We have been seeing a lot of Note Quote Request lately and have been funding a lot of transactions in the last 2 months.  I expect to see more and more seasoned paper for the next two years and, conventional financing will still be harder to come by at that time.  Also-cash is harder to come by so the number of note holders wanting to cash out, is sure to increase.  Not a bad time to be in the note business!

With that said, there is a steady supply of Late Night TV Seminar Graduates, just waiting to ruin your day. Seasoned note professionals can spot these folks a mile away but, these brokers advertise as if they are buyers and can wreak havoc on your note deals.  These folks may have taken one class or read one book or went to one seminar and now they are out there competing for your business along with all the seasoned brokers and buyers already out there.  A real education is the key to survival in the note business and the key to an education is getting the right type of education for the business you are looking to get into or currently working in.  There have been hucksters out there touting the Note Business as an Easy way to make BIG bucks for years over time, most of these folks end up in trouble for fraud.

Let me tell you the Note Business is a long ways from easy.  To broker notes for a living, you need to have a firm grasp of the business, what investors are looking to buy and what motivates, and how to talk to note sellers.  A note broker needs to know what makes a quality, marketable note, and the general pricing of different quality notes.  A note broker always needs to know (and understand) all of the correct terms, numbers and balance of the notes they are trying to sell.  This will be impossible to do unless you have the ability to run an amortization schedule on the terms of the note and check the note holders initial information for accuracy.  You will also need to know how investors calculate the yield or return on investment to understand how notes are priced/discounted in the secondary markets.  As a broker you would then need to discount the investors offer by what you wish your fee to be.  It is important to understand what is realistic and that there is competition out there when it comes to this point.  Try to make to much and you will certainly get out priced by the next broker or note buyer. 

Note: Some Note Brokers Are Just Plain Old "Out There!"
 
1.  There are the newbies that don't know much about the business, and never will because they just do not have the ability or desire to do what it takes.  Education can be had-desire comes from within.  If you want it you want it and, if you don't you don't.  That's okay as long as these folks realize this and move on to areas where they can be more productive.  The note business is tough and not for those that can't negotiate.      2.  There are the newbies that actually get it and have the proper background and education to understand how to go about the task at hand, and the ability to quickly find out what the answers to any questions they do not know.  These folks are go getters and even though they don;t know it all they are super hard working and will dig in to get the job done.  These are great folks to work with.

3.  Seasoned Note Brokers / Master Note Brokers:  Those that have closed at least 12 transactions.

4.  Those that buy some notes for their own account while brokering other notes at the same time.  This is how most buyers get started.
The last two types of brokers are always the best to work with because they know the drill and how to get the job done and do it every day.  These folks will not waste your time submitting notes that are outside of your buying parameters and they will take the time to figure out what the note buyers wants and needs are.  As a note buyer, who would you rather work with?  To make money brokering notes it is important to be on top of the game as there is simply to much competition out there right now for brokers stuck in the first category to have a prayer of a chance of making ANY money.  Those that are the the 2nd category will fake it until they make it and keep on learning. 

Note brokering is a profitable business and there is always room for more quality brokers
the key is being a quality broker!

To those that think they can just go find notes, list them on some website and make money, I have sad news for you.  There are millions of notes out there trading hands on a daily basis in the USA.  They key to staying active is not to find notes but to find MOTIVATED note holders.  A motivated note holder is someone that has a need or desire for a lump sum of cash now verses collecting monthly payments on the note for years to come.  Note holders need cash for all sorts of reasons.  I always like to ask note holders what they plan on doing with the money during my initial interview / when I am filling out the Note Intake / Quote Request Form.  A good note broker will ask questions and carefully listen to the note holders answers.  If they have no real need for cash then they have no need for you as a broker.  If they need cash, then you are there to help and this is where you can immediately take control of the situation and help your note holder get the cash they want or need.           
               
Remember When Submitting a Quote Request for a Note to Make Sure Your Facts and Figures are 100% Accurate

A seasoned note broker will always make sure that the numbers are correct on the work sheet.  A newbie note broker will just take the note holders word for it and not double check the numbers before submitting the note quote request from a note buyer.  More often than not there will be small mistakes in the note holders information they initially offer you unless they are taking the information they are giving you directly off of the note itself, even then mistakes are easy to make.  As soon as I establish that the seller has a desire to sell the note and a cash need.  I naturally just assume this if they are calling me or why in the heck else would they be calling me?  I assure them that I understand and am here to help get them as much as possible.  I do my best to strike a friendly, helpful tone and to build trust and rapport with the note seller. 

Before I get down to business I let them know that I will need to collect some information up front in order to get them the best quote possible.  I ask them if they have the note in hand and if they don't, I ask if they will grab it before we start.  If the note is handy, most note holders will get it to make sure they are providing accurate information to you.  If they question anything here just make sure you tell them that you only want to make sure you are getting accurate information as one mistake, can make a big difference in the number of payments remaining or balance due, having an impact on the price you will be able to offer.  Get comfortable using the Intake/Quote Request Form as a guideline to the rest of your conversation, keeping in mind the reasons why the note holder has told you they want cash.  Close by saying, "thanks for the call, I will get back to you within 24 hrs. with a firm cash quote.  Please fax or e-mail me a copy of the Promissory Note (or real estate contract) and, I will get back to you as soon as we run the number." 

