Lessons for Marketing to Note Sellers


This series is designed to give you tips on how to effectively market to note sellers.

Fact #1- There is a lot of money being made in the note (cash flow) business today.

Fact #2- Most of the money is being made by a very small percentage of note brokers.

Fact #3- Most new note brokers fail.

These three indisputable facts beg the question-What are the few successful doing that the majority are not? The answer is simple – they are marketing effectively to find note sellers. If you market your note business effectively, you will succeed– if not, you will fail. Harsh but true.

Tip #1- Establish a long-term marketing plan to reach and convert more note sellers

You must establish a long-term marketing plan to reach and convert note sellers. The key is LONG TERM. If your mindset is short-term (get rich quick), you will have a short term frustrating career. Every successful note broker is in for the long term. For you to be successful in the long run, your marketing program should be designed with three goals in mind: Keep, create and repeat.

Keep- Use marketing pieces that note sellers do not discard.

Create Urgency- Your marketing plan must be designed to create urgency- motivated note holders are the only ones who sell.

Repeat referrals- It is imperative that your marketing be designed so that you do multiple transactions with note selling sources.

In Tip #2, we will start to cover “keep, create and repeat” in more detail.

Lessons For Marketing to Note Sellers #2

In the last lesson, I reviewed with you the three goals to a successful marketing plan: Keep, Create and Repeat.

In this lesson, I will talk about “KEEP”.

If you want to be successful, it is important for you to understand the motivations of note holders. Please observe that I used the term “note HOLDER” and not “note SELLER” – it is YOUR job to turn note holders into note sellers. Note holders only become note sellers when they are motivated to sell. There are many reasons why a note holder becomes motivated: business opportunities, desire to help a family member, financial distress, etc. etc. The commonality is the need or desire for a lump sum of cash.

The big mistake that most note brokers make is the frequency of their marketing efforts. An age-old marketing adage is that marketing produces best results when it is done well and done frequently.

Here is a typical scenario:

You send a marketing piece to a note holder. The note holder has no interest and discards your marketing piece. Sometime later (a week, a month, a year) the note holder becomes motivated to sell, but has no way to contact you because they did not keep your marketing piece. One marketing effort is not enough.

The most effective marketing plan proceeds as follows:

Direct mail being one of the best, most effective ways to reach note holders today, your first effort should be a letter with your note broker’s brochure enclosed.

A different marketing piece should go out 30 days later, and then every 90 to 120 days. If you want note holders to remember you and to keep your information, this simple plan will help do the trick.

Lessons For Marketing to Note Sellers #3

In the last lesson, I talked about – Keep. Let’s continue with that theme. It is essential for your success that the note holder keep your marketing material, and your marketing PROGRAM must be designed with that in mind. As a direct marketer, I know that the majority of material I send will be discarded. Your goal is to increase the number of note holders who DO keep your materials. Just a small percentage increase of “keepers” will have a dramatic impact on your financial success.

Last lesson, I outlined a plan for you; (1) send a letter and a brochure, (2) send another mailer in 30 days and (3) send a mailer every 90 to 120 days. This plan is based on one of the best and oldest marketing adages I have ever heard. I suggest you make a copy of this and look at it every day.

Here goes:

“Marketing produces best results when done well and done frequently.”

Let’s take some time on your letter. Most of the letters I critique for note brokers are much too long. Your letter should be two to three paragraphs at most. The only purpose of the letter is to introduce you to the note holder– nothing more. Basically, you want them to know who you are, what you do and how they can get in touch with you.

There has never (ever) been a letter that is so powerful as to make a note holder want to drop everything and sell you their note(s). Successful note brokers realize that the letter is the first of many steps in the marketing process.

Lessons For Marketing to Note Sellers #4

This series started with the outline of the three goals of a successful marketing plan: Keep, Create and Repeat. We will continue with: Keep, letters.

Letters (and anything else) that you send to prospective note sellers have to look first class. You can be working from a card table in the middle of a rented room, but your letters should look as if they came from a Fortune 500 company or prestigious financial professional.

Use good quality paper. This may seem unimportant, but good quality paper conveys the subtle feeling of success and the cost difference is negligible. I would suggest white or cream-colored stationery with blue type. Grey paper stock with maroon typeface is another “classy” alternative. Your letterhead must be professional. There are two general possibilities: (1) classic– similar to what is typical of a major law firm, or (2) more stylized and colorful- similar to what many major corporations use.

It is important to use color and highlights throughout your letter– this attracts and keeps the reader’s attention. Here is a caution: don’t overdo the color and highlighting, as too much is confusing.

Use a “P.S.” at the end of your letter. This simple trick will ensure that more prospects “keep” the letter that you send. Here is an example:

“P.S. Even if you do not need a lump sum of cash today, tomorrow could bring unexpected needs or opportunities. Please keep this letter with your mortgage documents.”

