How To Create a Real Estate Commission Disbursement Authorization (CDA)

Commission is one of the main motivations behind real estate agents’ and brokers’ productivity. The commission earned on each closed real estate transaction is the driving force behind sustained growth.

However, as vital as the commission check is, the money doesn’t simply appear in bank accounts without thorough preparation and work.

In order to receive your commission, you must complete a commission disbursement authorization (CDA) form.

In this article, we’ll explain how to fill out a commission disbursement authorization form step-by-step and how you can simplify this process for your agents.

What is a Commission Disbursement Authorization? 

A commission disbursement authorization (CDA) is a document that can be sent to an escrow company, title company, attorney, or whoever is handling the closing. 

Most state real estate boards allow you to present a commission disbursement authorization to the closing entity and have them disburse the funds.

Commission disbursement authorization forms provide instructions on how the commission should be paid out. It acts as a payment request to the closing company. 

Using purpose-built commission management software can help you create your CDA. However, you can also complete a standard commission disbursement authorization PDF.

Why should I create Commission Disbursement Authorizations? 

Managing commission plans typically  involves extensive paperwork and often leads to headaches for busy real estate professionals—agents, admins, and brokers alike. 

Creating a commission disbursement authorization before closing and sending it to your closing company ahead of time is a great way to ensure commission payments are processed quickly to keep your agents happy.

A CDA also provides the opportunity to have agents receive payment directly, instead of the entire commission being funneled through your real estate brokerage, where it then needs to be deposited and distributed to your agents.

How to Create a Commission Disbursement Authorization:

Follow these 5 steps to create a Commission Disbursement Authorization (CDA):

Step 1: Fill out the sale information and the commission overview

An accurate commission disbursement authorization should begin with high-level information.

Your closing company will likely have much of this data available. You need to clearly state which deal the commission applies to.

Include fields that assist the closing company in identifying the specific deal associated with the CDA. Provide transactional details such as buyer and seller information along with purchase agreement specifics.

Step 2: Include the closing company contact information

The CDA should be addressed to the specific closing company contact. This will document which escrow or title officer is responsible for following the remainder of the commission disbursement authorization and who should be contacted should any errors occur.

Step 3: Add each net payable line item

Once you’ve included a sale overview and the closing company contact information, the next step is to calculate how much each party will be paid from the commission. 

This includes real estate agent-earned commissions, brokerage commissions, deductions paid to external parties, and referral commissions. 

Once that’s calculated, you need to determine each payee line item. 

Some companies may opt for direct payments to individual payees, while others may have constraints preventing them from sending funds directly to external parties. 

For example, If your brokerage collects franchise fees and then pays them out separately, the franchise fee and the brokerage commission should be added together and listed as one payment.

Step 4: Add payment instructions

Specific payment instructions will vary, but your commission disbursement authorization should clearly state how the closing company should make payments, notify payees, or submit confirmation. 

For example, your agents may need checks cut to their legal business entity rather than their name. In this case, ensure that the entity name and any other tax-related information are captured. 

Another example might be direct deposit instructions, delivery instructions, or pickup instructions. All of this should be included on the CDA in the correct fields.

Step 5: Sign and send the Commission Disbursement Authorization (CDA)

The final step is having the document signed by the person authorized to do so. After that, the commission disbursement authorization form can be sent to the escrow officer, title officer, or attorney.

The Problem with Filling Out Commission Disbursement Authorization Forms Manually

While downloading and filling out a commission disbursement authorization PDF might sound like a good idea, this process presents some issues:

Commissions are difficult to calculate

From the outset, the net amount paid to agents or received by your brokerage is determined by the commission plan negotiated by each agent

Whether you offer a flat fee or a percentage split, a commission cap, tiered thresholds, or lead-source incentives—each has an impact on the commissions received. 

The specific commission plan details determine how each final commission is calculated, what net payables will appear on your commission disbursement authorizations, and, ultimately, what lands in your bank account. 

It can be challenging to calculate commission splits to add to your CDA form on your own. 

This is why it’s helpful to use commission management software that will calculate this for you in just a few clicks.

It’s cumbersome

Ideally, real estate professionals want the time between closing and payment to be fast. 

For many, the CDA process is slow, cumbersome, and sometimes requires traveling to pick up a physical check. 

It’s easy to make errors

When you’re filling out a CDA manually and trying to make calculations and determine line items yourself, there’s lots of room for error.

A single mistake can transform the disbursement process into an administrative headache when payments are made incorrectly.

🤔 What’s the Solution?

You now know the risks of completing CDAs manually, but what is the alternative?

Investing in an online reporting system built into your real estate transaction management software can help admins calculate commissions quickly. 

They can seamlessly account for various commission plans, franchise fees, real agent fees, client fees, earnest money, and more. 

With a simple system like Paperless Pipeline, the process is easy for even the most complicated commission calculations

Ready to Simplify the Process?

Filling out a commission disbursement authorization form can be complex and time-consuming. 

Why not let your real estate team spend their time focusing on what they do best rather than handling cumbersome paperwork?

With Paperless Pipeline, your CDA can be created instantly as you calculate real estate commissions for each deal. 

Once created in the system, you can quickly send your CDA to the relevant contact and rest assured that everything has been completed correctly.

You can try Paperless Pipeline completely free today by visiting our website—no credit card details required! You’ll get to see exactly how our commission management software works and how it can simplify the CDA process from start to finish.