“Master note broker” is a label brokers give themselves. No license, exam or official body stands behind it. In the trade it describes a broker who sends notes straight to the buyers who fund them, and who takes in deals from other brokers as well as from note holders.
Where the label comes from
A note broker is a go-between: someone who finds a person holding a private note, such as a seller-financed mortgage, and matches that note with an investor who will pay cash for it. Brokers differ in how close they sit to that investor. One who submits files directly to the people funding the purchase, and who has priced enough notes to estimate what a payment, a balance, a payer and a property will bring before the file goes out, is the kind the trade calls a master broker. Newer brokers and finders pass their deals to that person, who handles the pricing, the packaging (assembling the documents a buyer needs) and the placement with a buyer.
Nobody awards the title. We know of no exam, register or governing body behind it. Where a training course uses the phrase for one of its levels, anyone who finished the course can put it on a business card. Read it as a description someone has chosen for themselves, then look at what supports it.
The chain between you and the buyer
A note sale can involve more people than the holder expects. With a master broker in it, the chain runs like this:
- The note holder, who wants cash.
- A referring broker or finder, who met the holder first.
- The master broker, who packages the note and takes it to buyers.
- The buyer, who funds the purchase.
Everyone in the middle is paid out of the gap between what the buyer pays and what the holder receives. An extra layer does not always lower the holder’s price, but each one has to be paid from somewhere, which is why it is worth asking how many parties stand between you and the money. When two brokers are co-brokering a note deal, one found the holder and the other has the buyer, and both are paid from that same gap.
What the word “master” leaves out
The title is silent on the things that change what you receive: whether the person holds a license where one is required, whether you will be shown more than one offer, how much they earn on your note, and whether their buyer will actually fund. Licensing is the one you cannot settle by asking the broker. Rules for brokering notes vary by state and by the type of note, so once you have the general idea of whether a license is needed to broker notes, take that question to an attorney in the state concerned. On the other points, a broker with a plain title who answers clearly is a better choice than one with a grand title who will not.
Questions to put to any broker
- Who is the buyer? You should learn the buyer’s name before you sign a purchase agreement.
- How many buyers saw my note? One buyer means one opinion of the price.
- What do you earn on this? A broker knows the figure and can tell you. Read up on how note brokers are paid before you ask, so you recognize the arrangement when you hear it.
- Is anyone else being paid from my price? This is where the referral chain shows up.
- Can I see how the offer was calculated? A price with no working behind it cannot be checked.
The label we use
We call ourselves a note broker and leave “master” off. We also buy some notes directly, and on each deal we tell you which of the two roles we are in. An offer from us arrives with a pricing worksheet: one page showing the balance, the return the buyer wants on their money, the gap between the balance and the price, and what we earn. If another broker has already given you a number, ask us to price the same note and set the two offers side by side, line by line.
If a broker has already called you
Put the questions above to them before you sign anything, and write the answers down. A broker who names the buyer, states the fee and shows the working has told you what the title could not. Where an answer uses a term you do not know, look it up in the note basics and note brokering guide before the next call, and ask for anything still missing in writing before you agree to a price.
Related questions
Is a master note broker better than a regular note broker?
The title is self-applied, so it tells you little about the person using it. What counts is whether the broker names the buyer, shows you how the offer was calculated and tells you what they earn.
Does working with a master broker cost the note holder more?
It depends on how many people are paid from the deal. Each broker or finder in the chain is paid from the gap between the buyer's price and what you receive. Ask how many parties are involved and what each one earns.
Can anyone call themselves a master note broker?
As far as we know, yes. No official body awards the title, and some training programs use it as a course level. Rules on brokering itself vary by state, so licensing is a separate question for an attorney.