Always Get a Copy of the Promissory Note Being Offered for Sale / No Note, No Quote

Always ask the seller for a copy of the Note and HUD1/Settlement after concluding the initial interview and filling out the worksheet, as a contingency of providing them with a quote.  Remember they are looking for money and you want to make sure you have all of your facts and figures straight.  The only real way to do this is to verify the information by reading it off the Promissory Note and HUD1 or Settlement Statement.  If this is a Contract for Deed, Land Contract or some any other type of Seller Financed Real Estate Contract other than a Mortgage or Deed of Trust, then ask for a copy of the signed contract.  In most cases you will find that the note holder will have a detailed and signed Promissory Note as part of the file they have on the transaction.  This is normally the most important document as it spells out the terms and conditions of the loan/note being sold.  Remember it is key to get these figures right on your final Quote Request Form that you will be submitting to your Note Buyers.  You will want to take your numbers directly from the Promissory Note itself and verify the information provided from the note holder.  You will also want to run your own amortization schedule so that you can verify the current balance of the note.  When submitting your Note Quote Request Form to Note Buyers your note will always go to the top of the list if you make sure to include a copy of the Promissory Note and HUD1.  This will also make sure that you get an accurate quote and save you from having to lower your quote to your note seller in the due diligence process. 

The smart broker will always look at the note "as if" they were investing their own money.  This will cause you to take a more calculated approach to your business and help you focus on what is really important.  Note Buyer are generally looking for equity and credit in valuing opportunities to buy notes.  This will also make you ask more intelligent questions of the note holder in the interview process.  Remember that ever time you submit a Quote Request for a note that you are asking an investor to part with hard earned capital.  Make sure your quote requests are always complete and accurate.  Most note buyers do not have time to try to figure out incomplete or inaccurate Quote Requests.  Make your Quote Request stand out by including loan documentation and you wil be sure to get quicker, higher and more quotes!   

No Sales Pitch, No Fluff-We are not selling anything-We are buying notes

As a note buyer and broker I get at least three or four calls a week from new note brokers looking for information on what kind of notes we buy and what information is needed in order to broker notes to Creative Financial Solutions. This section is of the site is designed to answer your questions. We look forward to working with you and will be updating this section of the website often so please save us to your favorites and take the time to read through the articles herein.

Creative Funding Service, Inc.  Buys and Brokers a Number of Different Types of Notes, Loans and Portfolios
1. First position performing loans and notes secured by real estate. These include both commercial and residential notes and mobile home notes where the land is part of the security.

2. Mobile home notes where land is part of the security.

3. First position performing business notes that have a term of 240 months left on the payments or less where the buyer put at least 15% down. 

4. Portfolios of first position performing mortgages: Mortgage Pools, Loan Portfolios up to $25,000,000 nationally.

We do not buy notes that are in default or where the buyer put zero down. We also do not buy notes that are posted on any open internet sites.
We work with a variety of note buyers and note investors including private individuals, IRA’s, Trusts, Hedge Funds, Private Equity Funds, Banks, National Warehouse Lines, etc. I need to respect my investors time and intelligence. I will do the same for you if you do the same for me. A smart thing to do is look at things as if you were using your own money and ask the note sellers for a copy of the note, sales agreement, closing statement and evidence of hazard insurance and whatever else seems appropriate to the situation at hand in order to get some of the due diligence out of the way to avoid all of the back and forth. We are looking for motivated sellers that want to sell right now and are willing to provide anything we might request upfront in order to move ahead with a deal. You will never get cooperation or put a deal together with an unmotivated note seller.

Most of the time when folks are just telling you about a real estate note over the phone, they are providing you with what they "THINK" the correct terms are. A note holder would not purposely mislead you (or would they :)- this information is incorrect because they are going from memory most likely. Get a copy of the note, study the terms (run an amortization schedule to make sure you have the correct balances) and plug in the correct numbers! Why waste time working on deals when you're not sure of the exact terms? Would YOU personally ever consider buying ANYTHING without seeing what you are buying first? Successful brokers can save a lot of time and energy by getting sale and loan docs up front!!!
Please read through all of the information provided in the Note Brokers Back Office, take your time and take advantage of the thousands of dollars we have spent to make this happen!!!! Since this business and world are always chancing, I can assure you we will be updating the entire website frequently. I look forward to the networking and encourage your participation.

Here are some links to help with advanced note broker training. Keep an eye out for frequent updates!

For Question and Answer Regarding Selling Notes to CFS Visit Our Forum on BiggerPockets: Note Brokers Forum (you must join biggerpockets.com to have access to this area-don't worry there is no charge)

Helpful Links for Note Brokers

Learn "the Art of Seller Financing" from Mitch Stephen one of the nations most respected leaders in the business.

Audio Interview with Hal Cramner: "Profit Like the Banks Buyng Notes"

Co-Broker Fee Agreement (for use once you have found a note that fits our underwriting guidelines)

How Do I Find Quality Notes

Social Networking for Business

7 Rules for Quoting Note Transactions for Brokers

Qucik Sniff Test for Performing Real Estate Notes

Real Estate Note Document Checklist

How Much is a Real Estate Note Worth?

Note Buyers Underwriting Guidelines

How to Use Seller Financing to Create Safe, Secure and Valuable Real Estate Notes?

Mortgage Note Buyers Blog