Where are all of these notes hiding?
So there you have it…no financing, sellers have to carry paper, sellers need cash, sellers liquidate all or part of the remaining payments. At this point you should be doing cartwheels as you realize the millions of dollars of business notes presently in the market, and the millions that are created every day, nationwide. So the 64 million dollar question is where are the mortgage note buyers:
Business brokers (“BB’s”) are your #1 source for business notes in this country. A very high percentage small business sales are transacted through BB’s. Additionally, if 80% of all transactions involve seller financing, then your BB’s filing cabinets are a vault just waiting to be cracked. BB’s receive calls all the time from past clients asking them if they know anyone that would have an interest in buying the note that was created previously when they sold the business. Most BB’s have a fair idea that the note is salable but have few actual investors that will take over these high risk notes. That’s where you come in.
It is imperative that you are on a first-name basis with every BB in your city and learn how to become mortgage note buyers. It’s time for the BB’s of the world to stop turning their past clients away and start referring them to you. You can become the “alternative financing arm” of the business brokerage community.
No, if you are a business note buyer you are not a lender. However, if we are all in agreement that the sellers of the world will be carrying paper on 80% of the small business sales in this country, then you can become an integral part of the cycle. Past sellers are prime candidates for present and future listings the BB has. Problem is, they’re not liquid…their capital is tied up in the note. If the seller can liquidate all or part of the note he’s presently collecting, chances are good that he could be a buyer for one of the BB’s present listings! Therefore, by helping you (through referrals and introductions to present noteholders) the BB is actually helping himself. How? Noteholder gets liquid, noteholder buys another business and…
BROKER POCKETS ANOTHER COMMISSION!
Design a nice brochure explaining how your services can assist an existing noteholder and anyone about to sell a business and carry the paper. Convince the BB that your company’s services will be viewed as an added service to his clients. Your goal is to have him allow you to keep a nice acrylic brochure stand in his office (preferably at the receptionist’s desk as well as in the board room where the closing documents are signed). This will be a terrific boost to your marketing and will bring you plenty of referrals.
Look in your local paper under “Business Opportunities.” You’ll see lots of businesses for sale, some by business brokers, some For Sale By Owners, or “FISBO’S”. The broker listings are another invitation to visit yet another business brokerage firm to discuss what we talked about above, in addition to the business he’s advertising. The FISBO’s are an avenue for you to call and explain how you can assist with a seller financed note, should the seller not be fortunate enough to sell for all cash. (Now, you know and I know that there’s an 80% chance that a note will be created, but you don’t want to imply that he will be unsuccessful in finding an “all cash buyer”).
Working with notes that technically haven’t been created yet is the way to eliminate the competition. Become the go to guru for mortgage note buyers. Educating the sellers of the world BEFORE the sale and creation of the note makes you an integral part of the transaction, and it’s unlikely the note holder will work with anyone other than you when it’s time to sell the note