In this live training session, Chris Prefontaine walks a small group of agents (Janice, Rick, and others) through the mechanics of using an Assignment of Contract (AO) versus a sandwich lease (lease‑option) to rescue properties headed to auction. He demonstrates a step‑by‑step numerical example for a $1.1 M seller asking price, showing how a $200‑$300 K buyer deposit can be split between the seller and the investor, how caps protect the seller’s minimum price, and how cash‑flow differs between AO and sandwich structures. The conversation also covers practical tactics for locating auction‑bound sellers, leveraging a niche “auction‑stopper” specialist, handling equity protection, depreciation considerations for untitled investors, and ethical communication with sellers. Chris emphasizes the importance of asking direct questions about the seller’s plan, using the right down‑payment percentages for jumbo loans, and documenting economic control in option agreements. Throughout, participants ask clarifying questions about caps, down‑payment language, and transitioning from lease‑purchase to sub‑to/owner‑finance deals. The session ends with reminders about compliance, documentation, and resources for further learning.
Chapters
He's not getting all of that in a sandwich. In a sandwich, is he still depreciating this property if it's an investment, which it is? Yes, he's untitled. Yesterday we did that call for Janice. It's posted. Everybody hear that? The guy's name was Victorian.
Okay.
No one?
Yeah, I heard it.
You heard it? Okay. So from that call, we said we would get him the numbers. The numbers are real simple for an AO. So I want you to ask me because then we'll get deeper into other types of deals. The challenge is Janice found out this morning. How did you find out about the auction, Janice?
I actually knew when I called him and then I didn't bring it up till the very end because he didn't bring it up. He tried to hide it and he still hid it to the very end.
Yeah, I knew he was in arrears and I told the people in my office I didn't bring that up because I think it would have put him on the defense. I didn't need to. He knows where he is. I didn't know it was going to auction. This guy's going to auction at the end of June and he was playing hardball with us.
Hmm.
So I know one guy in our community. He does not want to be referred, but I said, I can refer all associates to you. He's like, it's a pain in the— you know what, Chris, I don't want to do it. But we have one-offs where we got to stop an auction. He's the only guy I ever met in 34 years who knows how to do it the right way and the right way for the seller. So you can reach out to him on Slack, Janice. And if he doesn't answer, not on much, I can get him by cell. Okay.
Okay. Thank you.
I would get this to this guy and then I would send— then I would offer him that, that door.
Okay.
Okay.
All right.
This guy was on for 1-1. What I'm going to show you guys is exactly what I would sketch out for a seller in first. He's on for 1-1. You'll hear in the call and those of you that heard it, No matter what I did, he wasn't going with another method. So I pivoted at the end to this logically instead of letting him go. And I almost forgot because I was in my office and you guys were watching. I'm like, I almost jumped off the phone, giving up on the guy. And then I went to AO. Here's what Janice can send him. So Janice, you're just going to send this to him in an email, okay? You're going to say, I don't know yet, but I'm giving you a hypothetical. And our paperwork says this is just a hypothetical. But I'm going to go on for, say, Rick, what would you say?
1.2.
1.2. I'm going to use that. I would have went a touch higher, probably. But let's use that and see how it comes out. We're just going to do it live with you. I'm going to go on for 1.2, Victoria. I'm going to look to get a $200,000 deposit from the buyer, whether it's upfront or over time. You're not buying in most markets a million-dollar home without 20%, right?
Everybody agree with that? Okay.
So, Victorian, at— and you'll write these out what I'm saying— at financing time, the buyer's going to owe you $1 million. But we already got $200,000, which we split $100K each. So I got you to your $1.1 million, basically. Everybody follow that?
Mm-hmm.
Now, Janice might get a little less, might get a little more. This is just an example. So he in this case understands how this thing floats.
One thing that I'll, I'll always add is just so they're aware, the minimum they'll get is their asking price. So anything that our portion of the split is capped at that markup.
