What is a CDA in Real Estate and Why It Matters
- Hoozzee
- Apr 1
- 3 min read
When I first came across the term "CDA" in a real estate context, I was surprised by how often it's misunderstood—or completely unknown—by both new agents and even seasoned professionals. A Commission Disbursement Authorization (CDA) is more than just paperwork; it’s a vital piece of the real estate transaction puzzle that ensures everyone gets paid fairly, on time, and without confusion.
What is a CDA in Real Estate?
A CDA, or Commission Disbursement Authorization, is an official document used during a real estate transaction. It lays out exactly how commissions from a property sale will be split between agents, brokers, or any other parties involved.
It’s usually prepared by the brokerage or a transaction coordinator and sent to the escrow or closing company. The CDA tells the closing agent how much to pay each person once the deal is finalized.
Why CDAs Are So Important
In the chaos of multiple offers, inspections, appraisals, and closings, commission details can get murky. The CDA simplifies all that. It provides:
A clear commission breakdown.
An official record of who gets what.
Fewer disputes among agents and brokerages.
Think of it as a financial peacekeeper in the often chaotic world of real estate deals.
Who Prepares the CDA?
Typically, CDAs are created by the agent’s brokerage or a designated transaction coordinator. These professionals have the legal and administrative knowledge to ensure every detail is correct and compliant.
The closing company won’t release funds until they receive the CDA, which is why it's crucial for agents to request or prepare one in advance.
Key Information Included in a CDA
A well-prepared CDA will include:
Property details: address, buyer/seller names
Agent and brokerage info
Total commission amount
Split percentages
Payment instructions
Some CDAs even include bonus details like referral fees, marketing reimbursements, or charity deductions.
Common Problems Without a CDA
Without a CDA, commissions can end up misallocated or delayed. Some of the most common issues include:
Agents being overpaid or underpaid
Disagreements between cooperating brokerages
Delayed closings due to missing documentation
It’s surprisingly common for agents to discover errors only after the deal is closed and the money is already gone—or worse, in the wrong hands.
How to Create a CDA
Creating a CDA involves a few critical steps:
Gather Commission Data: Collect details from the listing agreement, MLS, and brokerage contracts.
Calculate Splits: Determine how the commission will be divided.
Draft the Document: Include agent/broker names, percentages, property info, and payment instructions.
Get it Signed: Usually by the managing broker or team lead.
Submit to Closing: Send it to the escrow or title company before the closing date.
Most brokerages have a standard template for this. Some platforms like Paperless Pipeline and Loft47 also allow agents to generate CDAs digitally.
Benefits of Using a CDA
Ensures timely commission payouts
Reduces the risk of errors
Establishes a legal record
Improves communication among parties
Saves time post-closing
Conclusion
Understanding what a CDA is in real estate is essential for any agent or broker who wants to protect their earnings and ensure smoother transactions. Even if you’re just starting out, learning to manage or request a CDA early on shows professionalism and helps avoid future headaches. Whether you’re part of a large brokerage or a solo agent, the CDA is your friend—and your financial safeguard.