There are now a lot of companies offering to give commission advances to real estate agents. The question is, are they really helping real estate professionals? Or are they just taking the piece of the agent’s hard earned commission?
We have talked to some real estate professionals heard about commission advance companies and have tried out their services themselves. The views are mixed.
They Say Foe…
Elaine, a real estate agent in Manitoba, relates that she needed the money. She could not wait until after Closing to get paid her commissions. Her bills were piling up. She had no choice as working with a commission advance company was her only way to get her hands on her commission ahead of Closing. Unfortunately she did this advance with a very expensive advance company – finding out that there were lots of hidden fees. And the advance company held back a reserve from her advance – which she did not get refunded!
She recounts that while she got a breather and a much needed cash flow, she regretted having to pay the high rates.
For Elaine, she was happy to learn about the services of advance companies as she could not have bridged this payment gap through her bank or brokerage company. However she needed to find a cheaper and fairer advance company.
Minnie shares Elaine’s sentiments. Minnie laments, “Ultimately, advancing was a quik and easy solution for me. But I needed to find a cheaper and more efficient advance provider.”
They Say Friend…
Elaine and Minnie, like many other canadian real estate agents, discovered an advance company that offered a much cheaper alternative.
“What a breath of fresh air to speak with AccessEasyFunds – their rates were so much cheaper. And there was no holdback rerserve. I got more dollars advanced for substantially less fees! Making my advance much moe affordable.”, said Elaine.
Minnie added similar praises “ What I really like about AccessEasy is that their rates are fixed with no hidden fees. I know right up front what my fees are. They are highly efficient. It was really simple and quick.”
The Bottom Line…
Larry Weltman, who serves as a CSR at Access Easy Funds, says that commission advancement is not for everyone. And equally important you need to advance in a fiscally responsible way. Agents must look at all the costs to do an advance.
Weltman explains, “Of course commission advancing is a useful resource to agents to bridge their commissions. They do not get periodic pay-cheques. They need cash to pay their personal and business expeses. Real esate is very often seasonal as well.”
Weltman further added “Commission advance companies can help you as they should be able to turn your request around very quickly. We often do it same day at AccessEasyFunds. They don’t usually do credit checks. However don’t get in the habit of advancing to fund a lavish lifestyle. Make sure the return you are getting is higher than the fees you are paying. Use the advance to help grow your sales and to cover basic personal expenses that you could not otherwise take care off. Of course if you have other cheaper sources of cash rather use them. A line of credit with a bank is cheaper than a comission advance!”
What You Should Look For
Weltman has some tips, though. “There is no sense in getting extra money now and pay through your nose later. So you need to choose the commission advance company very well. Look around and make sure that you are dealing with an established advance company that has been around for a while. Check rates out and make sure there are no hidden fees. Ask for references. Ask within your brokerage office if colleagues, your office etc. have dealt with them before,” he says.
Larry Weltman further suggests that you look for a company that offers fixed low fees in the first place. Watch out for hidden fees that really mask what you are paying. Hidden fees come in the form of administration charges, set-up fees, minimum fees, and hold back reserves.
“Equally important is to look at the advance company’s history – you want to make sure that you are not dealing with a small company that down the road may not be able to fund you. Many advance companies have closed their doors in the past few years. Also look out for the limitations on the advance company’s services – what caps or restrictions do they have. As you don’t want to lock into one advance that going forward will restrict you. As if you owe one advance company, it will limit you advancing with another one. You need to keep all your advances with one supplier”
“When it comes to service, things to look out for are: How quick to they take to process an advance? How man deals can I have outstanding at one point in time? What is the maximum I can advance in $ per deal? Do they require minimum deposit sizes? Must the closing be within a specific time frame? Do they advance on non-residential deals – ask about commercial, pr-construction, and lease deals if these are the types of deals you do?”
In the end, Weltman says that you should not rush into just getting any company out there. “You should go about it like how you go about selecting any valued supplier.. Check out the companies, see what their previous customers say about them, and research and compare these companies before making a decision.”
A good commission advance company always forms great relationships with their clients.