It is amazing how well this works. I have had note sellers send me document packages with copies of my letter and flyers (more about flyers in a future lesson). When I inquired as to why they had so many copies, the typical reply was something like “you told me to keep them, didn’t you?!”.

Lessons For Marketing to Note Sellers #5

Try to personalize your letters. This means having the note holder’s name and address appear on the letter as well as including the name in the salutation, such as “Dear Mr. Russell”.

If you are using a word processing program, this may be easier than it sounds. Most word processing programs have capabilities that allow you to personalize your letters. Many full-featured word processing programs also let you prepare mailing labels, zip sort your mail, delete duplicate names and addresses, and many other features that could help you expedite a mailing. If your program has these features, learning how to use them could save you time and money.

Many mailing services can personalize your entire mailing. Costs may vary from service to service. When considering a mailing service, shop around. Compare prices, capabilities and get references.

Whenever possible, try to have your letters signed in a different color ink. For example, if the text of your letter is in black, you can use blue for your signature. Having your signature in another color adds a personal touch. If you are doing a larger mailing, you can still utilize this technique. All you have to do is get a rubber stamp made up with your signature and imprint your signature using a blue stamp pad.

Lessons For Marketing to Note Sellers #6

Generally, business letters include the date the letter was created. However, dating your letters can be a little tricky. For example, first class mail usually takes from 1 to 2 working days to be delivered locally, depending on your city and the specific post office handling your mail. Some post offices are more efficient in getting out the mail than others. What this means is that if you put a date on your letters, you must consider when you are going to mail and when you expect it to be received. Since you always want your letters to appear timely and important, once it is dated you must be sure to mail promptly. The rule of thumb is to mail as early in the day as possible. Don’t wait until the last collection. Getting it in the mail early increases your chances of having it processed that same day rather than having it delayed.

On the other hand, if you are doing a bulk mailing, not dating the material can be an advantage since bulk mail often takes much longer to get delivered. As you gain experience with your mailings, you can decide which approach works best for you.

There are a few theories about including your return address on your envelopes. One says, “leave the return address off.” The reasoning is that omitting the return address arouses the recipient’s curiosity. As a result, the note holder is more inclined to open the letter to see whom it is from. This also saves you the cost of imprinting your envelopes.

However, if the letter is undeliverable, it won’t be “returned to sender” which it would be if it were sent first class. If this is the case, you won’t be able to update your mailing list or keep track of that particular lead. Therefore, theory two says, “always include your return address”, because it gives you better control over managing and updating your list.

Lessons For Marketing to Note Sellers #7

Another idea relating to the return address portion of your envelope involves hand writing just your initials over your return address. This technique has proven effective because it also helps stimulate the note holder’s curiosity, which helps motivate them to open the letter and read it. You may want to test each approach on a limited basis to decide which is best for you.

Lessons For Marketing to Note Sellers #8

I like to follow up my letter with flyers. Too many note brokers become married to their letters. Send out only one letter to note holders on your mailing list. Next mailing should be a flyer within 30-45 days, and then another flyer every 90-120 days.

Flyers are inexpensive, designed to attract attention, arouse curiosity, and deliver your message in an easy-to-read format. They should be able to be read within seven seconds. People today have a very short attention span, and are being bombarded with advertising. Make sure you have them customized with your name, phone, etc., and proofread carefully prior to having them duplicated. This holds true for any materials requiring customization. You would be surprised as to how many people fail to check their phone number, email address, URL etc. before a marketing piece is printed. The last thing you want to do is send out your marketing materials with incorrect contact information.

You can prepare your flyers in any number of ways. For example, you can have them duplicated using a two-color technique, or you can have them duplicated onto colored paper. Don’t be afraid to experiment with various color papers. I recommend using very bright colored paper. Bright green or orange seems to attract the most attention. I suggest that you stick with the same color paper for all of your mailings. You know your marketing is working when you start receiving calls from note sellers that start with “Are you the one sending me those ugly green flyers?”.

Lessons For Marketing to Note Sellers #9

Besides mailing, you can distribute your flyers in any number of ways. Here are just a few. For example, you can place them in real estate offices and title companies. You can use them to work with a broker or other referral source. For example, you can provide the digital copy to real estate brokers or other professionals you work with so that they also can customize them with their office information and distribute them to their clients. Just make sure they refer all of the business to you. You can post them on public bulletin boards. There are bulletin boards everywhere if you start looking for them; supermarkets, home improvement centers, libraries, banks, diners, laundromats, hospitals, etc.

Here’s a trick that you might consider for mailing your flyers. Just fold them into thirds, as you would with a standard letter. You now have an “instant self-mailer.” Simply hand-write an address on one of the blank panels, affix a colorful first-class stamp on it and drop it in the mail. The important point here is that you make a concerted effort to get your message out to as many prospects, referral sources and note owners as possible. Remember that the goal of all your marketing efforts is to get noticed, get read, and get responses. The more prospects you reach, the more opportunities you create for making deals.

