In this coaching session, Chris Prefontaine leads a real‑estate team (Rob, Speaker C, and others) through the analysis of an expired, overpriced property tied to a nursing‑home debt. The sellers owe $160 k to a nursing home and are motivated to sell quickly. The group evaluates two primary deal structures: a cash offer around $200 k versus a seller‑financed purchase with a $1 k monthly payment and a balloon payment after 36 months. They calculate realistic net proceeds using a 97 % of list price benchmark, subtract a 3 % listing discount and a 6 % realtor commission to arrive at roughly $319 k before closing costs. Mortgage payment estimates for a $315 k loan at ~6.5‑6.75 % interest are discussed ($1,991/month). The team maps out multiple “payday” profit stages, considers attorney involvement to secure nursing‑home payment terms, and debates inclusion of title and closing fees. Chris emphasizes the need for clear permission from sellers, creative attorney solutions, and a timeline for the deal, while assigning homework and next steps.
Chapters
So we'll do the one, the call I just made.
Everybody ready for one more deal?
Yeah.
Okay.
And then I'll give you some homework. We'll do final thoughts and we'll get out of here.
Okay. This was the expired.
Okay. Rick, you got the camera? Yep. Okay.
She's looking for $350,000. Oh, uh, free and clear.
Oh, nice. Okay. Motivation. Did Zach get it?
Yeah, she, um, well, well, actually, um, that's the one who had to pay the nursing home. She got her husband on the line. So yeah, they owe the nursing home $160,000. Right. So she needs the money.
$160,000.
And the sale of the house to buy that.
Yep. So what did Zach say to doing this? You guys, you're all in the room. Um, what were the 2 options he wanted you to do?
So he said I could offer her $200,000 and do like a fix and flip, or, um, yeah, the other option was, um, fix and flip or wholesale it. Yeah, wholesale was the other.
Oh, which one was this? This is the one with the Nursing home. Yeah, the parents. Oh, okay. I thought the other one was coordinating with the attorney to see if they, if the nursing home would be fine with payments.
If they would be okay with taking payments. Yeah. Yeah.
Is that the second option?
Yeah.
Well, I mean, this is a little different, so we're not going to structure 3 paydays because it's going to be as simple as what we just did. But let's talk about ideas. You were dealing with the husband and wife, right, of the deceased?
Yes. Oh yeah, it's, it's the parent. It's the, the wife's parents.
So, and they were on kind of 2 different pages.
Yeah, yeah. See, I talked to her originally, and then Zach was able to get the husband on the phone.
Who sounded like they were running the show?
Uh, probably the husband. Okay, definitely.
Who's talking? You sound more clear.
Yeah.
All right. Yeah, it was her parents. That's probably why.
Her parents. Okay. Yeah.
Um, okay. So, I mean, you know how to do this one, Rob. The only, the only other issue would be to get permission with them on the phone to call the nursing home payments. Right. But then the offer's better. That's what's going to be their incentive to talk about it.
Yeah. Cause she didn't want to come down on the price at all. She's like, I'm not dropping the price.
The realtor wanted the property.
Right. So is she going to accept the $200,000?
I mean, yeah.
Yes, exactly a year.
Okay. No, well, still sitting there.
No offers, nothing.
All right. Um, uh, she didn't want to keep it even until winter.
No, she didn't want to keep it. She wanted to definitely sell it. It was— she wanted to get rid of it before the winter.
Yeah. So even if you went to, um, did she give you guys— this was on the market?
Yes. Okay.
Where's the calculator? You should do this with every expired who doesn't understand what they're really going to net. You didn't sell it, but if you sold it in this area, you'd be lucky to get 97% of ask. They, they didn't even come close to that. They would have got an offer. But what's 97% of that? $339,500.
Yeah.
Then you had to pay a realtor. What's 94% of that number you just gave me?
$319,000.
Okay, Rob, that's reality if they got 3% off of asking price, right? Okay, so you're already at this number with an expired. Okay, can we go back to those Mercedeses? You should use this little tweak on all your expireds unless they get it. Okay, what is— what, what is that kind of based on? Okay, yeah. So I say, hey Donald, you didn't sell. This is precisely what we did on so many of our deals. You didn't sell, but if you did in this area, you can play around with comps, but you're going to be in this number range at best for them.
Okay.
The sell-to-list price is around 97% I use. Now, I truly believe they're higher than that. They wouldn't have got that, but let's just give them the benefit of the doubt. And then you got to pay your realtor. So before closing costs, you're at $319,100, taking those 2 calculations off. You basically took off 9%. So what's the 90— the 94% is the realtor fee?
6%. Okay.
I was netting it out.
Okay.
So 6% and 3% off the ask price is 9% off of this if you got an offer. You didn't. But hypothetically, Rob, you could say, but I'm willing to go to that number that you would've got. You didn't, right? You do that if you're going to sell it on terms. So they get 2 dramatically different numbers.
Right.
But here's the punchline here. The $319,000, now you have to pay the nursing home something monthly. So you got to work on that first. My opinion. Yeah.
Oh yeah, for sure.
So I don't know if I'm if I'm in their shoes. They're ready to take the house probably. They have a lien on it? I heard Zach ask. No, they don't have a lien on it.
No.
So what? So just a payment.
So they're negotiating with the attorney. So I guess he's trying to push it down the road a little longer. They have the agreement where they sell the house. Then the nursing home will get paid.
That's the issue.
Yeah.
But there's no lien on it.
There's no lien on it yet. Yeah.
Right. So they still gotta go through the court. They don't wanna be a problem, but okay. But that's nicer. It's cleaner. Yeah. So I'm saying roughly just if they would take $1,000, you talk to the attorney, not the nursing home first.