Okay, good point. So If he came— does everybody understand this basic piece of an AO? Because we're going to— these are just one payday. It should be— I want to make sure it's cut and dry in your heads. Is everybody good?
Mm-hmm.
Okay. Let's change it then to Rick's point. Let's say that not uncommon for a buyer at this price range to say, okay, they go to the buyer meeting with you and Nick, and with Nick's checklist, they get up to $300 grand over time. Right. So that would mean if we didn't cap it to Rick's point, let's see where this comes out. And we each took $150,000. This person is going to be owed at— the seller is going to be owed at closing $900,000, right? He only got $150,000. So he's $50,000 shy of the one.
That— Follow me.
I want to make sure.
Yeah.
Okay. So you either don't— if they don't ask about cap, I don't bring it up. But if they ask about cap, you can do what Rick said. Look, I'll make sure you get your minimum no matter what. So if this goes too high, you're still going to get your 1.1, in which case I can't take the 150, right? If they're going to get the 1— if they're owed 9 and they need 1.1, then they need 200. Out of that 300 to be in their pocket. You guys follow that?
Yeah.
So I only can take 100 if they bring it up, because this is just a hypothetical. You don't know. And I say to— I don't know what I'm going to get you. So make sense, you guys? Okay. Yell if it doesn't, please. I do have Julius. You have to write him an email.
Yeah, I have to ask him for his email.
Right, but you get the numbers?
Oh, yes. My other question is, is EO the best structure for him? I guess, is he even in the position to ask for $200,000 versus losing his house altogether?
No, because of his situation, I would— I said to you in Slack, I would ask him, what is your plan? You got $900 grand in equity to protect. Did you have a plan to save this from the auction? If not, I might have one of my—
He says he does. That's why he was very— he was quite arrogant, like a few that I've come across where they're like a hurt animal. They're like, you know, I can deal with this. I don't need you.
Right. But you didn't point blank ask him about the auction, right?
No.
Right.
You got to ask him. Now's the— now's the— yeah, now's the come to Jesus. What are you doing?
Yeah, because if he had wanted to save it, he would have saved it. It's been at least a few months from early pre-foreclosure too.
Now, I agree. I'm just leaving that door in case the auction's on public note still, but it's been canceled, you know?
I see. Okay.
I don't know. So you might as well ask, but let's find out. You got to be blunt with him because he's either going to say, get lost. Yeah, I need your contact and I'll call Kevin if I owe you. Kevin saved a $1.1 million house in Florida about 2 months ago. We put it out as a deal structure, so you guys may have seen it. This woman only owed like, I think it was like $100,000 or something. She was going to lose all her money. He not only saved it, he morally and ethically said, I can't buy it and take all that equity. So he took a 40% stake in the property and saved it. And the woman was in tears because of it, because he could have— most investors were trying to steal it from her. She was an elderly lady. And some weird thing that the mortgage didn't get paid. So Kevin's good. He'll do the right thing as long as you get him in time.
So, so, Chris, on that, isn't it once it goes to auction, obviously people are going to buy it for much less than it's valued at, most likely if they can't see the home. But I'm— I saw something recently. It could be wrong, but I'm pretty sure— let's say they bought it on $0.70 on the dollar and then they pay all the attorney fees, all the foreclosure costs, everything gets paid out as well as the mortgage. Everything left over, the buyer or sorry, the original homeowner can file with the state and collect it back. I think a lot of people don't know that, but. Right, right. They can do that, right? They can still get some of their equity back.
That, that is correct. And there's also talk about niches in real estate. There's a guy on my podcast that that's all he does is go after those funds that people don't think they have.
Right. Yeah, I just heard of one.
You said they don't claim it. They think they leave their house and they think they're toast. Yeah.
Yep.
But I do have a quick question. Just really brief. That example you have written up on the board, and that's okay. So you said they could come with $300,000 down payment or a buyer might come with $200,000 down payment. When you're writing the offer, usually I just show 10% down and then I say we split it. But do you ever use any language to kind of show the— we don't really know what they're going to come down, you know, come with as a down payment. I don't know.
