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Beginners Guide to Being a Note Broker – Part 1 of 3

There are many different players in the seller financed real estate note industry— individual note buyers, institutional note buyers, title companies, escrow companies, real estate attorneys, servicing companies, appraisers and processors, to say nothing of note holders and payors. Nevertheless, the real movers and shakers are the intermediaries, the people constantly moving between and communicating with these players: the professional note brokers.

We are the middlemen (in a good way). The note broker is the workhorse of the industry. He’s a salesman one moment, a note holder’s advocate the next; he’s an analyst, an auctioneer, a consultant, a negotiator, and a marketer; he occasionally performs the services of an appraiser, a clerk, and a loan processor; he sometimes even accommodates his note holders on nights and weekends, and often works well beyond forty hours a week.

Basically, a note broker does a little of everything, and for that, he’s paid a modest commission (provided, of course, that he closes the deal). It’s no wonder, then, that so many note brokers cycle in and out of the industry. It’s also no wonder that demand for their services remains high even in slow markets.

Overwhelmed? Don’t be: this first part of a three part series will guide you and tell you everything you need to know about the challenges and essentials of being a note broker, as well as the first three of nine important tips to help you get off to a strong start. 

1. Note Brokering is not a hobby: it’s a business

In recent years we’ve seen some new trends that, more than ever before, the average person has access to the kinds of statistics, market analyses, technology, and expert opinions that were previously reserved for people who actively made their living as a note professional.

Consider, for instance, the article you’re reading. Before the Internet, much of this information would only exist in the mouths of working note professionals or in a random book. Note Holders had little need for this information because they trusted their note professional to know it.

Today, some individuals involved in the note business are blabbing all over the blogosphere, even making a buck by telling note brokers how to do their jobs. “How to Make Money in the Note Business: Five Easy Steps” or “Flipping Notes for Fun and Profit.” Consequently, some seem to think of becoming a note broker like taking up a hobby, something to occupy your down time and earn you quick cash at the same time.

But most hobbies are cheap, and even the expensive ones are about the sheer enjoyment of the activity. With a hobby, you’re allowed to be careless because you don’t have anything to lose. Neglect your herb garden for a few days? No big deal. Don’t play your guitar for a month? It’ll still be there when your fingers get the itch.

Seller Financed Notes, on the other hand, is a business. It’s about money, and as the market has shown in the last few years, when people get careless in the note business, you stand to lose a lot of it. As a note broker, you’re an independent contractor, which means it’s up to you to manage your own business. Any note broker who picks up your slack isn’t handing it back to you.

Lastly, hobbies are personal, while the note business is professional. Typically, only the people with whom you choose to share your hobbies know about them, which means they don’t have a huge impact on your public image (unless, of course, you’re still collecting Beanie Babies).

But since your conduct as a note broker takes place in the professional world, it has much a longer paper trail. Pretty much anyone can find out about it. Fail to satisfy a note holder, and you’re telling her and everyone she knows that you’re unreliable—which can have serious ramifications for other areas of your life.

None of this means you shouldn’t enjoy working as a Note Broker. On the contrary, you’re not likely to be successful if you don’t. But the best note brokers are those who marry the pleasure they get from their work to an understanding that it’s, well, work.

2. Leads and lists, but not necessarily in that order

No matter what business you’re in, selling is hard. As a note broker, however, the challenge is even greater because repeat customers are few and far in between.

Seller Financed Notes, after all, are not electronics or fashion items. They’re not designed to be replaced after a year, nor do they become obsolete. People carry notes with the intention of collecting the income for the full term. In a perfect world, your note sellers won’t need you again for a long time, if ever again.

So how do you grow your business when demand for your services is limited? We do it by working both sides of the note business equation. This usually means you’re a matchmaker, connecting note buyers with willing note sellers. The arrangement is basically that note brokers use their superb marketing skills to find qualified notes for the note buyers to purchase and then their ninja negotiating skills to get the note holders to accept the offers.  Instead of just brokering a note, you are also very much so, selling your expertise.