When preparing a mailing, you will ultimately have to decide whether you are going to use mailing labels or have the note holder’s name and address either typed or hand-written directly on the envelope. Each approach has its pros and cons. On one hand, preparing mailing labels is easy if your word processing program has a mailing label feature that allows you to print your own labels. Labels for use with your word processor and printer can be purchased at most stationery stores. If you are doing a very large mailing, labels may be the best way to go. However, using mailing labels diminishes the “personal touch” of the mailing.

On the other hand, typing the note holder’s name and address on the envelope is very effective in maintaining a personal touch. Here again, many word processing programs are capable of printing envelopes on a printer.

Addressing your letters by hand is the ultimate personal touch and helps to stimulate curiosity about what is inside. You might consider this approach for smaller mailings.

Whenever possible, use “real postage stamps” rather than having the mail metered. Having a stamp helps to distinguish your letter from “metered mail.” This can work to your advantage, because many people often associate “metered mail” with junk mail, solicitations, or in some cases, bills. The post office has a large selection of “commemorative stamps.” Most of the commemorative stamps are colorful, attractive and interesting. Using an interesting commemorative stamp can add a bit of color and will often help draw more attention to your message.

Lessons For Marketing to Note Sellers #10

Here is an example of the type of flyer I like. It is in the form of a cartoon. Cartoons are read, and even if it ends up in the prospective note seller’s waste paper basket (a distinct possibility), your message has still been delivered. It only takes 7 seconds to read your flyer, and we live in a society that has a 7-second attention span. Your number one goal is to get your message delivered; you have just accomplished that goal.

Goal number one-A is for the note holder to keep what you sent. Experience shows that note sellers tend to keep these cartoons more often than they would a letter. The PS on the bottom instructing the recipient not to throw away your flyer works well. I have always wondered why. I never have come up with a good answer. All I know is putting a “PS” on any communication will get the desired results.

A final word regarding flyers. When my marketing people suggested this technique, I was very resistant. I thought they were much too primitive. I finally tried it, and the results were both immediate and positive. Give flyers a try.

Lessons For Marketing to Note Sellers #11

Postal cards are another inexpensive way to reach note holders. Your flyers and postal cards can be very similar. The postal cards can use the same visuals and messages that appear on the flyers. This is done for a very specific reason: to keep your marketing message clear and consistent.

You could have your postal cards prepared using some of the ideas already mentioned in previous lessons. Now, here’s a secret that most savvy marketers know and use all the time: take any one of the postal cards (or flyers, etc.), print it on different color paper and mail it to the same person more than once over a period of time. What happens is this. Every time you mail that same item and print it on a different color, the person who receives it thinks it is different from the last item even though the message is the same. Using this trick you can accomplish two things:

1) You can double the mileage you get from each piece, and 2) you drive your message home and reinforce it by frequent repetition.

Lessons For Marketing to Note Sellers #12

If you review the previous lessons, you will have an understanding of the resources needed to accomplish the “Keep” step of the marketing process. In review, “Keep” was defined as using marketing pieces that note sellers do not discard. The installation of the 3 key components – Letters, Flyers and Post Cards, will help you accomplish your business and financial goals. Most neophyte Note Brokers fail because they bail out too soon. If they do not get the expected response the first time, they get discouraged and quit. For the plan described in this series (or any other plan) to work, it must be implemented over time. Success comes with long term planning; which leads me to the second part of “Keep”. “Keep” means marketing over and over for long periods of time. Note holders must get used to seeing your marketing pieces over and over again. Then and only then, when the time to sell arises, they will have your material and get in touch with you.

The process of “Keep” (explained in previous lessons) will allow you to “survive” financially. Most new note brokers never reach the survival stage. If you survive, you have the possibility of achieving significant financial success. More about that in future lessons.

Lessons For Marketing to Note Sellers #13

Accepted industry statistics indicate that 17% of note holders are ready to sell their notes at any one time. Logic would indicate that you would get your fair share of productive leads if you have (1) a good list of note sellers and (2) decent marketing material i.e., letters, flyers and post cards. Logic in this case, may I say, is illogical or at least misleading.

Let me explain. A common complaint of neophyte note brokers is getting responses, but only for bad notes. Notes that have no market, and therefore, no way to make a profit – the proverbial “small second mortgage on a vacant oil well in default”. I am of the opinion that the 17% statistic is correct – but misleading. The problem is these are not the mortgage notes we are looking for in order to make a profit.

The note holders we are looking for are not yet ready (or more correctly, motivated) to sell. That is why the “KEEP” portion of your marketing plan is so important. A note holder KEEPS your marketing piece, and when they become motivated to sell, they can locate you. If you KEEP marketing, your marketing piece will most likely be in the hands of the note holder when the motivation to sell occurs.

Lessons For Marketing to Note Sellers #14

What is the difference between rich people and poor people? The obvious answer is money. It is true that rich people have money– otherwise, they would not be rich. There is a commonality that most wealthy, successful people share. Wealthy people tend to think in long terms and unsuccessful people tend to think in short terms.

