Far too many brokers are weak in presenting a purchase offer to a note holder. You want to make sure that you send a WRITTEN offer before you initiate conversation. It’s kind of amazing to me as far as the actual # of brokers who just call and give an offer verbally. This is incredibly minor league. The initial answer to a verbal offer is ALWAYS going to be “no”. Ever hear of the saying “The first one to mention a figure loses”? It’s true. Call it human nature or the way things are or whatever you want to, that’s just the way it is.
So, to paraphrase one of my old high school teachers, Jessie May, “Let’s not be stupid”. BE PROFESSIONAL. First of all, you need to be confident that you have a good, competitive quote in hand from a bona fide, reputable funder. The next thing you want to do is write the offer up, and give them at least a couple of options, i.e. full vs. partial purchase (the latter is a lot easier to make if the seller has given you an amount of cash he specifically needs to come away with).
Finally, you need to make the offer in a manner something like this:
- quote them the figure that you ‘will pay them for the entire note’, and add some more language such as ‘when you add up the $___ that you have already received plus the amount we will be paying you, I am sure you will find this to be a very generous offer’. (This is a pretty powerful little approach, as it prompts them to mentally tally up the figures for themselves rather than just reading a number off a piece of paper.)
- quote them the partial offer and tell them ‘I will pay you ____ for the first ___ # of payments, after which you will resume collection of payments after payment # X. Then say, ” when you add up [this and this plus the total amount you stand to collect], I am sure you will find this to be [a very generous offer as well].
And then, at the end, tell them what will happen next if they accept: “If you decide to go with this, I will need copies of [documents] and your OK on [the initial purchase agreement which gives them an opt out if you fail to perform, and most importantly gives you the option to purchase but also the option to opt out if there are surprises or something doesn't check out].
THEN and only then, AFTER you’ve sent them the written offer, it’s time to call them to talk and review the offer as well as answer any questions they may have.
You’ll find that you’ll get a lot more offers accepted this way. Be precise, be specific, be professional. And always remember: Even if the offer is not accepted this time, it may well be another month from now. BE SURE TO FOLLOW UP methodically because that’s where most of the acceptances come in (that is, “down the line” a little bit). When they accept a couple of months later, all things being equal, you simply reduce the original offer by the # of principal payments that have been received since then.