In this 7,695‑token segment of a team coaching call, Chris Prefontaine leads a discussion with agents Annette, Deb, Jeff, and others about structuring a creative seller‑financing deal for a property in Shrewsbury, MA (the "Rice Lake"/Jill deal). The seller (Jill) and her ex‑husband are finalizing a quit‑claim, and the buyer side is being represented by Annette. The seller’s representative, a friend named Steve, is dictating strict terms: $50,000 down, 5.5% interest, and a 15‑year balloon (30‑year amortization). The team debates whether to accept those terms, how to counter‑offer, and how to protect the seller’s interests. They outline a rent‑to‑own then owner‑financing wrap structure, discuss pre‑payment penalties, legal limits, and the importance of attorney review. Chris advises drafting an email (to be refined in the President’s Club Slack channel) that ignores Steve’s demands, proposes a lower down payment (around $20k), and emphasizes the seller’s flexibility. They also touch on market conditions (high financing failures), the need for a spread between the seller’s note and the buyer’s note, due‑on‑sale clauses, and the overall strategy of creating multiple profit centers through creative financing. The conversation is instructional, strategic, and includes actionable next steps for Annette to prepare the email and for the team to review legal aspects.
Chapters
Whatever prepay, if they bring a prepay up to Annette, Annette checks with her attorney and sees if she can cover that with a better prepay on her note to the buyer. Hypothetical, Deb.
Could we talk about Rice Lake real quick?
Yeah. Which one is it?
That's Jill.
Jill, the one that you went to the other day and they had oral? Okay, so Annette went to this appointment and the ex-husband showed up who owns the property and they were freaking out. So she left and then she got a call today that they wanted to— want to do it. Did I understand that correctly?
Yeah. And the thing was, I mean, we were just outside walking the yard, so I hadn't even taken a picture of me in front of the house. All of a sudden he pulls in and she lost it.
And then she called—
lack of better terms.
I guess my question is that, is she— who's on the deed? Remind me.
Well, they both are currently until the divorce goes through, and then he's signing a quit— a quitclaim.
When would this be?
Supposed to be done tomorrow.
Oh, fine. Okay. Because you don't want to mess with that. Get that done. Okay. And then— and then what do you need help on with this while we're out here?
Well, I'm looking at— so in the appointment, she had one of their friends, and it's both of their friends, this Steve.
Yep.
And in talking to Andy this weekend, so everybody knows, this is a lead that I found on Marketplace. So I communicated back and forth with him. He called me first and then set me up to talk to her. So this Steve fella that they both know is kind of dictating a little bit of the term. And so she doesn't want to talk about anything without him there. And he's saying she needs, you know, minimum $50,000 down, sale price of $399,900.
She's just—
minimum—
just picking her though.
I think so. When I asked about, you know, if that was the lowest she could go, and then interest rate, he wants 5.5%. If they give anything less than the $50,000, then the interest rate goes up.
I remember this. Okay, so they are literally dictating what's their ramp if they don't do this with you because they're calling you.
Well, and the thing right now, she has 2 gentlemen that are more in the private sector that are offering and she is not getting a real good feeling with them. So if they don't go with me, then she's going to list it in a week or 2.
Okay. I'm just going to say something you're probably not going to love. You're going to We're going to put a thing together, but it might be that they won't. They go list, right? If they don't like it, because I don't think 50 grand is necessary on a $400,000 house.
No.
So you told her to dictate?
I told her the same 5%. You know, we could— we're going to— if we do a down payment, it'll be small. And she kind of pulled back a a little bit, but their friend Steve said right away, absolutely not.
Okay, fine.
$50,000 or even—
That's fine. Do they owe anything on the house or is this all owner financing?
No, it's all owner financing as of— because the ex-husband is going to be paying off the $28,000 mortgage tomorrow.
Okay. So I would not do an agreement yet. And then you guys feedback fine if you have some thoughts that I'm missing, but I would not do an offer yet. I would do an email. And send it to me and send it to the President's Club channel on Slack, and I'll tweak it to be a little more stronger, probably, because ignore the guy Steve. Act like he doesn't exist. Take his feedback, but act like he doesn't exist. Right?
Okay.
Honor him on the calls because he has to help her and all that. But I'm saying don't listen to what he's doing for terms. Okay. I can give you— did you ask the question about what's more important in the quadrant or no?
Yes, I did.
Great. And what were the 2 things that were most important or one?
One, she wants it to go 15 years. Oh yeah, they pay it off sooner, which amazed me because here's— here was her reply when I asked her if she would consider less and she says, well, I'll consider less, but I still want the interest that they would pay if, if they kept going the 15 years.