Long-term thinking is a mindset. Most new brokers enter the cash flow business with the mindset that it will be quick and easy (short-term thinking).

It is my belief that our business is simple: (1) find an acceptable note/cash flow, (2) match it with the appropriate funding source, (3) take your fee and move on to the next transaction. Simple, however, is different from quick and easy. Most new note brokers fail and fail fast. They are in and out of the business in less than a year. A year is the time needed for a workable marketing program to bring significant results.

Most novice note brokers are leaving the business way too soon. To be successful, which requires finding the right note sellers, takes time. Follow the lead of rich people and develop a long-term mind set. The point that I have been hammering at the last several tips is how important it is to KEEP marketing and KEEP marketing over a long period. This message is simple but not always easily absorbed by newbies.

Lessons For Marketing to Note Sellers #15

We have not yet talked about brochures, however, they are indispensable marketing tools. Written properly, note sellers will keep your brochure if it says the right things. Almost everybody has, at some point in their adult life, read a brochure to get additional information about a product or service that interested them. Brochures let you selectively develop your message in greater detail by providing the reader with useful information about your services and why they should call you when they are ready to act. Your brochure should be designed to provide prospects with useful information about selling their notes. The content should “mirror” your website layout, and address questions people most frequently ask regarding the sale of their notes. It also provides the answers to these questions as a way of simplifying and explaining the process of selling a note to you. In essence, the purpose of the piece is to provide the reader with useful and important information, and sell the fact that you can help them when they are ready to sell their note.

There is another, more important ingredient that is required when creating your brochure. Your brochure should be designed to educate the note holder. Most note holders have very little knowledge about the asset that they own. In many cases, the note is their most important asset. Educated note holders are much more likely to sell their notes. Your brochure may be the first time they are made aware of the pitfalls involved in note ownership.

Lessons For Marketing to Note Sellers #16

With direct mail marketing, using two colors is more effective and attractive than using one color. Use the second color to highlight points that you want to emphasize or draw attention to. Using a color stock adds another dimension to the overall look of the piece. When it comes to using “spot color”, here’s a tip that separates the amateurs from the professionals: don’t overdo it. Use spot color sparingly in those places where it makes the most sense. Overusing spot color, or using it indiscriminately, defeats the purpose and usually weakens the impact of the piece.

Use your brochures as general sales and information pieces. They communicate information about converting notes to cash. A good idea is to carry some with you at all times. This way if an opportunity presents itself, you are prepared to provide information immediately. A business card with your website address is nice, but truth be told, you can’t count on people to actually follow through and go to your website… furthermore, they may tuck the business card away and never look at it again. You want to make an immediate impact by giving them something they will keep as well as instantly communicating your message and call to action.

When people ask you to send them additional information, get their mailing address and send them your brochure. Don’t just verbally give them your website address… they may never get around to going to it. In some cases, you might want to include your brochure with a marketing letter or send it out by itself as a mailing.

As with all your marketing materials, your brochures should be designed to give you flexibility. This means it should be designed to be used as an “instant self-mailer.” Here’s how it works, one panel should be left blank to give space to write in a name and address and to affix a stamp. Try it. Presto! Your brochure is ready to be mailed.

Lessons For Marketing to Note Sellers #17

Before moving on with your direct marketing program, now is a good time to go over a checklist for all of your material, both printed and online.

Checklist for Preparing Printed Material

? Was care taken in the final production of the materials?
? Do the materials meet printers’ specifications?
? Will the materials meet high quality reproductions?

Is the layout well-organized and easy to see and read?
Is the overall visual format attractive, distinctive and attention-getting?
Does the layout need more white space to improve its readability?
Does the material look professionally created and produced?
Will using color increase the impact and effectiveness of the piece?

Does the headline grab attention and stimulate interest?
Does the headline communicate a powerful message or idea?
Is the message in the copy clear and understandable?
Does the copy state the benefits you want to communicate?
Does the copy create urgency and have a “call to action”?
Does the copy tell the reader how to respond? Call? Write? Fax? Email?
Does the copy contain all of the vital information that you want included such as your correct phone number, address, etc.?
Has the copy been proofread, checked and corrected?

Lessons For Marketing to Note Sellers #18

No discussion of marketing communications would be complete without mentioning advertising. Advertising is a powerful tool and can generate leads. However, there are a number of things to consider when planning to advertise. First, pay-per-click (PPC) ads tend to be expensive. Second, if you use these, you must use them on a frequent and consistent basis. Running a PPC ad one time seldom produces the expected results, unless of course, you are running an offer that they just “can’t refuse” (unlikely). Third, because of the expense involved, running PPC ads according to a pre-determined schedule (involving any kind of a truly consistent daily or weekly spend) will quickly use up your marketing budget. Fourth, while PPC ads, to some extent, do qualify as “target marketing”, that doesn’t preclude the fact that some people who click on them may or may NOT own mortgages or notes. Put another way, this means that those who might own mortgages are not necessarily the majority of readers.

