Posted by Mark - MD on May 28, 2000 at 16:21:39:
Appreciate your response. I posted question both places, wasn’t sure where it best fit.
I understand the additional risk with this type of arrangement. I also have worked around real estate people and mortgage broker folks who always seemed to ask for advances on their commissions, sometimes well before closings. They were high earners but were also very high spenders or they had staff assistants to pay in slow months or whatever. True, this would not be used by everyone but like business factoring you would probably get a high repeat client base going.
This is why I am seeking other institutuions or firms that do this so I can find the real world ways that they make their investment a little less risky. It is a fact, closings will not occur but the advance funding would be with full recourse and I don’t believe the agent would risk their license by not repaying or substituting another upcoming commission (with another added discount) to make good on the first one.
Still just checking this type of investment out, with your investment capital turning 6 or 7 times per year and you getting a 6% to 15% discount (or more) each time it turns it seems worth adding into the mix. I’m the first to admit though, there maybe a big monster in this that I am overlooking.
Thanks again. Anyone else know any institutional firms that invest in these instruments.
Appreciate all responses and input, Mark