As we started with in October this is the continuation and final installment of everything you need to know about the challenges and essentials of being a note broker, as well as important tips to help you get off to a strong start.
Understanding that 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 last installation of this three part series guide will give you the info you need to know. Here are the last three tips of nine total continuing on with number seven.
7. Make peace with technology.
Let us tell you what you already know: the Internet has transformed the entire note industry. Welcome to the twenty-first century. Today, there are no secrets. Note buyers and brokers can view live video feeds of the subject property’s area, get perspectives on the neighborhood from current residents, access government stats on traffic and environmental hazards, check the subject property’s sales price trends for the surrounding area, take virtual tours of every room, and so much more.
Nevertheless, if note holders now have increased access to information, note brokers also have increased access to potential note holders as well. Social media and marketing technology are changing the way note brokers interact with note holders. Twenty years ago, Linked In, Facebook, Twitter, Craigslist and Google didn’t exist; today, more than ever note professionals are using these services on a daily basis.
This has led not just to changes in communication, but more importantly, to changes in advertising and marketing. The Internet is being tested and slowly unfolding as a valid marketing method if done properly. That means there are increased opportunities to reach potential note holders more quickly, more efficiently, and more cheaply. Sure it a much, much, much bigger numbers game than other marketing methods yet some note brokers are cracking the code.
On the other hand, this also means there’s more pressure on note brokers to adopt the new tools. But note brokers who complain by responding that they “just don’t understand technology” are ignoring their business sense. Fads and trends become norms on the Internet for a reason: because they make life easier, they make life better, and they make people money. True, there’s a learning curve, particularly for note brokers who didn’t come of age with the Internet; but that’s no excuse for ignoring it.
An effective note professional keeps current and continues to educate himself on the ways technology is being adopted and adapted to the note industry. That means humbling yourself and asking people in the know, who are often younger. There are also more formal ways to educate yourself. Read books. Take classes. Go to conferences. Put in the time.
Finally, it’s important to remember that when it comes to technology, just because you have to understand it doesn’t mean you have to be an expert. You always have the option of recruiting someone else to handle your technology for you. Nevertheless, you’ll have to know enough to be sure that you’re not throwing your money away. Hiring someone to build your website will be a waste of time if what they produce is based on the demands of last year’s note holders.
This brings to mind a final point about technology: perhaps the biggest challenge of using it is the fact that it’s always changing. But that’s all the more reason to be active about adopting it. Don’t wait for some grand epiphany: search for knowledge. It’s part of your job responsibility.
8. Know your market.
Though some note brokers choose to work nationally thanks to the ease of communication, most note brokers still continue to work close to home and have a core local strategy. This brings us to an important and often-overlooked fact about the note industry—namely, that it isn’t a single industry at all, but rather a collection of local and regional markets. Though in many ways we’re no longer limited by geography and boundaries, the note profession is still fairly unregulated. True, some of the differences in laws practices between states may seem arbitrary; others, however, exist for a good reason. But regardless of how you feel about this reality, you must accept it and plan accordingly. The dynamics of your local market can have a profound effect on how you conduct your note business, and with whom—and the lower to the ground you are, the more evident this becomes.
9. Learn from the best.
In tip number 6, we talked about learning and improving from reflecting on and measuring your own performance. One of your greatest assets as a note broker is self-reliance. But you should still look elsewhere for guidance and support, especially if you’re new to the game. Let’s get philosophical for a second here. We live in a subjective world. Everything you experience is colored by the unique flavor of your consciousness. This means that we all see the world differently, but it also means we all see ourselves differently. That goes for your reflection in the mirror as well as your sense of your abilities. This has major implications for your work as a note broker. Confidence is an important quality in a note broker; but too much confidence can alienate your prospects—and if there’s a truth about confidence, it’s that the person who has too much doesn’t know it.
The only way to solve this problem is to “average” your perspective as a note broker with those of the note brokers you associate with—and the top performers are the ones who have done this work for themselves. Start by building and maintaining your relationships with your fellow note brokers and note buyers, the people you work with every day. You’ll not only strengthen the network of contacts you need to be an effective note broker—you’ll also have access to their hard-earned wisdom. Listen to horror stories as well as their success stories. Find time to ask questions. If an experienced note professional doesn’t have time to help you during work hours, offer to send him or her their favorite gift card or buy them a coffee or drink at the next event or convention. Worried about your rapport with note holders? Have someone whose opinion you trust listen to one of your calls. He or she may be able to point out a tic or mistake that you’re unable to see. Not getting the response you want from your marketing? Get feedback from someone who has it figured out, even if it costs you a few dollars. It will be money well spent.
Next, you should widen your focus. Step outside your door and find out which note brokers (if any) are the best and/or most visible in your community, city, county or region. Do your research. What are they doing that others aren’t? How do they market themselves? What tools do they use? Look at their numbers. How much business are they doing, and where are they doing it? You may say that because note brokers are independent contractors, they won’t be ready to divulge their secrets. True, it’s not in their best interest to tell you everything. But if there is one thing people in the note business —in any profession, really— love, it’s being viewed as an expert. By consulting a peer, you’re telling him that he is worth consulting. You’re validating his years of hard work. Plus, the people you’ll be asking for help are already successful at what they do. That doesn’t mean they’ll give up their edge completely, but it does mean they can afford to help the little guy. In truth, the secret that most people are keeping is that they don’t really know what they’re doing. If they have real wisdom, they’ll have no problem sharing some of it with you.
Hopefully, these final 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! 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 info@armstrongcapital.com. For beginning to advance training opportunities, resources, to learn more or to obtain a quote visit armstrongcapital.com and secretsofpaper.com.
Very insightful.