(Side note: You might employ “retargeting” which involves ads aimed at people who have already visited your website (this is done through the use of “cookies” which is a tiny code snippet placed on the site visitor’s browser)– this can still be rather expensive but more effective since these people have previously clicked through for more information that you have to offer, so they may be better qualified.

On the other hand, you may be far better off allocating your advertising budget towards purchased lists of known note holders (holding notes with good LTVs, property types that investors are actually looking to buy) which are culled from public records. These tend to be HIGHLY-targeted leads, and, since 2%-3% of note holders are SERIOUSLY considering selling their note at any given time, you can expect to close deals more consistently once your campaign gets rolling. And, you can INCREASE your response rate through subsequent monthly follow up mailings, even to 5% or more in some cases (I’ve seen it done) as a normal part of your mailing budget (Example: Figure, conservatively, 2% conversion rate out of 1,000 monthly mailings = 20 closed deals x $3,000 profit– again, that’s a conservative estimate, as profit can be more, i.e., $5,000 up to $10,000) = $60,000 less mailing expenses which are comparatively low.

Remember that consistency and frequency are key components to successful marketing and advertising.

Lessons For Marketing to Note Sellers #19

This series on Marketing to Note Sellers began with an outline of the three steps necessary to achieve success. They are:

Keep- Use marketing pieces that note sellers do not discard, both direct mail and/or electronic.

Create Urgency- Your marketing plan must be designed to create urgency- motivated note holders are the only ones who sell.

Repeat referrals- It is imperative that your marketing be designed so you do multiple transactions with note selling sources.

We have covered “keep” in quite a bit of detail. For you to survive in this business, you must have a marketing plan and the marketing resources to implement the “keep” step. This is the reason so much time has been spent on this topic. I urge you, if you have not already done so, to review past lessons.

Areas that have been covered are: direct mailed letters, flyers, post cards, brochures, follow-up and advertising (pay per click or otherwise). The failure rate for newbies in our business is quite high. The reason – most new note brokers do not understand the marketing process.

For you to prosper in this business understanding and implementing the next step, “creating urgency”, is critical. Next, we will be moving on to the topic of creating urgency.

Lessons For Marketing to Note Sellers #20

If you followed past lessons on “keep”, you should be in the elite category of cash flow note professionals who have survived and are still alive in this business— and, consequently, ready to go forward to the next level.

It is essential for you to have an understanding of note holders. There are two main categories:

  1. Note holders who have bad, unmarketable notes – the proverbial non-performing second position note on a toxic dumpsite. These notes are easy to find, and they always seem to be presented to those who are new to the business. Transactions on notes like these never close. After seeing several of these bad notes, the new, inexperienced broker becomes discouraged and quits.
  2. Note holders with better quality product who want to sell because of some circumstance creating urgency. In order for you to become successful, your marketing plan must be designed to create urgency. Motivated note holders are the only ones who sell.The urgency to sell a note takes place either naturally or because you help create urgency.

Examples of urgency that occur naturally would be: cash needs for such things as weddings, emergencies, vacations, business opportunities, payment of debts, etc., etc. You will receive your fair share of business from this type of note seller if you follow the previous lessons – i.e., keep marketing. This will enable you to survive (and then thrive) in the cash flow business.

The most successful cash flow professionals understand the need to create urgency. The understanding of this concept is what separates the superstar note broker from the average note broker. You cannot create urgency using only letters, flyers, post cards, email (as explained in previous lessons). Creating urgency requires a long term, well thought-out marketing plan.

Lessons For Marketing to Note Sellers #21

If you are to prosper in the note/cash flow business, you must learn how to create urgency. If I have convinced you that this is essential, then the next question should be “What creates urgency? How do I do it?”.

Let us start with a simple but amazing fact. Most note owners have little or no knowledge regarding the asset that they own. Many note holders took back financing not because they wanted to, but because they had to. In any event, in the vast majority of cases, the note they are presently collecting payments on will probably be the only cash flow that they will ever own. In many cases, the note they own is one of their most important (if not THE most important) financial assets.

So, you have a situation where someone owns something they really didn’t want, doesn’t know what to do with it and doesn’t understand what they own.

You are probably familiar with the old expression – “ignorance is bliss”. That may be true in many cases. However, when it comes to owning a note, ignorance can spell disaster.

Once you understand this phenomenon, you will be in a position to close many more transactions—and, at the same time, you will be helping amateur note holders. You will accomplish this by creating urgency.

Lessons For Marketing to Note Sellers #22

Note ownership is a complex business rife with benefits, but filled with risks and unforeseen problems– especially for the uninitiated. Complex financial instruments should not be owned and controlled by novices.

There are several reasons why most amateur note holders do not sell. Among them are:

  • They do not want to take a discount. They are getting a better return than they can elsewhere;
  • They have become comfortable with their investment.

