What Is Novation?
Also known as: Real Estate Novation
A novation replaces an original contract with a new agreement, often allowing an investor to market the property differently than a simple assignment would.
A novation replaces an original contract with a new agreement, often allowing an investor to market the property differently than a simple assignment would.
Novation explained
Novation strategies are more complex than standard wholesale assignments. In a real estate novation, the seller may agree to let the investor market the property, coordinate improvements or listing activity, and be paid according to the new agreement. Because the structure affects control, disclosure, agency, and compensation, it requires careful paperwork and legal review. It is not a beginner shortcut; it is a specialized deal structure.
Example
An investor signs a novation agreement allowing them to list the property and earn the spread between the seller payout and final buyer price.
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