A note broker is a go-between. The broker finds people who hold private notes and want cash, takes each note to note buyers, and is paid when a sale closes. The purchase money comes from the buyer, so a broker can arrange a sale without funding it.
The transaction a broker arranges
A private note is a borrower’s signed promise to repay a debt in installments. A common source is seller financing, where someone sold a house, land or a business, took a down payment, and agreed to collect the rest month by month. The person receiving those payments is the note holder. A holder who would rather have a lump sum can sell the right to the payments, and that sale is what a broker puts together.
Where the broker sits
| Party | What they have | What they want |
|---|---|---|
| Note holder | A note paying monthly | Cash now, at a fair price |
| Note buyer | Money to invest | A note that pays the return they need |
| Note broker | Knowledge of buyers and of pricing | A closed sale, which is when they are paid |
A holder who created one note when selling a property has had no reason to learn who buys notes or what a fair price looks like, and buyers have no easy way to find individual holders. The broker fills that gap.
What a broker does on a deal
A note broker’s work starts with the facts of the note: the balance, the rate, the payment, how many payments are left, the payer’s record and the property. The broker then presents the note to buyers. Buyers want different kinds of notes and price them differently, which is why one note can draw different offers.
When the offers come back, a good broker explains how each was priced and what would change it. After the holder accepts one, the broker collects documents, answers questions while the buyer checks title, the property and the payment record, and keeps both sides informed until the money moves.
How a broker differs from a buyer
A note buyer and a note broker differ in whose money is at work: a buyer uses their own and keeps the note, while a broker arranges the sale and steps away. A company that advertises as a note buyer may pass some notes on to others, and a broker may buy certain notes directly. We do both, buying some notes and brokering the rest, and we tell you which is happening on yours.
For a seller the label matters less than knowing how many buyers saw the note and what the person in the middle is earning.
How a broker is paid
A note broker earns a fee only if the sale closes. The fee is either the difference between what the buyer pays and what the seller receives, or a set amount paid by the buyer. Both come out of the same pool of money, which is the reason a seller is entitled to know the size of the fee.
The limits of what a broker can do
No broker can make a note worth more than buyers will pay for it. Every note sells for less than the balance owed, because the buyer waits years for the money and carries the risk that the payer stops. What a broker can change is how the price gets set: by several buyers bidding against each other, where the note attracts them, and not by one opening offer. A broker can also price a partial, in which you sell only some of the payments and keep the rest. A note with few payments left, or with a payer who is behind, may not suit one. Which of these applies to your note depends on its details, and you can send them to us for pricing to find out.
A straight broker will also say when the sums do not favor selling. If you do not need the cash and your payer is reliable, keeping the note means collecting every payment with its interest, and nothing is given up to a buyer.
Before you speak to a broker
Know the note’s payment amount, interest rate, remaining payments and current balance, and decide roughly how much cash you need, because that settles whether the conversation is about the whole note or part of it. Any broker can work from those figures. If one of them is hard to find, the basics in the learning center will tell you which document it is on. Then ask each broker you speak to how many buyers will see the note and what the broker earns if it sells.
Related questions
Does a note broker buy my note?
A broker arranges a sale to a buyer who funds it, so the broker is not the one buying. Some firms do both. We buy some notes ourselves and broker the rest, and we tell you which applies to yours.
Do I pay a note broker up front?
You should not. A broker's fee is earned at closing and comes out of the sale. A request for money before closing is a warning sign.
Can I sell my note without a broker?
Yes. You can approach note buyers directly. The trade-off is that you do the comparing yourself, and a single buyer has no reason to show you what others would pay.