You’ve probably heard of Sun Tzu’s (the famed Chinese
warrior) instruction to his soldiers to “know your
enemy” before going into battle.

Well the same is true with note buying.

“Know your seller” should be the mantra for every
note buyer (and broker for that matter!).

Why?

Because if you don’t “know” your note seller then you
might be entering a negotiation with them without
having any idea of their key negotiating points.

Let me give you an how-to-buy-notes example,
based on a note we recently bid on:

A bank has a 1st mortgage on a single family home in
Salt Lake City that they want to sell.

The borrower hasn’t paid on the note in over 120
days, and the note matured over 2 months ago, so the
whole loan could be called due.

The bank hasn’t served the borrower with a
foreclosure notice.

And they’ve called you in order to find out if you
want to buy their non-performing note and mortgage.

I looked at this loan first from the standpoint of
price – how much could I offer for it. We pulled a
title report and a BPO and looked at comps that a
local realtor provided to us.

And we put in our bid.

My rep at the bank hinted that she would need
approval from a committee of senior staff at the bank.

But she was very cagey about answering any of my
questions about where she needed pricing to be in
order to sell, and what the status of the borrower was.

I became a little suspicious and tried probing for
more information, but she immediately clammed up and
said: “I’m not at liberty to say more about our
borrower.”

Something was up in this note buying deal.

It was odd that the bank rep would react that way -
in fact it was the first time I’d seen that kind of a
response to an individual loan before.

How-to-Buy-Notes Tips when talking to the Banker

So I called her back again, and tried a little
“exploratory” language with her.

“Would it be safe to say that the bank has a unique
relationship with this borrower?” I asked her?

“Absolutely,” she immediately replied.

I was curious – what was going on here
in this defaulted mortgage deal?!

So I kept fishing, understanding full well that she
couldn’t reveal any information to me, but that she
wasn’t opposed to my pressing for more information as
long as she could answer in yes or no terms.

“And there’s a reason why the bank isn’t foreclosing
in this case, correct?” I asked.

“Yes,” she answered simply.

“And you’re probably not at liberty to tell me, but
this sounds like it’s a difficult relationship for the
bank to foreclose on, is that correct?”

“Absolutely,” she answered again. “I can’t tell you
any more than that.”

“One last question,” I asked. “Is it safe to assume
that the bank may be more open to a bid on this loan
that clarifies what exit strategy we’ll be pursuing
with the borrower rather than an actual purchase price
for the nonperforming note?”

“Yes,” she answered briefly again. “That would be
correct.”

So what was going on in this note deal?

Well, what I learned in two more phone calls with the
woman I was negotiating with at the Bank was that the
borrower was extremely well connected in Salt Lake
City political circles, and her ex-husband was a close
friend of the bank’s President.

Foreclosing on her could create a political ruckus
for the bank, it turned out. So the bank was exploring
discreet options to rid itself of its non-performing
loan – namely via a note sale to a 3rd party investor.

——————————————————-
* The lesson you should take from this How to Buy Notes example *
——————————————————–

If you don’t take the time to probe WHY the seller is
looking to sell a loan, and the circumstances around
the sale, you may completely miss the seller’s key
negotiating points on a transaction.

In this case, it wasn’t price. It was what we were planning
on doing to work out the note with the borrower.
Price was much less of an issue.

Your how to buy Notes Action Items from this:

1)    Always try to understand WHY a bank wants to sell
you a note or a pool of notes.

2)    Try to find out what the key negotiating points
are for the bank for selling you this defaulted mortgage

Usually it’s one or more of the
following:

a.    Price

b.    Speed with which you can close

c.    Your ability to close (in other words, the Bank
cares more about WHETHER you can close rather than
what price they Buyer is offering for the discounted note)

d.    Your note buying exit strategies (in other words, the
bank may determine whether to accept a bid or not based
on what kind of Buyer you are – are you a foreclosure
operation with no attempt at loan modifications, for
example?)

So keep all this in mind when you’re next talking to
a Bank to buy notes.

It’ll make you that much better a note buying warrior!

Talk soon,

Dean
PS: If you enjoy this kind of no-fluff info, you will be delighted
with our A-Z NoteBuying Course. It’s full of it!
(And our insane 33%-off Special will not go on forever. Hint, hint.)

