Commission2CASH – Business case for a commission advance
While providing commission advances to California real estate agents, we have encountered a wide variety of agents and brokers with cash flow needs. Here are three concerns (besides "what does it cost?") that are typically inquiries from our new customers:
- How does it work?
- What happens if my deal doesn’t close when it’s supposed to?
- What happens if my deal goes sideways?
Business Case Example:
Tony is a KellerWilliams® agent and he came to us looking for a commission advance on his transaction which was set to close in 45 days. The inspection contingency had been satisfied. The buyers had an FHA loan with 5% down and had put a $10,000 earnest deposit down on their $500,000 purchase. Tony was a first time client with Commission2Cash. Tony filled out his application online at. We received the completed application and we created a few agreements for him to complete. As a new client, he signed our master agreement (establishing our business relationship and laying out general terms for any commission advances he does with us) and a business purpose declaration (declaring that he was obtaining commission advances from us largely for business purposes).
In addition, he signed a series of transaction related agreements - selling and assigning his commission receivable to Commission2CASH. He also certified that there were no liens against the commission already. Tony's commission on the sale was $10,500 (70% of the $15,000 commission, since his broker would be retaining 30% of the commission), but since he was a first time client, we could only extend $6,000.00 commission advance. So we created the documents to purchase only a portion of Tony's commission. Since we were purchasing his receivable, we actually bought more than the amount advanced - $7,500 in this case - and paid for it in 2 installments. The first installment was the commission advance ($6,000) and the second installment ($750) we would pay after the receivable was paid to us.
The last document signed was the Notice of Assignment - signed by Tony and his broker. Tony also sent me a copy of the purchase and sale agreement (with the inspection contingency signed off), the buyer's loan pre-approval letter, and a copy of the MLS listing showing that the sale is pending. Tony then gave the mortgage broker and the Broker a heads-up that we would be contacting them to validate the information Tony provided earlier.
We verified the terms of the transaction and making sure that the buyer had an application in process with the mortgage broker. Everything checked out, so we transferred the money into Tony's bank account. It was that easy and quick! All of this happened within 2 days of getting the application! Tony made sure the commission disbursement instructions directed $7,500 of the commission to Commission2CASH and we were on our way.
The week of the closing we received an email from Tony - the buyer and seller were signing an extension for another 21 days - there were several delays in getting the loan funded, misplaced documents, additional loan requirements, etc. I'm sure you've experienced these kinds of delays also. Favorably for Tony, he received his commission advance from Commission2Cash instead of some of the other companies, we have a 30-day grace period on every transaction, as long as we receive settlement on the receivable within 30-days of the expected settlement date, the fee stays the same. 3-weeks after the expected closing date, we received a check from the accounting department from Keller Williams® for $7,500 and that same day we deposited $750 into Tony's bank account.
What would have happened if Tony's deal fell out of escrow instead of the 3-week extension? He would have had 3 differing options:
Tony could have replaced his deal with another deal in escrow and if it closed within the grace period on the first contract, Tony still would have received his $750 holdback deposit.
Tony could have paid off his receivable with a personal check (this happens, just not that frequently).
If Tony didn't have another deal in escrow, we would have waited until his next deal closed - and his broker would cut us a check for the balance due us from that deal.
At a crucial time for Tony and his business he received the $6,000 commission advance. The process is that simple, quick and easy to use.
All businesses have cash flow issues, this is just another financial tool for Real Estate Agents to fund their business and control cash flow instead of allowing cash flow to control them.
You've earned it. Why wait to get paid!
Tony is a KellerWilliams® agent and he came to us looking for a commission advance on his transaction which was set to close in 45 days.
The inspection contingency had been satisfied. The buyers had an FHA loan with 5% down and had put a $10,000 earnest deposit down on their $500,000 purchase. Tony was a first time client with ... MORE