This lady wants the 15 years, guys. She doesn't want to go 10. She wants the 15 years. So we're going to attack here if we get it. is to do a rent-to-own buyer and then turn it into an owner financing buyer with a prepaid penalty because she can't stop Annette from selling it. But Annette's going to try to honor that, right?
Right.
So, Annette, I mean, 5%, $20,000, I think that's— yeah, I think that's the highest I'd go and I'd make it like $19,700, say. And you say in the email and I'll tweak it with you, I kind of maxed out our metrics because usually if we do any down, it's going to come off the back end. I'm trying to maintain your back end, your price, and I'm trying to maintain your interest. I can't maintain all 3.
Okay.
That's what I would do because this sounds like a cool deal. I don't want to blow it out for ego reasons, right? But I do. I don't think we should give them all 3. That's stupid. You know, and if— and say— and then you got to do a takeaway. And again, I'll help you with email. If this doesn't work, I totally understand. Let me know if you don't get full price on the open market because the open market right now is very unpredictable.
Okay.
Like I told the guy, was it today, Dad? Did I say the Wall Street thing to your guy?
Yeah.
Yeah, yeah. I told the guy, Bill, he's— he says he's got some offers this week, which he kind of hinted last week to us. I said, no problem, Bill. Sounds like that's going to go. But with the amount of buyers not getting financed right now, The Wall Street Journal is still reporting over 20% closings falling apart. So I planted that on purpose. I said, so if it doesn't work, just give us a call. Just boom, just get off the phone. Like, we just planted that seed. So when he doesn't get the offers next week, when he does and they're wonky, I said, if any of them require financing, just know this. So in your email, you kind of hint the same thing. But that's what I said to Deb's guy this morning, because I truly don't think he's going to get what he wants unless he gets a cash offer. And it's not like it's a bad town. Shrewsbury, Mass. is like a hot town, but I still don't think he's going to get what he wants. Does that make sense enough for you to get me something in Slack?
Are you talking to me?
Yeah.
Yes.
Okay.
Yes, I'll work on it after this.
You guys, any questions on Annette's deal? Nice little deal.
So I didn't even think down and interest were— I didn't think we really did both of those.
Well, she's going to— she's insisting on 15 years, though.
Oh, okay.
And quite frankly, in 15 years, Annette can do— and even in 10, Annette can do a lot on that house. She could turn that into owner financing and be a bank and create 4 profit centers, not 3.
She's got interest for 15 years too.
She wants 5.5% interest. What I didn't ask you, Annette, is that you're doing a 30-year amortization with a 15-year balloon, I'm assuming.
Correct.
Yeah. So what she'll do, Deb, is This is in theory. If she gets it, is she'll do a— she'll say to the tenant buyer, Jeff's a tenant buyer. She says, hey, Jeff, here's the structure of this house. Even though the video said you have to go get your own loan, if you meet certain requirements, you won't have to. And they get buyer— this is at the buyer's meeting where they already came in thinking they had to get bank financing eventually. And she says to Jeff, you keep your payments up for 2 years. And over the course of that 2 years, no hurry, you get your down payment up to 20%. At the end of that, I'll owner finance you for 10 more years at— give them a rate. You're going to finance them and no banks. Give them a rate of 7. She's only paying 5.5. Give them a rate of whatever, 6.75. Still a good rate. And they don't have to go through all the underwriting crap and all the fees. They just have to pay the— they have to pay the doc fees and stuff for the attorney. But that's it. So Annette's not going to come out of pocket to be the bank right now. And that's the bank. So now she's got payday 1, payday 2, payday 883 for 10 years at least, if not 15. And now she has a spread every month on top of that with interest.
Okay, cool.
All right. One question on prepayment penalties. If you go over 3 years, is there potentially some legal issues if you're telling them they have to hold the loan for more than 3 years? Every state's different with what you can impose for a prepay. So make sure your attorney— and that good point he brings up, They dictate that. I don't know every state, of course.
Okay.
And it's not even— look, if you give them a good enough rate, why would they want to refi anyway? Right? If you soak them, they're going to want to refi you out. Yeah. And like, we have predatory lending in Rhode Island. If you add up fees and interest and points, you can't be over X. It's high, but you still can't go over it. So you got to be careful of that too.
So the first 2 years would be just the rent-to-own with a, with a rental payment that would cover— and that's 5.5%.
Yeah. Just like a normal short-term deal.
Normal. Yeah. And then if they, if they pay on time, they get their down payment up, then you would owner finance them at like 7%. So you're making a spread there and there may have been a spread already It would be.
Well, it's going to change, though, Jeff. So after that 2-year—
Would change.
It's going to change to a spread plus the interest spread.
Yeah.
