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Examining the Mind of the Note Holder – Part 3 of 3

Written by Jeffrey R. Armstrong – President/Owner of Armstrong Capital

Your favorite Master Note Buyer – Straightforward, Honest, Fair…

Marketing for notes is more than just sending out a postcard or building a website.  There are many reasons why a note holder responds to your marketing efforts and then subsequently accepts an offer on their note.  This month is the final segment of my examining the mind of the note holder series. This information will help you in creating more targeted marketing materials as well as when you are talking on the phone and negotiating with note holders.  The Reasons for Not Selling correspond with the Best Proven Responses below.  Have you heard some of these reasons for not selling?  Maybe some of the following will resonate with you.

More Reasons for Not Selling:

1) – I am not having any problems with the note right now, everything is fine

2) – No Current need to sell

3) – I really don’t need the money right now

4) – I like the monthly income

Best Proven Responses:

1) I appreciate that Mr. Seller and that is why we can make you a great offer on your note today.  If you begin having “problems” what do you think happens to the risk and value of your note?  Do you think the value of your note will go up or down?  (Pause) That’s correct (or not correct) – your risk increases and our risk also increases which would mean that I would have to pay you less than I can today if you start having “problems” with the note.

2) & 3) & 4)  This one can be tough or it can be a fun one.  I might joke with them and ask if they would give me some money.  Then I tell them how it would benefit them to sell now and get the money into something that will make them more for their kids, their retirement, etc.

What typically stops them in their tracks here is asking them what they do with the monthly income.  Are they paying bills, are they saving it, or are they just blowing it?  Then you gently point out that at the end of the note unless they have invested it, they will have zero.  Whereas if they take a large lump sum they will more likely invest it and watch it grow.  Or even pay off their own debt so any income they earn will be theirs to do with as they please.

More Reasons for Not Selling:

1) – The offer is lower than expected

2) – Need more money, owe money on home

3) – Wary of the companies legitimacy

Best Tried and True Responses:

1) & 2) First of all if you do not set the seller’s expectations on the very first phone call you will hear this type of reason many times. You should not hear this on the second phone call, if you do you need to re-examine what you say on your first contact phone call then do it and make sure they know right up front where their expectations should be.  If this still comes up when you present the options then ask lots more questions. How much were you hoping for? What were you planning on using it for? How long would it take to come up with the difference? If they need more money due to a wrap-around or AITD, remind them of the reasons they don’t like the current wrap.  Tied up credit lines, being left with large debt if buyer defaults, less buying power due to debt to income ratios still on their own credit.  Sometimes you can show them that they are better off selling the note and bringing money to the table to walk away from the situation.

3) This doesn’t come up too often. Explain the initial mortgage purchase agreement and the purchase contract. Explain to them that we actually obtain a title policy at closing and would not be able to just randomly claim ownership of the note if we had not provided money.  Simply state that “even if we were to have you send us the originals in the mail and not send you your money, you would simply instruct the borrower not to pay us.  You would have an executed agreement that you signed in front of a notary that would show we were liable.” Talk about paper trails and offer to close at a title or escrow company or real estate attorney of their choice (and at their cost) if that makes them more comfortable.

The bottom line with all of these responses is to keep the seller talking.  There is no one response or one-liner that I can give you that will make the seller says yes every single time, no golden phrase.  I think the key to being successful in the note business is getting to know the seller and “really” listening to what they say.  In return the seller begins to know and trust me.  When I get them to let their guard down I can typically find out what the real reason is they called. Once in awhile they really are “just curious”.  However, most other times they aren’t.  Sometimes you will find out the real reason for their call on the first phone call and other times it may take several conversations.  Sometimes when I call to follow up I just call to check in on them and say hi without even bringing up their note and I let them bring it up. Then we go from there.

Remember, success demands action! Keep on marketing, it’s going to work! TWITA! (That’s What I’m Talking About!)

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