And to say it in the words of  Josh Gray
from UpgradedProperties.com in Chandler, AZ, who put the
following (unsolicitedly, I might add) on our forum:

“Dean, I truly appreciate all the information you have provided in
the A-Z Course. I have read ALL the competition’s materials and
it comes nowhere near yours.”

In case you missed our f.ree note buying webinar last Wednesday on
‘How to Determine the Price on ANY  Property in the US – without leaving your desk‘:

You can watch this How to Buy Notes Video buy clicking HERE.

It is part of an 8-part series as part of the Private Access Club.

It is all about how to implement the Note Buying Roadmap Document that came with the A-Z Note Buying course.

I am taking you by the hand and we spend 90 minutes on each week of the 8 weeks in the Roadmap.

Here’s your chance to have me ‘handhold’ you through it – and you being able to watch me go through all the assignments of it.
And, of course, to ask me any ‘how to buy notes’ questions on it you’d like. LIVE.

Enjoy the replay (it applies to any part of Real Estate Investing, not just buying notes…), and join me for the rest as a PAC member…

Remember, there’s a 30-day f.ree Trial. So, not much risk there.

Dean

================================

* Check out our NEW FORUM: www.NoteBuyingProfits.com/forum

* Ready to REALLY get down & dirty?
‘A-Z Profiting from Discounted Mortgages Business-in-a-Box‘.
-> 16 hours+ of Video Training, 23 pages of checklists, a complete 8-Week Roadmap, an extensive Table of Contents for quick reference, plus TONS of Bonuses.
[===> You can check out Hours of F.REE Training Videos of the actual Course Content HERE.]

* ‘PRIVATE ACCESS CLUB’ (PAC) – Test-Drive it for F.REE for 30 Days!
Get Your Questions Answered LIVE & get Ongoing Support & Training!
Conference Calls/Webinars, Interviews with Industry Insiders (Bank Reps, Top Note Brokers, etc.), Real-Life Case Studies, Role-Playing, Members-Only Forum, and ‘HOT SEATS’ to get coaching on Your Deals/Business Challenges, and more

* Questions? Chances are I already answered them at www.NoteBuyingProfits.com/blog. (Use the ‘Search’ feature or click on the ‘FAQ’ category on the right to see them all!)

The markets are going crazy and the Dow’s down to 1998 levels (yikes – hopefully you got out before the fall – I told all my family friends to go cash back in February of this year, so we’re doing OK as long as the mattress holds up).

So what does this mean for you in terms of buying defaulted mortgages?

Will Treasury snatch everything up?

No. There will be plenty of non-performing notes to buy. There is just too much bad paper circulating right now.

And regional banks and other smaller institutions, unlike Wall St broker/dealers, have a “normal” selling cycle that keeps putting paper out to bid every month.

Those are a great starting point for you.

For more info on the market, where to buy notes, who to target, and what the implications are, click on the note buying video below! (This is a snippet from this week’s Private Access Club webinar/conference call – where you can get ongoing training & support for your note buying business. Check out the 30-Day FREE Trial! It’s a great community! You can watch the full 90-MINUTE replay of this webinar in the members area, as well as TONS of other recorded note buying training sessions, interviews & role playing sessions with bankers & lots more).

What worried me was when he said: “Dean, I want to get into buying defaulted mortgages in order to keep people in their homes and get some good cash flow.”

Don’t get me wrong. I’ll be the first to admit that Humanity counts.

But …

Don’t lose sight of the forest for the tree.

In other words – don’t try to force your Note deals down one note buying exit strategy.

It just won’t work.

You see, you may WANT to pursue A SINGLE exit strategy for the defaulted mortgages you purchase (in this case, he was looking to re-perform all the notes he bought – possibly by modifying them all – and then to hold them for cash flow).

DON’T FALL INTO THE SAME TRAP.

In order to invest successfully in non-performing notes, you need to be like Rafael Nadal.

Nadal is a really well-balanced tennis star. He has an amazing serve, excellent grass court experience, plays solidly on clay, and can fire a wicked forehand.

Follow the same approach to your Note buying. Learn how to pursue MULTIPLE Note Buying Exit Strategies at once.

