The working life of a real estate agent can be an uncertain but exciting one. Some months there is a glut of cash from commissions and some months there you may not have any deals closing. If you haven’t built up a nice bank balance during good times, you may have a tough time finding enough money to meet your business and personal expenses during the lean times. This is especially true in the current Canadian real estate market where rising home prices are making buyers scarce.
As a real estate agent, you want to ensure a steady inflow of cash so that you can keep your business running smoothly and pay all your monthly bills on time. This however, is not always possible. You are often forced to endure a long waiting period until the deal finally closes and your commission check is cut. By the time your commission arrives, your payments may already be overdue. You may also be forced to put on hold important business activities, such as advertisements and listings, because of lack of funds to support them.
Canadians have been lucky to escape the recent global financial crisis with only a few minor bruises. The Canadian real estate market was going strong when that of the USA was crashing. In 2012, the house price index rose in every province except British Columbia. To combat soaring house prices, the federal government recently tightened the mortgage lending rules by reducing the maximum amortization period for government-insured mortgages from the previous 30 years to current 25 years and lowering the maximum LTV ratio to 80% for refinances.
The new rules, which went into effect in mid-2012, have made it harder for the average Canadian to buy a home. But the rules haven’t deterred home prices from rising. This is where the problem lies. Experts are saying that the time is becoming ripe for the Canadian ‘housing bubble’ (as some people like to call it) to burst and go the way the US market did in 2008. If that happens, many Canadian real estate agents will be in real trouble. With many more sellers than buyers, they will simply not be able to make enough commissions to meet their expenses.
Even if the “housing bubble” doesn’t burst (let’s hope that it’s not a bubble, and that it won’t burst!), you will still need a smooth cash flow to run your business and remain competitive in a crowded marketplace. The only way to do that is to receive a commission advance – as soon as you have made a sale. With advance commission in your hand, you will be able to pay your bills and pay your staff on time, balance your cash flow and be in full control of your business at all times.
There are a number of companies in Canada that offer commission advances to real estate agents, so do your homework before approaching one. The criteria you should look at are fees, approval time (not more than an hour or two), easy application process (completely online), personal credit score (not required), deposit method (direct deposit or cheque), and security and privacy. AccessEasyFunds is Canada’s leading commission advance company. We have given advance commission on over $3.5 billion worth of real estate transactions so far to cushion real estate agents working in a fluctuating market.
