In the real estate industry, a commission disbursement authorization (CDA) form plays a vital role in ensuring timely and accurate payments to all parties involved. Let’s walk through the five essential stages of creating a CDA.
Step 1: Provide Sale Information and Commission Overview
A well-crafted commission disbursement authorization starts with precise and comprehensive information. This allows for easy identification of the specific deal to which the commission applies. The closing company usually possesses most of the necessary data, but it is crucial to explicitly state the relevant transaction details. Include buyer and seller information, as well as purchase agreement details to assist the closing company in accurately processing the CDA.
Step 2: Include Contact Information for the Closing Company
When preparing the CDA, make sure to address it to the designated contact at the closing company. This ensures that the escrow or title officer responsible for handling the authorization form is aware of their responsibilities and can address any potential errors.
Step 3: List all Net Payable Line-Items
After outlining the sale overview and providing the closing company contacts, it’s time to calculate the commission distribution for each party. These calculations typically include realtor-earned commissions, brokerage compensation, deductions paid to external parties, and referral fees. It is important to consider how each payee wishes to receive their payment, as preferences may vary. While some brokerages prefer direct payments to each recipient, others may have restrictions on sending funds directly to external parties. Always ensure that the calculations are presented as net payable amounts.
Step 4: Specify Payment Instructions
Payment instructions may vary, but it is essential to clearly outline how the closing company will make payments, inform payees, and provide confirmation. Some agents may prefer checks issued to their legal business entity rather than their personal names. In such cases, it is crucial to provide the individual’s name along with other tax-related information. Other instructions, such as direct debit, delivery, or pickup instructions, should also be clearly mentioned within the CDA.
Step 5: Sign and Submit the Commission Disbursement Authorization
Once all the necessary information is included in the CDA, it must be signed by the authorized individual responsible for its execution. Subsequently, the signed CDA should be sent to the designated escrow agent, title officer, or attorney for further processing.
CDAs streamline the payment process for real estate agents, ensuring they are compensated promptly and efficiently. However, many companies still rely on outdated methods to manage these forms. Using spreadsheets and other complex systems to track commission structures can pose challenges and potentially result in delays or errors. Timely and accurate payments are crucial for retaining top-performing realtors and maintaining a successful business.
To simplify the process and ensure smooth transactions, consider leveraging modern tools and technologies such as those offered by Garrity Traina. Their expertise and experience in real estate solutions can help you streamline your commission disbursement process, ensuring realtors receive their payments promptly and hassle-free.
Remember, when it comes to commission disbursement authorizations, efficiency is key. By adopting modern solutions, you can optimize your operations, enhance the agent experience, and foster mutually beneficial relationships.