Salaried employees enjoy the certainty of knowing exactly how much they’ll take home in their next paycheck and when it hits their bank accounts. South African real estate agents who rely solely on commissions, unfortunately, don’t have that luxury.
Some months, you might seal the deal on two or three properties and enjoy a tidy income. But then there are those other months when your hard work yields absolutely no financial return. So, since your income doesn’t always arrive at the same time your bills and living expenses do, you end up riding a cash flow rollercoaster. And this tops the list of reasons why many agents eventually decide to bid farewell to the world of real estate.
Even the most successful agents can face cash flow issues when deals take weeks or even months to finalise. To solve these challenges, you’ve got to find a way to “bridge the gap” between reaching an agreement on a property and receiving payment upon closing. And one great way is taking out an advance on your commissions.
What Is a Commission Advance?
In simple terms, a commission advance allows you to receive a portion of your future commissions before the property transfer is officially recorded at the Deeds Office. Since you’re essentially getting early access to your own money instead of borrowing from a bank, the application process is easier, and the fees involved are much lower compared to other funding options.
Why Do You Need One?
Being an estate agent here in South Africa can be a challenging job when there’s so much fierce competition out there. Lots of other agencies and independent agents are all scrambling for the same limited number of properties that are up for sale.
You invest a significant amount of money upfront to secure listings, host open houses, and close deals. But during this period, you’re not earning any income, which means your savings are steadily decreasing (or your credit card balance is rising).
And even when you eventually manage to make a sale, the process of transferring property ownership can be frustratingly slow. All this waiting means that your cash flow can be all over the place. You might have to sit on your hands for months, or sometimes more than a year, before you see a cent of your hard-earned commission.
Through a commission advance, you get instant access to your commission now instead of having to wait for it, which means you can cover operational expenses, support your family, or reinvest in your business.
Why Choose a Commission Advance Over a Traditional Loan?
Most agents, especially those who are new to the industry, often consider applying for loans when they face financial challenges due to depleting funds because they think it’s a safer choice.
But traditional banks don’t always understand the specific hurdles estate agents encounter and their loan processes can be incredibly slow and strict. Plus, they might want you to put up some property as a guarantee. Even after all that, it can still take weeks for you to actually get the money.
A commission advance can provide an alternative that avoids high-interest loans that can be difficult to repay. This type of advance doesn’t involve extensive paperwork, appointments, or discussions at the bank to get approved, and there’s no need to worry about your credit rating affecting your eligibility for a commission advance as a realtor. It’s quick and simple, and you can have your cash on the very same day you need it!
Taurus Capital’s Estate Agent Commission Advance
At Taurus Capital, we truly understand the dedication and hard work that agents like you put into selling properties. And we know that you have to wait for weeks or even months to receive your well-earned commission. Meanwhile, you still have your own business and personal expenses to cover.
That’s why we’ve designed our Estate Agent Commission Advance, an interim financial solution that allows estate agents and agencies to easily access up to 80% of their commission before the property sale is finalised. We can greenlight loans more swiftly and with fewer strict criteria compared to traditional lenders.
This isn’t just a fly-by-night operation. Taurus Capital has already advanced over R4.5 million to agents in the past 18 months.
Debunking the Myths
In the past, commission advances were often considered a measure of last resort, an option agencies resorted to only when they were on the brink of collapse. It gave the impression that if you needed an advance, your business must be in big trouble. As we fast forward to today, however, many people are coming to the realisation that this is not the case whatsoever.
The truth is, that most of our clients are regular real estate agents just seeking a means to expedite their operations. They’re tired of waiting for their money and want to free up some cash to help their business grow. A commission advance is far from a poor financial decision. Quite the opposite, actually. It’s a completely sensible choice when you find yourself needing funds to cover certain expenses that might otherwise hinder your business growth.
Be it a café, a bookstore, or a clothing boutique, businesses of all types encounter fluctuations in cash flow. The only difference is that conventional enterprises often rely on lines of credit to maintain consistent cash flow year-round, whereas real estate agents, like yourself, face a greater challenge in securing working capital from banks due to the unpredictable nature of your income.
With Taurus Capital’s Estate Agent Commission Advance, you have the means to bridge the gaps between closings, make strategic investments for future expansion, and ensure an adequate reserve of cash for your ongoing operational needs.
Final Thoughts
While commission advances used to have a bit of a bad rap due to several misconceptions, times are finally changing. More and more real estate agents are recognising that this is a financially efficient way to bolster and expand their businesses, especially when compared to traditional financing methods.
If you want to succeed, you’ve got to keep your money moving. Letting it sit around is like wasting precious time that can’t be recaptured, and it ends up prolonging the time it takes for your business to grow.
If you’re looking to improve your cash flow and grow your business, consider Taurus Capital’s Estate Agent Commission Advance as a practical solution worth exploring. Get in touch with us to find out more.