Below is a useful Video snippet (straight out of the ‘A-Z Profiting from Discounted Mortgages Business-in-a-Box) to really hammer this point home to you.

Be careful you don’t “stick yourself” with one strategy. For example, one useful tool to get a borrower to cooperate with you in getting a loan modified can often be to start a foreclosure action.

Why? Because for someone who has been missing payments regularly and hasn’t been current for a while, sometimes a wake-up call with a foreclosure notice (combined with a helping hand from you to help them with a loan modification) is what prompts them to get their act together, take control of their situation, and to work their way out of their delinquency.

Don’t fall into the same trap the investor I talked to did. Don’t think that 1 Exit Strategy to your Note Buying business is enough to make you successful.

You really need to be a jack of all 5 Exit Strategies to do well in this business.

(You can watch a full hour just on Exit Strategies for FREE  right HERE, straight out of my massive 16-hour course on how to profit from defaulted mortgages.)

What do you do now?

I’ll walk you through what I do, and what I send over to the bank, in the Video below!

If you want all the documents you need for your note buying business (and the same ones I use), you’ll want to get our Document Toolkit (which is included as a FREE Bonus in the ‘A-Z Profiting from Discounted Mortgages Business-in-a-Box‘, hint, hint).

He’s smart and he’s hungry.

If you can find someone who can help you break through to banks and you can pay them a commission based on their “success rate” - e.g. you pay them only for loans that they bring you and that you actually purchase – that’s a very economical way to grow your note buying business.

Learn more about brokers – which ones are good, which ones are bad – and how to maximize what you get out of them, by taking a look at this brief Video (straight out of the ‘A-Z Profiting from Discounted Mortgages Business-in-a-Box’ 16-hour Note Buying Training Course):

As I mentioned to you yesterday:

*** Want to meet a good broker LIVE and ask him questions? I got one for you… ***

Today, Wed., 9/10 at 5pm PST/8pm EST Steve, a real good broker, will answer any questions we have as part of our ongoing Private Access Club webinars – Ongoing Support to get YOUR Note Buying Business off the ground!
(And if you miss the date, you can watch the replay in the members area later on…)

You know, A Good Broker for your Note Buying business is worth his or her weight in gold.

This past week, I received 4 phone calls from one of my “Good” brokers. He called me to touch base on where I was on my bid. I had bid a pool that he had brokered out for a friend of his whom he used to work with at an investment bank before getting into brokerage.

Always polite and professional, he would ask me “So, how is your due diligence coming along? Is there anything you found that you didn’t expect?” Or he’d say something like: “So which ones have you kicked out due to value, if any?”

And he always ends with something that demonstrates to me that he’s working to keep me and the seller “on the same page”. He’ll always say something like “well, what I’ll do is to tell John what you’ve just shared with me in case you haven’t already told John” (no, I haven’t told John). “And then I’ll let him know that you’ll be contacting him again once you’ve finalized everything…when do you think that will be?”

This broker is always ADDING VALUE – he’s helping the relationship between me and my seller along, and not coming in the way.

====> Let me give you a quick 1-minute VIDEO Demonstration of what a good broker delivers:

He’s also AWARE and ON TOP OF what my bid is, what it means, why I’m bidding what I’m bidding, and what the potential kick-outs (if there are any loans that I might “kick out” or pass on as a result of a value fade or a title issue.)

NOTE BUYERS – TAKE NOTE: if your broker isn’t helping you along, you’re not getting value for your commission $ when buying notes.

Good.

You’ll want to meet Saprina.

She’s a veteran – a former seller of Notes at one of the largest national banks.

And I’ve asked her to share tips on how to get YOU in the door with banks.

She was a mentor for me on my first note purchase. The one I made $96,500 on that I’ve highlighted on www.notebuyingprofits.com (first Video at top of that page).

If she can help me, she can help you.

Some of the questions I’ll be asking her:

• How did new investors/note buyers introduce themselves to you and “get approved”?
• What are the biggest “no-no’s” you look for when interviewing non-performing notes investors – any words that give away certain info that “kills” their chances to buy from you?
• Did you ever ask note buyers for references?
• Are there “blacklists” of non-performing note buyers? If so, how are they used in the industry today?
• Would you receive gifts from a real estate investor? What kinds?
• Who’s your best investor of all time? Why?
• Do banks proactively go looking for investors?
• Did you sell single non-performing notes?

