A commission advance from eCommission is a factoring transaction where an agent agrees to sell a pending commission receivable at a discount in order to receive advance payment of their money within 24 hours. Advances can be as long as 120 before the scheduled closing date, but most are 45 days or less.

Proponents site eCommission’s ease of use, speed of funding and professionalism as the main reasons why they enjoy our service. Steadying cash flow in an unstable market such as we are experiencing currently, can be a lifeline for agents forced to stretch their commission dollars further between fewer closings.

Opponents commonly point to the higher cost of advancing compared to using traditional credit cards or bank lines of credit. They also site the possibility of the sale falling through as a reason not to advance. Both of these viewpoints are understandable as receiving a commission advance does cost more than a bank loan and the possibility does exist that a sale might fall through.

I think it’s worthwhile to examine these concerns individually. Let’s accept that despite your best intentions and our underwriting experience, inevitably a sale falls through. It happens in real estate but it’s not the end of the world. If a sale falls through you have 60 days to repay the advance or replace it using a different pending sale. Most agents replace within that timeframe, but sometimes it can take longer. If it does, you accrue a daily rate based on the amount of commission you have advanced. The daily rate varies with each transaction, but averages $3.24 for each day that it takes for you to get the failed transaction repaid, resold or replaced. For this reason, it is best to have two or three pending sales in the pipeline and advance the strongest transaction with the shortest closing period.

Regarding the issue of cost, yes, receiving a commission advance is more expensive than going to your bank. But there are important reasons why. First off, a commission advance is much faster and easier to receive than a bank loan. eCommission requires minimal paperwork and often funds advances within hours of receiving a completed application. Moreover, most banks require you to have excellent credit. At eCommission, good credit is beneficial but not required to qualify for our service. Finally, receiving an advance is meant to be a short term cash flow solution. Unlike taking on long term bank debt, commission advances are repaid automatically when your sale closes so there is virtually no risk of carrying the debt longer than necessary.

Without exaggeration, I have spoken with thousands of real estate professionals over the years about our service. Those who come to eCommission seeking an advance usually do so with some trepidation because it is something they never tried before, and like anything you do for the first time, caution is often your guide.

So for anyone considering our service, I want to express to you first off that you are not alone. You may be surprised to discover that eCommission is used by thousands of your colleagues annually. Chances are, however, you’re unaware of anyone who has used us because most agents are reluctant to speak of personal matters with their peers, which is understandable. At eCommission, we take your decision to advance a commission very seriously and strive to keep your transaction as private and confidential as possible.

For more information about eCommission, please visit www.ecommission.com or call toll free at 877-882-4368 to speak with one of our customer service professionals.

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This entry was posted on Friday, July 25th, 2008 at 10:56 am and is filed under eCommission. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.