Brokers in the real estate business, as well as real estate agents, are pure service providers for whom obtaining a business loan is not always easy. However, they too face the uncertainties of cash flow that often puts them in great difficulties to keep the show running. If you know about the ways of working with real estate agents, you would realize how much difficult it is for them to maintain smooth cash flow in the absence of any structured financial assistance. To tide over the crisis, they may have to avail personal loans, which are very costly and can never be a permanent financial arrangement that they can depend upon. Moreover, there are plenty of uncertainties in getting personal loans especially if someone has a poor credit score. Simply, it is not a workable solution to the financial problems faced by real estate agents.
Real estate agents working in a personal capacity or for some companies engaged in the real estate brokerage business have only one source of income, which is the commission they receive from the sale of the property. While some agents working for companies might receive a small amount as fixed remuneration, the major earning comes from the commission on sales. Therefore, receiving the commission as soon as possible is what any real estate agent would like, but it never happens in that way. The lengthy process of closing sale deals not only delay the payment of commissions but sometimes deals may also have to be scrapped midway for various reasons that put a question mark on the earning.
Unpredictable income creates gaps in cash flow
Despite the unpredictable nature of income, real estate agents have to keep their business running for which they need a steady flow of money instead of depending wholly on receipt of commission from the deals in the pipeline. The problem is compounded further because there is no certainty about the number of deals per month. There could be some months when there are no deals done, and the agent has to depend on the commissions earned from previous deals. Therefore, realizing the cash from the sale deals as quickly as possible is the prime objective of real estate agents, and whenever there is a delay, they would need some financial support to fill the gap.
The financial support
To assist real estate agents in filling the gap created in cash flow, some financial companies extend support in the form of real estate commission advance Canada. The model of financial assistance comes in the form of paying advance to agents against the pending commission from a sale deal. The commission that agents receive only after closure of the sale deal thus reaches them much before and helps to maintain cash buoyancy for the business. The instant availability of funds helps them to maintain their dominance in the market.
The arrangement perfectly matches with the dynamic nature of the real estate industry that can never guarantee how much money will flow in and flow out from the business.