Given the above, in order to create urgency, you must educate the note holder. An educated note holder is much more likely to sell.

A common mistake made by neophyte note brokers is to try and create urgency using only letters, flyers, email, etc. This is not possible, and will only lead to your early “retirement” from the note business.

The successful marketing of your note business must take place over time. The resource that has been most successful for me to help create urgency is called a “Note Owner’s Manual”. A Note Owner’s Manual that is written, designed and used properly can make all the difference in your cash flow/note business. I stress “written, designed and used properly”. Like all other marketing resources, if your Note Owner’s Manual is structured improperly, it will be both ineffective and expensive. Your Owner’s Manual must be designed to create urgency.

Lessons For Marketing to Note Sellers#23

One of the main challenges note brokers experience is convincing note owners to take a discount and sell now. Many note buyers have told me: “…no matter how hard I try, I can’t persuade note sellers of the time value of money, the desirability of a Caribbean cruise, etc.” I will confess that in my approximately 25 years in this business, I was never very good at convincing unmotivated note sellers, either. If the only motivated note sellers you are dealing with are those who receive your marketing piece simultaneously with an IRS lien, pink slip, wage garnishment, etc. your note business is in big trouble. To be successful in any selling endeavor, you must create urgency. Once you learn how to create urgency, your profitability will take a dramatic turn for the better.

One of the most successful marketing resources which will help you SUPERCHARGE your note business is something called a Note Owner’s Manual. I got this idea from Fred Foote at a convention several years ago. It took a lot of time and energy to implement this idea but it was very worthwhile.

I am talking about is an owner’s manual for people who own notes. It is similar to the owner’s manual you get with a car, appliance etc. What struck me about this idea is that people do not throw away owner’s manuals, and it serves as an authoritative written source. The written word is a powerful tool. Years ago, there was a segment on the TV show “CANDID CAMERA”. They posted a sign on the Delaware state line- “DELAWARE IS CLOSED TODAY-DO NOT ENTER”. Motorists read this sign and pulled off the road. This is an example of the power of the printed word.

My Note Owner’s Manual, like any other owner’s manual, is a primer on what note owners need to know about the asset they own. The Note Owner’s Manual is easy to read and to understand. Scattered throughout the Manual are highlighted areas called “helpful hints”. These “helpful hints” work like magic in doing the one thing that is essential if you want to make money in this business, and that is create urgency.

Lessons For Marketing to Note Sellers #24

One of many “helpful hints” contained within the Note Owner’s Manual (see the last lesson) discusses in detail the importance for the note owner to be covered by insurance. This hits a lot of hot buttons. It is amazing how many calls you get from folks who were blasé and uninterested about selling their note. Now there is an urgency– at least to get more information. “Why do I need insurance”, they want to know, “didn’t my attorney take care of this”, etc.? I have made the following statement to many note holders (and I mean it): “Do not go to bed tonight until you know you are adequately covered by insurance”. I have even helped place insurance binders for note owners. But the important thing is that you never would have had the conversation about this unless they read about it in The Note Owner’s Manual.

It is almost impossible to create urgency in an owner who is naive and uninformed; who thinks the only thing they have to worry about is depositing the payment. It is easier to deal with an informed seller… one who has some understanding about the need for insurance, record keeping, legal issues, inspection of the collateral, etc. (Of course, these topics are all covered within The Note Owner’s Manual).

Lessons For Marketing to Note Sellers #25

If the potential note seller is informed about the inherent responsibilities that go along with owning this type of asset (see the last lesson) such as the need for insurance, record keeping, legal issues, inspection of the collateral, etc. and still wants to keep their note, that’s fine. But you will soon discover that many hard core ‘I won’t take a discount’ types become much easier to deal with once you direct their focus to these things.

My original goal in using the Note Owner’s Manual was for the long term marketing benefits. I never anticipated the short term immediate results that this resource generated. I have actually had note owners call in a panic seeking more information about various topics covered in the Note Owner’s Manual. Talk about creating urgency- wow!

There are many additional benefits you get when you use this powerful resource. Getting potential note sellers to remember you is critical if you desire long term success. The Note Owner’s Manual works as good as or better than any marketing tool in achieving this goal. My marketing motto is “give them something they will keep” (See previous lessons). All of your marketing efforts are wasted if the note seller does not have your name and phone number when it comes time for them to sell. Because note owners as a rule keep these manuals, you have achieved a major marketing goal. Even better, people will actually pay for your Note Owner’s Manuals. If they paid you for it, they will almost certainly keep it.

Lessons For Marketing to Note Sellers #26

To SUPERCHARGE your discounted note business, you must have entree to the professional market. Note Owner’s Manuals are your ticket. Distribute them to financial professionals such as attorneys, financial planners and real estate brokers. This is one of the best ways I have found to get your foot in the door.

This resource places you way above your competition and gives you an important competitive edge. This is not an original idea. Why aren’t more note brokers using Note Owner’s Manuals? I believe the answer is simple: It takes time, effort and money to produce this asset.

