One of the main problems note buyers have is convincing note owners to take a discount and sell now. Many 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,” and so on.
I’ll confess that in about 25 years in this business, I was never very good at convincing unmotivated note sellers either. If the only motivated sellers you deal with are those who get your mailer at the same time as an IRS lien, a pink slip or a wage garnishment, your note business is in big trouble.
Why urgency matters more than persuasion
To succeed in any selling endeavor, you must create urgency. Once you learn how, your results can take a dramatic turn for the better.
It’s almost impossible to create urgency in an owner who is naive and uninformed, who thinks the only thing to worry about is depositing the payments. It’s easier to deal with an informed seller, one who understands the need for insurance, record-keeping, legal issues and inspecting the collateral.
If an informed note holder still wants to keep the note, that’s fine. But you’ll find that many hard-core “I won’t take a discount” types become much easier to deal with.
What a Note Owner’s Manual is
One of the most effective marketing resources for a note business is a Note Owner’s Manual. I got the idea from Fred Foote several years ago. It took a lot of time and energy to put into practice, but it was very worthwhile.
It’s an owner’s manual for people who own notes, like the one you get with a car or an appliance. People don’t throw away owner’s manuals, and they see them as an authoritative written source.
The written word is powerful. Years ago, a segment on Candid Camera posted a sign at the Delaware state line: DELAWARE IS CLOSED TODAY — DO NOT ENTER. Motorists read the sign and pulled off the road.
Like any owner’s manual, mine is an easy-to-read primer on what note owners need to know about the asset they own.
How helpful hints create urgency
Scattered through the manual are highlighted “helpful hints.” They do the one thing that’s essential if you want to make money in this business: create urgency.
One hint discusses in detail why the note owner needs to be covered by insurance. That hits a lot of hot buttons. It’s amazing how many calls come from people who were blasé about selling. Now there’s urgency, at least to get more information: Why do I need insurance? Didn’t my attorney take care of this?
I’ve told many note holders, and I mean it: “Do not go to bed tonight until you know you are adequately covered by insurance.” I’ve even helped place insurance binders for note owners. But that conversation would never have happened unless they’d read about it in the manual.
My original goal was long-term marketing. I never expected the immediate results. Note owners have actually called in a panic, wanting more information about topics in the manual.
Give them something they will keep
Getting potential sellers to remember you is critical for long-term success. My marketing motto is “Give them something they will keep.” All your marketing is wasted if the note holder doesn’t have your contact details when it’s time to sell.
Because note owners tend to keep these manuals, you achieve that goal. Even better, people will actually pay for a Note Owner’s Manual, and if they paid for it, they’ll almost certainly keep it.
Using the manual with professionals
To grow a note business you need access to the professional market, and the manual is your ticket. Distribute it to attorneys, financial planners and especially real estate brokers. It’s one of the best ways to get your foot in the door and puts you well above your competition.
So why don’t more note brokers use owner’s manuals? It takes time, effort and money to produce one. It took me a lot of time to create a version that works in every market (mortgages, trust deeds, land contracts) and is economical to reproduce.
If you don’t want to build a full manual right away, start with a marketing letter on a theme such as “10 Things Every Note Owner Must Know.” That at least gets you started.
