Glossary / Funding and payment
Also known as: Advance on commission, commission funding
A commission advance is a payment a broker receives now in exchange for part of a commission that has been earned or is expected but not yet paid. The provider is repaid from the commission when it is paid, and the cost and recourse depend on the contract.
A commission advance turns a future commission into cash today. In the common structure, the broker signs an agreement with an advance company, the company pays the broker an amount upfront, and the brokerage is directed to pay part of the commission to the company when the commission arrives.
A form agreement filed with the SEC by La Rosa Holdings shows one version of this: the agent "sells and assigns" a portion of the commission to the advance company, and the broker "irrevocably agrees to disburse the Purchased Commission amount directly to Advance Company" from the commission proceeds. The same form makes the agent repay out of later deals if the transaction does not close. Other advance contracts are structured differently, so terms vary widely by provider.
An advance changes when you are paid, not how much the landlord pays. You receive cash before the commission's payment date, and in exchange a portion of the commission goes to the funder. Your net from the deal is the commission minus your brokerage split and the funder's charge.
The legal character of an advance matters. Whether it is treated as a Receivable purchase or as a loan depends on the contract and on state law. Rules vary by state and by contract, so this is not legal advice. Most advances also require your brokerage to sign off, since the commission is usually paid to the firm first, which is where an Assignment of commission comes in.
Before taking any advance, find the clause that says what happens if the landlord never pays, because that clause tells you whether you are selling an asset or borrowing.