It took a lot of time to create a resource that can be used in all markets, i.e. mortgage, trust deed, land contract etc. and is also economical to produce. I would encourage you to get started now. If you do not want to go through the effort of creating a Note Owner’s Manual immediately, you could create a marketing letter with a theme such as “Ten Things Every Note Owner Must Know”. That would at least get you started.

I hope you use the Note Owner’s Manual idea. It will help you to SUPERCHARGE your note business and dramatically increase your income. The benefits of incorporating a Note Owner’s Manual into your marketing plan are huge– long and short term. For creating urgency and generating income, this little gem cannot be beat.

Lessons For Marketing to Note Sellers #27

To become successful in the discounted note business, you must have the ability to reach note holders by all sorts of different means. It is also mandatory that you establish relationships with financial professionals, i.e. attorneys, accountants, etc. Almost every cash flow transaction goes through an attorney or accountant.

In order to be successful, you must be able to get the attention of these professionals. One strategy that has been very successful is the Note Appraisal. Note appraising can:

(1) Give you immediate credibility
(2) Increase short-term profits
(3) Add to your long term profits.

A very powerful trifecta.

Before going further with the appraisal strategy, here are two very important landmines for new note brokers to avoid:

  1. Never appraise a note that is institutional grade– i.e. you need to be able to get the note quoted by a reputable funding source.
  2. Never appraise a note for less than the amount quoted by the funding source.

Lessons For Marketing to Note Sellers #28

As we began to conduct our initial market research awhile back, all indications suggested that a large number of note holders needed to know the value of their loans for partnership purposes, estate planning, business dissolution, divorce settlements, etc. It so follows that almost everybody with such needs almost always requires the assistance of a financial professional, which is the crowd that we target.

When you are wearing the hat of an appraiser, you have dramatically improved your status above all other note brokers (AKA your competition). Once you discover this source of business as you market your services to financial professionals who have note-holding clients, you’ll likely be amazed as to how much of it exists through repeat referral business.

I first instituted this appraisal program for its long-term potential. It seemed natural to me that anyone who paid you for an appraisal would ultimately gravitate back to you when it came time to sell the loan, and over time that’s proven to be accurate. What I did not anticipate was the sheer number of note holders who will end up selling now, once you’ve had the opportunity to explain all of the potential options. It is astounding as to how much easier it is to deal with a note holder from your elevated status as an appraiser.

The appraisal itself is valuable and extremely accurate. You can tell a note owner exactly what their note is worth to a ready, willing and able buyer. You’ll need to obtain a quote from an institutional buyer so as to ensure accuracy.

Lessons For Marketing to Note Sellers #29

When I first started using this powerful marketing tool, I would issue a one-page “Opinion of Value” on my company letterhead, and I did some of these for free so that I could get off the ground more easily. The note appraisal has since turned into a seven-page document with attachments. When finished, you have photos of the security, copies of all pertinent documents and all of the necessary information about the loan.

In order to increase my credibility, I thought it a good idea to be “certified” as a mortgage note appraiser. Subsequently, I was certified by the American Appraisal Institute of Privately Held Notes and Mortgages. Never heard of them, you say? That is because I am the co-founder, VP, etc.

I like the Note Appraisal as a marketing tool because it serves several important functions:

• It gets you in front of note holders in a way that: your competition does not;

• It elevates your status;

• It enables you to more easily deliver your message; and You get paid whether there is a closed note transaction or not.

You can significantly enhance your financial wealth by getting educated about discounted paper. This opportunity will not last forever. Successful people know that timing is everything.

Lessons For Marketing to Note Sellers #30

It is my opinion that for you to be successful in the note business today, you must do business with financial professionals. In general, a financial professional is anyone who, as part of their practice, reviews clients’ financial statements. Professionals who fall into this category include but are not limited to attorneys, accountants, financial planners, mortgage brokers, bankers, etc. You should concentrate your efforts on attorneys and accountants. Almost every cash flow note transaction today goes through the hands of one or both of these types of financial professionals. If you can establish a relationship with one of these professionals who can refer to you two, four, six, eight note transactions a year, you will have a very nice part time income working part time. When this number reaches five financial professionals referring you business, you will have a full time income working part time.

The most powerful and important benefit of note appraising is to get you in front of these financial professionals in a way that eludes your competition. In essence, you are working with them professional-to-professional. These professionals will not only have clients who need notes appraised, but will also have clients who need to sell their cash flows. This is a win-win for everyone.

Lessons For Marketing to Note Sellers #31

Establishing relationships with financial professionals can put you on the fast track to success in the cash flow note industry. When working with financial professionals, it is imperative that you act like a financial professional. If you market yourself as a note appraiser, you must remain consistent. That means you must take off your note broker’s hat and put on your appraiser’s hat. When marketing a particular professional, you cannot cross-market. This means you cannot send a marketing piece one time as a note broker and the next time as a note appraiser (stay consistent). Choose how you want to market someone and stay with it. You must also be impartial and make an appraisal that indicates the highest and best value of the asset (cash flow) you are evaluating. There are important advantages to doing this. Once you earn the trust of the financial professional, they are in the position of referring many different clients and cash flows. They can make most of your problems go away, and it is possible to broker a note that you appraised if you handle the transaction properly (more about this in the future).