It's not right.
But then you're gonna run up the seller's bill, but that's up to them if they don't mind you talking to them. $1,000 a month with a balloon in, I don't know, you could do 36 months. Yeah, right.
Yeah.
Oh yeah. Someone with a mortgage calculator, what's, um, if Rob went out and sold this on terms for $350,000, 10% down, what's a mortgage of $315,000 at what's today's rates?
Whatever today's rates are.
I'm just curious what a buyer would pay. So 6 what?
6.75%.
6.75% rate with a mortgage. Say he sold it to the terms market for $350,000 with 10% down. So $315,000. What's that mortgage roughly? That payment for the new buyer, principal and interest? A mortgage calculator. 6.5% down, you said? Roughly. Yeah. No, 6.5% interest rate. It's going to be $1,991 the payment over 30 years. A buyer?
Yeah.
At $1,991?
$315,000 at 6% for 30 years.
Yeah.
Okay. $1,991. So Rob, if you're giving up, you only have $1,900 to play with.
$2,000.
Rent's probably higher. Let's just say $2,000. So you got a couple grand left to play with. You got to make your payday too, right? You pay taxes.
Yeah.
So, I mean, I try to get— what's the balance owed to these? If we, if we bought it for this and we— and the nursing home is owed this, what's the difference here, you guys? That's the seller's money. They're about to get zero, right? But if the home enforces it, what's that difference you got?
$159,130.
Yeah. So $159,000. It's like $160,000 each. Okay. That's even easier. Yeah. So look, we can get the— we can get the nursing home their $160,000 by doing $1,000 a month with a balloon. That's on— that's on me. I got that, you say. And then your $160,000 is similar to what Rick's done several times. No interest and no payments. For the balloon, no interest, no payments for the balloon payment at 96. If you marry this up, the point is, just so we know, but not to the 3 paydays, you're going to have the conversation with the attorney. You have an out for them if they're willing to get creative. Right. What would the markup on payday 2 be though? What would he keep on payday 2? Well, let's just go backwards. He's got, he's got $2,000 a deal, let's say. I don't know what the market rents are.
Yeah, it's probably close in that area.
He's got to pay a nursing home a grand. He's got a grand left.
Okay.
He's trying to give them nothing. What if you give him $500? Oh, got it. Okay.
So then you keep—
okay.
Yeah.
So he'll make $500 to $1,000 on his payday too. And give him this cash offer because you could spend it just, you know, right? Right.
Then they'll have $160 for their nursing home.
Yeah. You, you, I mean, they're not going to get anything else. This might take Exactly. Attorney's approval. This might take time for the wife to come to terms with this. How long ago did her parents pass?
I'm not sure. I mean, they sound pretty old themselves. Oh, so I'm sure it's been a while.
Well, I don't want to bum you out, but I got a guy in town here whose brother died 10 years ago. The house is dilapidated. He comes twice a year. Uh, I just met him his last visit and he still hasn't called me back. Right. And he has 3 other properties. Like, they sometimes— the family just— yeah, I don't want to let go emotionally. Any questions on this, you guys?
I got a question. Do we, do we include, um, title fees and all that in this when we're— because when we're transferring the name, the ownership over, do we include this in that payment too? You know, like closing?
The transfer tax, for example?
Yeah. When you're doing all that at the end, when you're going to title and getting everything switched over, shouldn't we include that in that price too?
Or— No.
What, they want me to deduct that away from that? I mean, because when he— I mean, because when they close, the seller close, he's going to have to pay his own, his own portion of the title fees and half of You know, yeah, I said, that's what I said.
So they would get $319,100 before closing costs if they sold on the open market. Yeah. Any standard cost for a buyer, standard cost for a seller has to get paid. Yep. Both closings.
Okay.
When he buys it, when he sells it. In Rob's case, this is going to be a drip, in my opinion, unless it pops for you. But I think it's going to be a drip, a little bit of a drip. You know what I'm saying? I don't want to sell you, but if Just to float out there, there's my cash. Right. And here's one way to do it. There's other ways to do it. You know, what's going to play into this is if the attorney's sort of creative and into it. Right.
Yeah. If they don't understand it, it's going to be a tough sell.
Then you'd have to go to the sellers and go, look, do I have permission with you on the phone to call the nursing home with you? Right. 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. Any questions on this, you guys? I don't know. I think I'm just getting blinded by the numbers or something. So I see the spread in the payday 2, I see the payday 3, but where's payday 1? There's no, there's no deposit. Yeah, we didn't even go there yet.
Got it.
That's why, like the last deal, we mapped out the 3 paydays. We're just trying to help him get to his next stage in this.
Got it.
So I didn't do paydays. This is option 1, cash. Yeah. Option 2, we'll try to buy it for this, pay the nurse and own this. Yeah. It sells nothing until the end of 3 years, which is pretty common. But she sounds like with all these workings, you might have a tough time with this. Yeah, rightfully so. But if it doesn't sell, there's got to be an end zone somewhere, right? So that'd be a question for you, Rob, with the attorney. If he's not open to it, look, I get you want to sell it, all right, but it's been a year. Is there a timeframe? This is key, the bookends, guys, when you're finding out that what if it doesn't happen? Is there a timeframe where we need to talk again, or will you just keep lowering this? I think Zach might've said it to him until you just pop it. Yeah.
Well, she wasn't gonna relist the— well, she was talking to another realtor, so I don't know if she's gonna try to relist it again.
The attorney's gonna go, what are you doing?
I gotta—
I can't hold these guys up. Yeah. I'd watch it. Yeah. Have that chat with the attorney, Rob. If you need help, I'm happy to get on, but it's really just a, what do you think? I can get this done. We have time.