You’ll have a chance to ask her additional questions yourself TODAY AT 5pm PST/8pm EST.
(For Private Access Club (PAC) members, the recording will be available later inside of PAC.)

Join me for this unique opportunity, today at 5pm PST/8pm EST.

Register now for this how-to-buy-defaulted-mortgages Special Interview.

Webinar spots are limited.

And, as a special goodie & pre-taste: watch ANOTHER interview I did before with another veteran bank rep – straight out of my ‘A-Z Profiting from Discounted Mortgages Business-in-a-Box‘ Course. (You can get the complete interview FOR FREE, incl. online video, Audio MP3 & iPod video version, by putting in your name & email at the top right of this blog!)

Quick update on yesterday’s post…

Look at the email I just got from Marshall (who TOOK ACTION and put the strategies & tactics of the ‘A-Z Profiting from Discounted Mortgages Business-in-a-Box‘ to use, and, look at that… the stuff is ACTUALLY WORKING…):

“Dean,

I think that you should place on your website in bold letters, “We do not recommend or provide leads on lenders who buy and sell non-performing notes. Doing so would deprive you of the joy and satisfaction of locating them yourselves!!!”

I located a list of banks that do short sales and sell notes on my own. Hold firm on your belief.

Marshall”

Congratulations, Marshall! Way to go.

You can check out hours & hours of FREE Note Buying Training Videos here… (all actual content from our 16 hour+ Note Buying Training Program ‘A-Z Profiting from Defaulted Mortgages Business-in-a-Box Course’).

Well…, we figured out a GREAT way to accomplish just that!

Enter: ===> PRIVATE ACCESS CLUB <===

Here is what you’ll get with PAC:

* Live Conference Calls/Webinars (Stay Current & Interact LIVE)

* Q&A Sessions (Get YOUR Questions Answered – listen to/download a Q&A Audio MP3 Sample HERE (= Good iPod ‘Food’!).

* Real-Life & CURRENT Case Studies (see a current deal of mine I shared with PAC members recently about to net me over $70K – and no reason, why you can’t do the same!)

* Role-Playing (How to talk to the bank & borrowers – get practice & coaching!)

* Special-Topic Sessions (Finding Notes, Raising Money, Calculating Returns, etc.)

* Interviews with Industry Insiders (Bank Reps, Top Brokers, Attorneys, etc.)

* Members-Only Forum (Exchange info with your peers, ask more questions, sell your notes, find partners, etc.)

* ‘HOT SEATS’ (Get 1-on-1 coaching on your deal/business challenge, as well as benefit from listening in on others’ deals/challenges & them getting coaching)

* and more to come…

And, no worries, if you can’t make it on the live call/webinar – everything will be recorded and promptly uploaded to the members area, so you can watch/listen to it whenever you please!
We are building a HUGE Note Buying archive/knowledgebase for you here!!

Multiple formats available where applicable: Online Videos, iPod Video downloads, MP3 Audio downloads, PDF transcript downloads, etc.)

30-Day Trial for $1 – click here

Here is what it will do for you:

You don’t have to do this on your own!

Wherever you are in your note investments, whether you are looking for your first deal, or raising a $20 Million Fund, there will be resources for you to build & grow!

* Get ongoing support! Get your questions answered.

* Learn from industry experts, learn from real-life case studies, learn from others being coached on their deals, learn from being coached on YOUR deal!

* Keep your hand on the pulse! Stay current with important industry news and market changes

* Exchange info with your peers in the members-only forum & grow TOGETHER

This market is Yours! We have 2-3 really good years ahead of us. Right NOW! Don’t miss it.

Here is what to do next:

Try it out for the first 30 days for $1! (No, this is not a typo!)

Charter Membership: $97 per month (after the 30-day trial for $1)
(Yes, the price will increase. NO, your price will never increase as a charter member!)

=> Purchasers of our ‘A-Z Profiting from Discounted Mortgages Business-in-a-Box’ Course are getting the first month for free!
(Please also note that this 16 hour+ Course will give you an invaluable foundation and solid base, which will make your PAC membership countless times more effective and valuable for yourself. You will be seriously prepared to have PAC support you in putting your note buying knowledge into high-gear ACTION!)