Lessons For Marketing to Note Sellers #32

If you handle yourself in a professional manner, you can increase your income and prestige in several ways:

(1) Appraisal fees are substantial in exchange for the minimal amount of time it takes to complete the required work.

(2) Some appraisals will turn into brokerage situations either almost immediately, or, more likely, in the future.

(3) Some financial professionals are in a position to refer numerous transactions (repeat referral business) per year.

(4) Financial professions who are satisfied with your work will refer their colleagues to you (double repeat referral business).

It is a natural instinct to want to convert appraisal business to brokerage business because of the big fee differential. The ability to exercise restraint in acting on this instinct, at least initially, is essential. Some clients want only an appraisal, and are not looking to convert to cash at the time they contact you. You must honor their wishes. When working as an appraiser, you must keep your appraiser’s hat on. Having said that, it has been my experience that when it comes time to selling their note, your past appraisal client will come to you to handle the brokerage transaction.

Lessons For Marketing to Note Sellers #33

The Note Owner’s Manual (see previous Tips) becomes a very important and powerful ingredient in your appraisal program. You want to get this powerful tool into the hands of “appropriate” financial professionals. The Note Owner’s Manual will do a much better job of explaining what you do (broker notes) than you can.

The Note Owner’s Manual will accomplish three things:

(1) educate the professional,

(2) educate the professional’s clients, and

(3) create urgency to sell.

I suggest you give Note Owner’s Manuals to “appropriate” professionals – those who you have done business with and those who show a real interest in learning what you do.

The other important consideration is pricing. How do you price the appraisal? How do you handle the situation when an appraisal client turns into a brokerage client– either immediately or sometime in the future? Most importantly, how do you determine your brokerage fee? Determining your fee for a repeat referral source is different than when you are working with a one-time seller.

Lessons For Marketing to Note Sellers #34

How are appraisals priced? You are in uncharted waters when it comes to pricing, because you are practically a pioneer in the field.

Almost certainly, nobody else in your area is appraising mortgage notes- which is why you want to. Remember-the main reason for appraising notes is to have an advantage over your competition. Appraisals give you access to financial professionals– and financial professionals are the best source of repeat referral business. And repeat referral business is the secret to making a substantial income. This is not to say that the fees you make from the physical appraisals are not important – they certainly are. The best guideline for fees is to determine what a real estate appraiser would charge for a like kind appraisal. If you were valuing a note on a single-family house, find out what a real estate appraiser would charge and use that as a guideline. Pricing will change from area to area. This is important to keep in mind when you are doing an appraisal out of your area.

Lessons For Marketing to Note Sellers #35

There are two major decision areas when pricing and charging for a note referred to you by a financial professional. We will now discuss the first one.

It is my opinion (learned from experience) that it is wise to conservatively price the appraisal you do for the client of a referring professional. It is natural to want to earn a “nice and fair” fee for the work you do, and you should. But keep your fee reasonable. In my opinion, you should consider charging less than you would for an individual note seller who is going to be a one-time client. There is not a much competition in the note appraisal business, but what you do not want to happen- ever- is for your referring professional to find that your fee is substantially above another appraiser they may have found. Remember, you are in this for the long haul and want many repeat referrals– as well as referrals for other financial professionals.

I have been asked about doing free appraisals as a way of establishing a relationship with a financial professional. This is something you need to think long and hard about. Under certain conditions, it might be OK to do a complementary appraisal to help establish a relationship.

Lessons For Marketing to Note Sellers #36

Last Tip, I discussed the first major decision area when pricing and charging for a note referred to you by a financial professional.

This time, we will discuss the second one.

Doing free appraisals is a double-edged sword. New note brokers/appraisers are often anxious to establish relationships that will help to launch their business. This is very understandable. You must make it very clear to the professional to whom you are extending this courtesy that the complementary appraisal is a one-time only event. If the professional sees the value of your work, then you should be on your way to a mutually beneficial relationship. Do not get stuck in the trap of “please, only one more for free”.

Now, then- The second major decision area is what to do about your fee when the note holder decides to sell. In previous Lessons, I addressed the fine line that we walk regarding converting an appraisal to a brokerage transaction. If the note holder decides that they would like to sell immediately, I think it is fair and reasonable not to charge for the appraisal. Your brokerage fee will be more than fair compensation. If the request for your brokerage service comes a year after the appraisal, there probably shouldn’t even be a discussion regarding the fee you already earned. I believe the cutoff time should be somewhere in the 90-day area.

Everybody has to make his or her own policy. You should be flexible. Remember, one of the major reasons for doing appraisals is to build relationships.

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