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.
I am very interested in this niche of the cash business.
There is a group known as Commission Express that offers a franchise for those that have sufficient resources to start funding advances to Real Estate Brokers and agents against their commission due upon a sale agreement being signed. I don’t have the sufficient resources yet but would like to enter this business as a broker.
The idea is to provide liquidity to those in the Real Estate business that have pressing operating needs and need to get their hands on some discounted commission money that is in the works. Factoring has been around for a long time and is typically B2B invoices. I really want to learn more and want to know if anyone on this board knows of any other institutions or lenders that provide this service.
Any thoughts on this business in general or other companies that may provide this service is greatly appreciated.
Mark, this topic has been discussed once or twice on the Cash flow forum. Post over there and I’m sure John Behle will address it again. I seem to remember part of the difficulty was that it was an unsecured note, (what if the closing doesn’t go off) that and the fact that if a realtor can’t wait 60 days for the closing he must be in pretty bad shape! Interesting idea though
if the kinks could be worked out.