The majority of residential purchase contracts that pass through the option period will close, although the exact closing date may not occur exactly on schedule in many instances. With this in mind, real estate agents can confidently work with commission advance companies. These are financial companies that offer real estate agent commission advances. Many have an easy application process, and you may simply need to provide your proof of licensing as well as your copy of an executed sales contract to receive an advance on your commission. When the deal closes, you pay back your advance with a modest fee. However, because not every residential real estate deal will close, you may wonder what happens in the rare event that your deal does not close as planned.
Read the Fine Print
Commission advance companies typically have a clause in their financial agreement with you regarding this possibility. Because each company handles this matter in different ways, it is important to read the fine print before you finalize your advance plans. For example, some will allow you to extend the repayment date until your next deal closes, or they may allow you to transfer the advance to another active contract you have in place. Others may demand that you repay the money as soon as the deal falls through. It is wise to learn more about this policy before you decide which of the real estate commission advance companies you should work with.
Have a Plan
The unfortunate reality is that some deals will fall apart despite your best efforts to keep them moving forward. This certainly will not happen with every deal or even with most deals, but it does happen to most agents from time to time. With this in mind, savvy real estate agents will have a plan in mind to pay the commission back before they find themselves in a sticky situation. It can be stressful and even devastating to lose a deal, and it can be even more stressful when you find yourself in debt with your advance because of the loss of a deal. When you have a repayment plan in mind, you can more easily navigate through this type of event.
Residential real estate deals can and do fall apart from time to time. They always result in unpaid time and effort at the expense of the real estate agents involved in the transaction. With this in mind, you may understandably be disappointed after the loss of a deal. You may be more disappointed with the result if you have taken out a commission advance on it. Because each company handles this possibility differently, you should take time to research companies’ rules as a first step before you decide which advance company to use for your financial needs.