You're right on all fronts. The only thing is, if you're— if the house price less whatever down payment is going to be a jumbo loan, I use 20% because I need that for a jumbo loan.
Okay.
So whether it's upfront or by the time they're financing, we don't want to set buyers up to fail. Some buyers don't know that because they see the ads and they can put 3% down or 10%. But, but, but the fact is most jumbos are going to need, unless there's a special program, that At that time. Okay, 20. But in general, I'm talking to relatives. And sometimes you guys, you'll put the AO training videos will show you this. You'll put the AO on one side of the piece of paper. I literally just scratch it open for the seller. And on the second side, you'd put a sandwich lease if they're, if they're still open to options. And you'll say, I'm in the middle of this one. I'm not in this one. But here are the different— you'll get more money here, Mr.
Seller.
And they appreciate you being honest because if they're open to both and you're showing them both, they know that you're making less on that. Oh, but, but if they're a landlord or a builder like Judy had a builder yesterday we talked to live in my office, investor builder, there's no reason for us to be in the middle of that. He knows how to do it. So this is the right thing.
How much off of those still?
Sure, I can, I can wing one. So The seller there got— let's just—
so that was the AO.
Let's, let's try a sandwich. Just use the numbers. What's going on? 1.1 and 320. Do we know the payment on the mortgage? Yeah, about 3 grand. Did you just put that or did he tell you that?
He told me that. Okay.
Okay, so with the AO, let's use five grand rental. He thinks it's like five to seven, which is probably right. So from the AO, he got that cash up front, and then let's use five grand. Let's just be conservative per month because Janice is out, right? If he's AO, if it's a sandwich, please someone say something or no? Is that a bird? Was it sneeze? Because I tell you, this is serious. You're not going to sneeze that. Is that Laura? All right, $3,000 he's paying out, right? $5,000. If you— if Janice goes out and gets $5,000 and she tied this up as a kind of standard sandwich, this payday 2 difference of $2,000 is Janice's. That's, that's the big difference here. He's not getting all of that.
Okay.
In a sandwich. In a sandwich, is he still depreciating this property if it's an investment, which it is? Yes, he's untitled. I mean, we could, we could do the same deal sub to— everything would shift again. But in a sandwich, Janice gets this for a payday 2. For Janice's payday 1, she'd get all of the down payment, that $200,000 to $300,000. We're not giving— I don't think I've ever given a seller a dime in a sandwich lease or any other deal unless it was buying it as a small down. Not sure where to get started? Go to smartrealestatecoach.com/getgoing for free books, strategy calls, and a whole bunch more. We're going to help you get going the wicked smart way. We've been after this for over a decade doing exactly that. More detail on that? Does that help just for the general? Difference.
Yeah. No, that's good.
So you'd say you'd give it to us. I said, look, I control the whole thing here. I got your back. We have to cash this out no matter what. On this one, you get more upside, but you're in touch with the tenant buyer. I'm here to help you, but it's your deal now. And if they default, you let me know. We'll come back and do another one. Or maybe the market's better and you sell it conventionally at that time. That's a discussion I'd be having with the seller openly.
And that's a good way of what Chris just mentioned about not doing a down payment on or anything towards, to the seller on a lease purchase. A good way to transition it from a lease purchase to a sub-to or sub-to owner finance is say, well, obviously we wouldn't put money down on something we don't own. You know, how important is that down payment to you? And then if they want the down payment, then that's going to be a sub-2.
It was on the call yesterday, call you heard that I did with that realtor. They're pushing down. And I said, well, let's take the lease purchase off the table then, however I said it, because we don't put— and you said, okay. So we went right back to owner financing.
Well, thank you.
The other important thing to let us know is when we have to have some sort of economic control of the property, right, before we can sign.
$10.
Yeah, we'll just write in the option agreement. That's why we do it.
Yeah, yeah.
It's literally for your file in case you get called. They told the people in my room yesterday by the licensing authority.
