How Do I Control Bad Debts?

As a broker, you provide a service for your agents and you deserve to get paid for it!

Part of running a real estate brokerage is paying expenses for your agents so they can go out and earn commission income. This can be everything from advertising expenses to franchise fees to something as small as photocopies. And everything that you pay on behalf of the agents or supply to them costs you money.

To ensure that you are covered for the funds you are laying out, you can review brokerWOLF's Agent Expenses Uncovered report on a weekly basis.

With this report in your hand, you will not only know what your agents owe you, but also what future commissions they have coming in that can cover what they owe. Remember, an agent who owes you $2,000 but has $10,000 in closings is not your bad debt problem; the agent who owes you $500 with no closings is!

Most brokers don't deal with the bad debt issue until it is a crisis. This normally means that the agent has left and not in a good way. So do you put the agent in collections? Probably not!

You should deal with this proactively by identifying the agents whose bills are getting ahead of their ability to pay them. Counsel the agent long before it becomes the crisis that we all dread. And if nothing else, prevent it from becoming worse by getting rid of a poor performing agent sooner rather than later.

Another way of looking at the agent bad debt issue is to review an Agent Production report. Knowing what an agent has done in the past, what deals are in the pipeline and what listings they are holding are all ways of getting a view of whether an agent is working and productive, or is on their way to being your bad debt problem!

View brokerWOLF sample reports!

To view the original article, visit the Lone Wolf blog.