Business financing is not easy for brokers in the real estate industry who seem to be some outcast among business communities. Brokers are like the untouchables to bankers and other financial institutions that do not extend any financial support to the broker community. Despite the fact that brokers run a legitimate business with a license, they remain out of the ambit of business financiers who look upon the broking business as too risky propositions for financing. The reservation of financial companies in funding real estate broking business arises from the uncertainties surrounding the business. Nothing is predictable in real estate business, nor does the earning of brokers have a stable pattern. While brokers experience high earning in patches, they also have to endure with periods of no earning. So, how do real estate brokers manage to receive any financial assistance?
Not all is lost for brokers because although they lack the support of institutional funding for their business, there are some other ways of obtaining financial assistance. By approaching advance real estate commission companies, brokers can now avail financial assistance that they need to run the business. These companies have a special focus on funding real estate brokers and develop schemes that ensure that brokers receive the support they need. The financial support from advance commission comes very handy, as brokers can use the money for business and avoid experiencing strained cash flow. It saves them from falling back on personal finances by availing loans that can be very costly and prove detrimental in the long run. The need for a business-friendly solution finds the perfect match in the scheme of advance commission.
Income uncertainty puts brokers on the back foot
The value of a business depends on the capital outlay and income, and if you look at the structure of real estate broking business, you would admit that it lacks on both counts. Setting up a real estate broking business, which is completely service oriented, requires a minimum capital for starting up. The main capital is the network of resources of brokers and their marketing acumen. Maybe you have to spend something in setting up an office, but there is neither machinery nor manpower required for running the business.
Only when the business expands that you may have to scale up the infrastructure and add more people to serve clients better. There are no assets as such required for the business and maybe you do not even need an office as you can run the business from home. Add to this the volatile nature of the real estate market that gives no assurance of steady income. It is therefore natural that structured financial support has always eluded real estate brokers.
Throttled cash flow is a big concern
In the absence of any financial support, real estate brokers have to use their own money to run the business, but the uncertain income becomes a bane for them. Most of the time, they have to depend on the pending commissions that arrive quite late and is of little help to maintain smooth cash flow. Because of throttled cash flow, it becomes difficult to run the business that requires a regular infusion of cash. Moreover, the market uncertainties affect the number of deals executed during a year. Depending on commissions earned from earlier deals is the only source of finance. Against this backdrop, the time taken for cashing out the commission, which can run into months, hits brokers very hard.
Propping up finances with the advance commission
Among all the negatives that brokers have to encounter, the only positive is that there is a way to arrange for finances by speeding up the commission payment. The commission advance company is ready to pay cash in lieu of the anticipated commission so that brokers do not have to wait for getting it after completion of the deal. Brokers can use the money to improve the business and earn more leads that enhances the prospects of the business. Receiving the money early helps to inject fresh life into business thereby opening up new avenues that can make the business grow. It becomes easy for brokers to keep the business buoyant and dominate the market for more gains.
Commission advance has given a shot in the arm to real estate agents who are now relieved that the bird that used to be in the bush is now in their hands. And we all know how much the worth of a bird that you have in hand is. When you have the commission in your bank almost as soon as you sign the deal, you get added time for exploring new business opportunities that could lend the much-needed financial buoyancy for your business.
As the fees paid for commission advance qualifies for tax-deductible expenses, the attraction is even more.