Cash Flow Business Tip of the Week- Ask the right questions of the note holder

qaLearning how to prequalify a note holder and then properly “package” a note or cash flow is key to getting the transaction reviewed, quoted on and processed. All too many times, we see note information just ‘shot out’ there haphazardly to the funder- presumably plucked off a website somewhere or from some third party that the broker doesn’t know (and, as a result, doesn’t really have a handle on what he’s trying to get a quote on).

As a cash flow professional presumably looking to forge good relationships, the worst thing you can do is lazily shoot out “notes for sale” information somewhere to anybody you think might be a funder. Not only is it going to be ignored, but you are also spinning your wheels and thereby wasting your time as well as the money people’s with whom you’re trying to establish street cred with.

Don’t ever forget that the value you bring to the table as an intermediary or note broker is that you are a finder– meaning that effective prequalification skills need to be your #1 strength (besides the actual lead generation). You can easily “paint by the numbers” in order to achieve the level of skill necessary to effectively prequalify, and you need to take the time to do it. The “shotgun approach” I just described is simply not going to work. You need to systematically go through the questionnaire provided by your funder and ask each and every question of the person asking you for a quote.

Make sure you are actually dealing with a note holder

Also, you must first establish that the person you are talking with is actually holding a note. Sometimes you’ll get calls from people who are trying to get out of a mortgage they’re paying on (seems strange, I know, but if you do this long enough, you’ll get these kinds of calls)!

A simple question I like to ask at the outset is “Are you collecting payments [on a mortgage, note, etc] now?” We want to make sure they are, in fact, the actual person holding the note and collecting the payments (and ultimately the “decision maker”).

What we also want to do is sniff out someone who is actually a broker themselves just trying to “shop” a note. At this stage, a phony is usually exposed. The next question I like to ask is a simple one: “What are the payments and how many are there?” Every note or cash flow  is essentially a series of installment payments. If the answers you get back indicate that the person is indeed collecting payments on a note, then we can get into the next line of questioning.

Realize that the key here is to eliminate the time-wasters early on. If he balks at the first question or starts getting off the track, ask the question again “Are you collecting payments…” Make it clear that you’re only interested in beginning a conversation if they are indeed collecting some kind of payment stream.

The Note Submission Form is your friend

Now that we have that established, you should be going to the note intake sheet or mortgage submission form next and simply ask the questions on the form with respect to payment amount, terms, etc, etc. Usually, a legitimate note holder will have a pretty good idea of exactly what these are and you will be jotting this all down as they give it to you.

Note: Even if you’ve never done any of this before, remember the note submission form or quote sheet is your friend. Getting the questions on the sheet answered will ensure that you are collecting the proper info needed in order to quote them. Also, this process will protect you from your own inexperience. Just be very confident in what you’re doing and know that there are in fact the right questions you need to ask.

Tune in to for Tim’s regular posts and columns on notes, investing, and personal wealth building. You can email him or call him at 312-922-1695.

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