Notaries who are considering becoming notary signing agents (NSAs) need to do research on their legal situation and their market conditions before they launch their business. You won’t know if it makes sense to spend the money for training or certification or background checks until you’ve done this research.
While those firms that sell training and other credentials make it sound like every notary public can make good money as an NSA, the sad fact is that the 80-20 rule applies with the NSA business just as it does with every other business: 80% of all new businesses fail within the first five years and only 20% succeed to that point.
So, you want to do research in order to know if this is a strong prospect for success in your area AND to have the data that will go into your business plan and marketing plan, as planning improves your chance of being in the 20% who succeed.
Before you even start researching whether there is enough work, you need to know the legal situation in your state. This mostly means three things:
1) Know your notary laws. Get the handbook if there is one. Read it at least twice. Then look up the actual laws referred to in the handbook and read them. If there is anything in either one of those that you don’t understand, call the Secretary of State or other notary administrator for your state and ask them questions until you do. Or speak with an attorney in your state to get clear on what it means.
2) Know the limits on what you’re allowed to do in terms of real estate closings. This will not be covered in the Notary Handbook or notary laws. So, it will require more research. The good news is your local library or state government website may be able to help you.
Some states are attorney-only on real estate closings and that term does not always mean the same thing in every state where it applies. Some require a title insurance producer’s license to conduct closings. At least one state does not allow notaries to handle funds without extra licensing. You need to know what the limits are to being an NSA in your state because this is a huge part of any planning you do for your business.
3) Know the rules about privacy and marketing. These apply to all businesses and you can get into serious trouble if you ignore them. If you don’t know what NPPI or the FTC rules about telemarketing and about affiliate marketing are, you need to learn those and other related matters before you launch your NSA business.
Privacy and NPPI get some coverage in training from Notary2Pro and from the NNA. I have not seen any training on the FTC rules from the major training sources, so it’s up to you to learn this stuff on your own. Visit ftc.gov for the basics. Look for classes on these topics from your local library as part of their new business courses. Also, the nearest Small Business Development Centers may have classes on these topics; find the closest one to you on sba.gov.
Once you know the legal situation, then you can move on to market condition research.
To start your market condition research, I would suggest you check with the county recorder or register’s office and see how many loans were closed there in the past year. You may have to spend a day or more there doing research to find out, but that’s cheaper than paying for classes and then being one of the 80% of businesses that fail.
If it turns out that there’s a lot of loan closing work, then you need to figure out how much of it’s being done in-house by lenders or title companies versus how much is being done by NSAs.
If it’s not many loans or almost all of them are done in-house, you have your answer. Not every market can support more NSAs.
The lender should be mentioned in the mortgage or deed of trust, which will be recorded at the county recorder or register’s office. If the lender is local, that was probably closed in-house. If the lender is not local, they may have used a local attorney or a local title company office or an NSA to close the loan. So, you need to get familiar with the notaries involved to figure out how much loan work there may be in your area.
As you do research, make note of which notary notarized the deed. Then look them up online. You can look the notary up in the big four notary directories: 123notary, notaryrotary, notarycafe, and signingagent. If they are on any of those directories, they are probably a freelance NSA as opposed to an in-house notary employee.
Not every NSA will be listed on one of those big 4 directories, so this is not an exact count — but it should give you some idea.
Once you have enough information about the loans and the notaries involved, you can estimate the two most important parts of your market: is there enough potential work to make it worth getting the credentials? And how much competition will you be facing if you enter this market as a new NSA?
My belief is that you need a relevant background in real estate or mortgage lending or law in order to hit the ground running by working your pre-existing network for referrals. You need people who know, like, and trust you enough to refer business to you. That’s basic marketing.
If you’re having to build that network from scratch, it’s going to take a great deal of time. That means you may not be able to make more than a part-time income at first, even if your market conditions are excellent. By the time you’ve built your NSA business up to a full-time income, the disruptive effects of remote notary laws may hit.
For a five to ten year plan, consider that remote notarization means your local market will, one day soon, be competing with others all over the country.
There may be a bunch of work right now, but anyone who looks at the technology trends should realize that all these local markets with local market conditions are going to become one big market in which the only thing that most hiring firms will look at is who has the lowest fee.
Add in some title companies or platforms setting up call centers to do remote notarizations using minimum wage employees and that’s it, game over.
If you have excellent marketing skills and/or a relevant background, you may be able to make some serious money before remote notarization fully rolls out. Without those, it’s far more likely that this NSA business will be your side gig at best.
Updated October 20, 2018