing time and has very strict qualifying parameters, the availability of commission advance is very fast. Except for submitting the documents about the deal undertaken by the broker no other documents are required, which speeds up the cash disbursement time. Also, the process does not require any credit checking of brokers. Even a person with a poor credit score is eligible for commission advance. Because it is a pure advance payment and not a loan, the credit history of brokers does not matter at all. Brokers have to pay back the advance within a month, which is the standard term of the industry, often with a grace period of 15 days.
Real estate brokers are now comfortable with the financing opportunity of selling their commission for quick cash. They are now able to remove the bottlenecks in cash flow that often arise due to the paucity of funds. Since broking is a cash-intensive business, the smoothness of cash flow that brokers achieve by availing advance commission goes a long way in sustaining their business without having to worry about funds. They are now able to survive on their strength.