Posted by John Behle on October 12, 2002 at 15:09:50:
In Reply to: Getting Info? posted by Scott on October 12, 2002 at 14:10:55:
There are many problems.
1 - INEXPERIENCED AND UNTRAINED BROKE-BROKERS.
One reason you run into problems is a large percentage of the people out there have no clue what they are doing, so if a "broker" brings you a deal, just assume they will not have, know or even understand what you are asking for.
I finally found it so frustrating years ago that I just negotiate them out of the deal. I will ask them "How much can I pay you to get out of the way".
"Jack, It's VERY difficult - almost impossible - to close a deal with brokers as intermediaries. We don't want to waste our time on deals that don't close and we are expert negotiators. We find brokers miss both details and opportunities. We're in this business for the long run and have NEVER - EVER - cut a broker out of a deal, so you don't have to worry about that. If we can get face to face with the note owner, we can make the deal happen profitably and safely without wasting anyone's time. Let's just negotiate a fee for you contingent on the deal closing and then get working on it right now. You can focus on what your good at - and find us both some more deals"
Something along those lines. That brings up the question of how much of a fee. He who names a number first loses. I'm not saying "Jack" will lose if he names a number he wants for a fee, but we do both lose if we can't come to an agreement. He may name a number lower than I might have. He may name one that is un-realistic. He wants ten thousand and has done a few minutes work, but the infomercial says that's how it works.
I bid a "Net" price to the seller. What Jack wants gets taken off that price. If he wants too much, we all lose. If I have an agreement with Jack, I can get in with the seller and negotiate a profitable deal that works better for everybody. If Jack tries to negotiate - it's dead. New brokers aways offer too much or ridiculous offers. There are DOZENS of ways to buy a note and/or solve the note seller's problem. Quite often that ISN'T cash - and is likely the only option Jack has ever heard of.
The price of the note is also VERY contingent on details that may not surface until some thorough investigation and likely Jack wouldn't have a clue how to do that anyway.
2 - DEALING DIRECT WITH THE SELLER.
Even when you get through direct to the note seller, they may not know or may have some go-between. When they call me, many times it is someone that was delegated to make the call and requires follow up with someone that truly does know. Sometimes they just don’t know. A seller may not know the balance, exact terms, balance on underlying loans, property value, etc. You just begin the process of “COLLECTION AND EVALUATION”. Gather data and then verify it. Get a copy of the note, trust deed, previous appraisals, etc. Many times that is just looking through their file they have. It may involve contacting the title company that closed the deal, even calls to underlying lien holders and looking for year end statements from Beneficiaries.
So, if you are investing directly in a note, you need to know how to do the whole process or have un-biased professionals around you that can help. If you are looking to just play the bird dog scenario that most of the courses out there teach, then many buyers won’t deal with multiple broker scenarios and will want to do similar to what I described and get you out of their way so they can deal direct with the note owner. Some will direct you how to proceed, what documents they need and what info to get. Basically, you will need to make contact with them, get their broker kits if they have them, their forms and procedures. Then you know the minimum amount you need in the way of information and some way or another as described here, you need to get brokers out of the way and get the information from the note owner or even find it out from alternative sources like I mentioned.
- Re: Getting Info? Scott 15:17:17 10/12/2002 (0)