Posted by John Behle on May 03, 1999 at 12:01:42:
There’s actually a couple scenarios in the industry. Maybe just some slight differences. What I might call the “Broker/broker” syndrome is a pain in the neck. One “Bird dog” gets ahold of your note and sends it on to another, who sends it to another, who …
We had one a few years ago that would just take the forms sent to him by another broker and paste his name over the top and send it on to us. Sometimes we would get the same note coming in from 3-4 sources. One local note actually came full circle. A bird dog brought it to us. I thought, hey I know a couple people that are involved in that condo project and might want this note. In trying to track backward through all the brokers, I found that one of these was the owner of the note and the other was the payor.
The scenario that is even more dangerous is the “Broke-broker”. “Broke” as in no money. A broker/bird dog pretending to be a funding source. A select few can make it work somewhat because of their expertise, relationship with the funding sources, etc. Most waste your time and can cause you to lose deals and money.
There are so many problems with the practice of brokering notes. That is one of the reasons I suggest investing in notes. It is easier, more profitable and is an investment that pays you to buy it as opposed to a job.
Some “bird dogs” could make more money at 7-11. Most would do better in a simpler form of sales or marketing like real estate, insurance or MLM. A small percentage continue their education, wade through the nonsense in the business and learn to buy notes, not play the broker games. Some become successful brokers, but most don’t make it.
I suggest students learn all they can. Especially if they are what might be termed “one week wonders”. They’ve paid thousands to spend a week getting hyped, pitched, teased and tantalized. They are told they are the top of the top - the elite - that the cost of their education relates to the quality. It does - inversely. If they do not expand, continue and in many ways “re-shape” their educational experience, they rarely have anything close to success.
Brokering notes is only a way to begin. Some catch on and begin investing without ever brokering a note. I encourage students to get out of the brokering trap ASAP. Broker a couple, learn the business, develop financing sources and approach it as an incredible investment, not a mediocre job. Investing in notes is wonderful. Brokering notes is a job.