Written by Jeffrey R. Armstrong – President/Owner of Armstrong Capital
Your favorite Master Note Buyer – Straightforward, Honest, Fair…
Many new brokers want to know when is the right time to work with a Master Broker and when they should work directly with a funding source. The answer depends on several factors: your experience and comfort level, the complexity of the transaction, time constraints, and your preference.
Just to refresh your memory, a broker is awarded the Master Broker designation by ACFA when they have exhibited the highest level of skill and expertise in the industry, and they are committed to working with brokers to get their deals negotiated and closed. Master Brokers are deemed to be in the top one percent of brokers in the nation. In general, you should use a Master Broker if:
– You are inexperienced and feel uncomfortable working directly with a funding source.
– You are uncomfortable structuring the transaction and negotiating with the seller.
– You don’t yet feel familiar enough with the documentation you’ll need to collect and review and calculations involved in putting together a transaction.
Additionally, after you have your business up and running and you start to get some calls a Master Broker can help you in a couple of different ways. If you are still working at another job and you do not have the time to actually work on the transaction yourself you can simply pass on a name and phone number of a pre-screened note holder and earn a referral fee if a transaction closes. Or, you may want to spend your time marketing, finding and pre-screening the note holders while you have a Master Broker do the rest. A pre-screened note holder is a note holder that has contacted you and you have found out that 1) they are receiving payments on an income stream, and 2) that they currently have an interest in selling all or part of that income stream.
If you have the time and you want to work on the entire transaction but you would like some assistance with negotiating, packaging, due diligence or closing procedures a Master Broker can help you with that as well. In addition to being able to take advantage of a Master Brokers relationship with funding sources, experience and knowledge, a Master Broker can often save you valuable time and considerable effort in conjunction with a particular transaction as well as help you earn a potentially larger commission. Furthermore, a Master Broker has the ability to quickly determine if a deal is feasible or not so you don’t spin your wheels and waste your time on something that has little chance of closing.
The upside of working with a Master Broker is that you can earn fee income while you are learning about the business. Master Brokers have different requirements on the minimum amount of information you can provide to them as well as their own individual ways of working with brokers, with some not even requiring you to complete the submission worksheet yourself. They will pick up and communicate directly with the seller early in the transaction if you choose. Regardless of whether the Master Broker gathers the initial information or you do, the Master Broker evaluates the transaction and chooses the funding source.
A Master Broker should not be used for general questions rather, a Master Broker should be used for questions you might have concerning a specific transaction or potential deal. A Master Broker can be used as a sort of mentor for your first few transactions to learn from and gain some experience. For example, Kevin Hammer, of Hammer Funding, recently closed his first transaction with me. Here’s what Kevin had to say about his Master Broker experience, “…thank you for all of your guidance and assistance with closing my first transaction. Your world-class professionalism, tireless work ethic and vast knowledge of the note business made closing this transaction not only easy, but also fun and exciting. Your Master Broker Services are truly an asset to anyone starting out in this business…”
Some brokers choose to do more than just their first few deals with a Master Broker and use them regularly. Case in point, Len Archibeque, of Baseline Funding used me for assistance on many transactions and as a result ended up in the Million-Dollar Club! Here is what Len had to say about his Master Broker experience, “…I worked with Jeff. He was my mentor for a few years to learn the industry. I can’t say enough about him taking that role as a Master Broker and helping a new broker develop clients… he showed me the ropes in the real world. We did several deals together…Jeff was very negotiable with his fees, so that wasn’t an issue with me at all. He provided me with the support I was looking for so it really worked out very well…”
The next time you have questions about a particular transaction or a potential deal and you are not sure what to do with it or you would like assistance with it, contact your favorite Master Broker and let them help you on your path to success.