Okay. Interest spread is not going to come out till payday 3, right? Technically, it's going to be the principal paydown at the end of this whole thing is going to be different than her note. You can have a net— you cannot have a due-on-sale. So when the person sells, it gives you an option to say this note is due-on-sale, not due-on-sale. So you have to let Jill know how you sell. If it comes up, if they say, no, no, we can't have— they say, no, I have to have it. That's how I sell. Not due on sale.
Well, can you explain that more?
Now, in our purchase and sales agreement, when you do an owner financing, it says in the owner financing section at the very bottom, there's a line that says this note, meaning to the seller, is due on sale or not due on sale. And most attorneys handling this would say, well, I have to have due on sale for my client in case you sell it. But if Jill brings it up, Annette's going to say, well, I don't sell it off. I sell it with a wrap. You're still protected. I'm going to— I'm going to stay involved in this deal. It's going to wrap mortgage to my buyer.
Okay.
Mortgage is still protected. I'm just selling it to my—
You're selling. Yeah, because you're selling it to the buyer, but you're staying in the middle and getting that, that spread.
Yeah. So on the property picture, you guys, on the property, Annette has a promissory note, promise to pay the seller, Jill. It's secured by a mortgage. All she's going to do for the buyer is it's going to be what they call a wrap. But all it means is it's technically in second place. The wrap just mirrors the underneath and has a better spread. So at the end of this, she's going to have X due to Jill, but the buyer is going to have X plus due to her.
Yeah.
Because the amortization is different and the rate's different and it started 2 years later, you know.
And then the interest would go— I'm sorry, the insurance would go from a net In the first two years to buy.
Exactly.
Now she's a bank.
Yep.
Now can she go three years before she does it? Sure. She never she wants. We'll revisit this with Nick when she gets it. But that's what typically I say. I don't want to. I'm not giving anyone the deal without twenty percent down. So that's one mile marker you have to hit. You can say twenty five, whatever you want comfortable-wise. We'll see other buyers over two years. Things could change by then. Could Annette also call in 2 years? In theory, not that she'd want to, but if the buyer was like, Annette, can I please cash this out? I got a loan or I got a friend or I won the lottery. Could she call the woman and just renegotiate? Because she's not going to have a prepay unless the lady catches this and does a prepay. She could put a prepay imposed on Annette if her attorney's shopping, but Annette's not going to bring that up.
Right.
So would it be wrong to put in the email to Jill when we send her possible numbers? Would it be wrong to say we're going to— we're going to get them up to a down payment of 20% within 2 to 3 years?
No, you don't need to talk with your buyer with Jill.
Okay.
Nothing with your buyer.
I was just thinking that might help her with that $50,000 to know that.
No. And then she's going to get greedy. No, no, no, no talk of your buyer.
Okay?
This is all about you right now. Okay? There's no comfort level. Remember what Jeff asked? The comfort— if it's just for comfort level, Steve, Mr. Know-it-all, or Jill, you tell them what I said earlier. Look, we're accredited with the Creative Financing Real Estate Association compared to your other buyers. We do what we say we're going to do. We've been doing it for years and years all over the country. But if you're not comfortable, this wouldn't be for you. Because if they're not comfortable with you saying that, how would they be comfortable with Joe Schmo who's never bought a house before and they're going to do auto financing with them? Doesn't make any sense to me. In fact, I would say if they give you pushback, I'd say, look, it makes sense to me why you tell a regular buyer that they have no experience. You're risking yourself if you go with them, but it's your call. But this is what we do. 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 Exactly that.
If she didn't have a prepay in there. So if— no, say she did have a prepay in there. So they said you can't— prepay penalty if you sell it before 15 years. And that seller came and the buyer came and said, yeah, my— I'm going to get a loan from my uncle or whatever. How do you handle that?
Whatever prepay— if they bring a prepay up to Annette, Annette checks with her attorney and sees if she can cover that. With a better prepay on her note to the buyer. Hypothetical, Deb. The buyer—
The dollar amount, you're saying?
It's a percentage usually. So say the seller says— I'm making this up— say the seller says 1% prepay if you pay it off within or before 10 years. If you pay off before 5 years, it's 3% prepay. So Annette just does the same thing with her buyer, only makes it higher by half a percent or a percent and covers it. If the law allows that in her state.
I see.
There'll be a ceiling no matter what it is.
Okay. So it's a good idea if there is one in one, you should put it into—
Oh yeah.
In the other.
Cover yourself.
Yeah.
She's got— again, you look at the deal holistically. If Annette sees 5 years, my property, this thing's $150 grand, is she going to cry over a $10 grand prepay? You know what I mean? So you just got to weigh all this out.
Okay.
Yeah. And she, in that case, she might, the seller might feel like she's winning and that goes, yeah, it's fine. Right? So it's okay.
