Is Note Brokering Legitimate?

Yes. Note brokering is a real line of work: arranging the sale of a private note from the person who holds it to an investor who wants to buy it. Individual brokers vary in quality, and so do the courses that teach the trade, so what you need is a way to tell a sound one from a poor one.

Why the question comes up

It is asked from two directions. A note holder asks because a stranger has offered to sell their note and they want to know whether that is a genuine service. Someone looking for work asks because they have seen note brokering sold as a business anyone can start.

Both have reason to check, and the rest of the learning center is written with both in mind. We know of no national exam or professional body that a person must pass or join before using the title “note broker”, and state rules differ. That openness lets honest newcomers in, and it also means the title alone tells you nothing about the person using it.

What makes the activity sound

A private note is property. Its holder is generally free to sell the right to its payments, much as a bank sells loans to other banks, and investors buy private notes because the payments give them a return. Someone has to bring the two together. A holder who has never sold a note gains from a person who knows the buyers and the paperwork.

Whether a particular deal is legitimate therefore comes down to how it is carried out.

If you hold a note: signs of a sound broker

They explain the price. You are shown the balance, the yield the buyer wants, the discount and the fee. We set these out on a note pricing worksheet with every offer.
They take the note to more than one buyer. A single number gives you nothing to compare it with.
They say what they earn. If the answer is vague, assume the fee is larger than you would accept.
The money moves through a neutral closer. A title company, escrow company or attorney holds the funds and the documents until both sides have done their part.
They give you a name. You know who you are dealing with and how to reach that person again.
They leave the decision to you. That includes telling you when keeping the note is the better choice.

You can hold us to that list. Send your note details and see whether what comes back does each of those things.

Warning signs

These are the ones that bear on brokers in particular, drawn from the wider set of note buyer red flags and scams.

You are asked to pay a fee before any sale closes.
You are asked to send the original note before a signed agreement and a closing agent are in place.
The offer is far above every other figure you have seen, with no explanation of how it was reached. A high opening number can be cut shortly before closing, when the seller has stopped talking to anyone else.
You are pressed to sign today.
Nobody will say who the end buyer is or who is funding the purchase.

If you are thinking of becoming a broker

The work is real, and the marketing around it deserves more suspicion than the work does. Be wary of any course or mentor that states what you will earn, calls the business easy, or says no rules apply. We make no claims about what brokers earn, and a figure quoted by someone selling training should be read as part of the sale.

Deals take time and can fail late, over a title problem, a payment record that does not hold up or a price the holder will not accept, and a broker is paid only on the ones that close. Rules may apply to you as well. Depending on the state and the kind of note, arranging a sale can touch licensing laws for real estate, lending or securities, so read whether you need a license to broker notes and ask an attorney in your state. Your name is also the business, since holders and buyers return to a broker whose fee was in plain view.

How to check any broker, including us

Ask for the offer in writing, the worksheet behind it, the name of the closing agent, and the fee in dollars. Then set it beside at least one other offer. A legitimate broker expects those requests and answers them without fuss. One who refuses any of them, or will answer only by phone, has shown you how the rest of the deal would go.