So which is more important to a note broker, leads or lists? That depends on where your leads are coming from (what marketing methods) or where you are getting your lists from and the criteria for those lists of note holders. But regardless, it’s crucial to keep a close eye on both. In a difficult market and a changing industry, the best path to success for a note broker is to be adaptable and willing to work with both note sellers and note buyers. Concentrate solely on one, and you’ll find yourself struggling keep your note business afloat.

3. Relationships are everything

Every note professional these days seems to be glued to his iPhone or laptop screen. However, it’s important to remember on the other side of all those industry tools (for lack of a better term right now) are real people, and they’re the ones who keep your business going.

Relationships are your bread and butter—and when we say that, we’re not talking the little dinner rolls you fill up on before your meal arrives.

To understand how to maximize your relationships as a note broker, start by asking the basic questions: who do you know, and who knows you? The answers will go far in revealing the extent of your sphere of influence, the collection of people for whom you and your business have weight. The greater your sphere of influence, the more of a magnet you become for prospective note holders—and the better your chances of turning them into note sellers.

There is a cliché in real estate that goes “it’s all about location, location, location”.  In the note business, this isn’t just about inventory: it’s about involvement. To maximize your note business, you need to participate in your community. Get exposure in the flesh, and make sure people know what you do.

By showing you’re interested in the life of your community, you demonstrate that you have a personal stake in all the business you do as a note broker. You should also treat everyone you meet with the same courtesy and attention, no matter who they are or what they can do for you—after all, you never know who may become the next note holder or who might be able to give you the next referral.

Knowing and being known by as many people as possible is crucial, especially when there aren’t a lot of prospects to go around. But while quantity is good, quality is even better. Visibility is great, but if your only goal is to get everyone and anyone on the hook, knowing everybody in town will actually work against you. Your reputation in your community greatly influences your trade. People obviously want to work with note brokers they trust.

The most sustainable business model is one in which your transactions with others are always mutually beneficial. The note business is about making money; but if you focus too much on your profit margins, you’ll find you have fewer and fewer customers looking to hand theirs over.

Finally, once you’ve established your relationships, it’s vital to keep them up, whether or not they’re making you money right now. Follow up with recent note holders to see how the payments are coming in. Distribute an email newsletter to all your note holder contacts and potential referral sources. Send personalized notes and birthday cards. Use social media and maintain a presence online. If you feel like you haven’t spoken to an old note holder or referral source, send them an email to ask how they’re doing. The gesture only takes a minute or two, and it can pay huge dividends in the long run.

Each contact you make has a value, and each note holder also has a lifetime value. Lose contact with your note holder prospects, leads and referral sources, and you’ll be squandering your greatest asset.

Hopefully, these first three tips we’ve given you will help you get off to a strong start. But as any seasoned veteran will tell you, this is by no means an exhaustive account of the potential challenges you’ll face as a note broker. It may be a while before you start closing deals regularly, and you can be sure you’ll have your share of failures and awkward or embarrassing moments. But don’t get discouraged. Like many jobs that require a high degree of social interaction, the note business is best learned by time on the water, by doing, by interacting with as many leads, note holders, note buyers and referral sources as possible. So get to work! Next month three more solid tips in my second of this three part series. Remember success demands action, keep on marketing, it’s going to work!  TWITA! (That’s What I’m Talkin’ About!)

Jeff Armstrong of Armstrong Capital, your favorite Master Buyer, has been in the cash flow industry since 1991.  Specializing in the private mortgage note niche and seller financed notes he can be reached at 818-865-2322 or by email at For beginning to advance training opportunities, resources, to learn more or to obtain a quote visit and

2 thoughts on “Beginners Guide to Being a Note Broker – Part 1 of 3”

  1. Hi, I’ve been researching note brokering for years but never had the opportunity to work with any experienced professionals that would coach me if needed, I wish to become a Investor someday but for now I’d like to partner as a broker for a company such as yourself. Best Regards,Mike Justice.

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