Why Novation Are Better Than Wholesaling

[Dawson Brewer]

Here’s why I’ve started using novations over wholesaling.

1. Sellers Get More Money

With wholesaling, sellers often need to take a low cash offer. With novations, I can offer closer to market value by selling to retail buyers, making it easier to get deals accepted.

2. Bigger Assignment Fees

Instead of selling to investors looking for steep discounts, I market to end buyers willing to pay market price. This means I make more per deal than a typical wholesale assignment.

3. No Double Closings or Hard Money

Since the seller stays on title, I don’t have to use hard money or worry about double closing fees. I just facilitate the sale and collect my fee at closing.

4. More Buyers, Less Competition

Wholesaling relies on a limited pool of cash buyers. Novations open up the MLS and conventional financing, bringing in a larger pool of buyers and reducing competition from other wholesalers.

5. Easier to Scale

With less reliance on deep-discount deals and cash buyers, I can scale novations faster than traditional wholesaling.

Final Thoughts

I’m not saying wholesaling is dead, but novations have helped me close deals I would’ve lost before. Anyone else using novations? What’s been your experience?

[Don Konipol]

Quote from @Jay Hinrichs:

Quote from @James Wise:

Quote from @Jay Hinrichs:

Quote from @James Wise:

Quote from @Dawson Brewer:

Here’s why I’ve started using novations over wholesaling.

1. Sellers Get More Money

With wholesaling, sellers often need to take a low cash offer. With novations, I can offer closer to market value by selling to retail buyers, making it easier to get deals accepted.

2. Bigger Assignment Fees

Instead of selling to investors looking for steep discounts, I market to end buyers willing to pay market price. This means I make more per deal than a typical wholesale assignment.

3. No Double Closings or Hard Money

Since the seller stays on title, I don’t have to use hard money or worry about double closing fees. I just facilitate the sale and collect my fee at closing.

4. More Buyers, Less Competition

Wholesaling relies on a limited pool of cash buyers. Novations open up the MLS and conventional financing, bringing in a larger pool of buyers and reducing competition from other wholesalers.

5. Easier to Scale

With less reliance on deep-discount deals and cash buyers, I can scale novations faster than traditional wholesaling.

Final Thoughts

I’m not saying wholesaling is dead, but novations have helped me close deals I would’ve lost before. Anyone else using novations? What’s been your experience?

 What in the holy hell is a novation?

its just another method of flipping a contract..  

 So wholesaling but we changed the name?

basically you can google the definition.  there are some guru's teaching it these days.

Hey guys, it’s basic “guruism” 

1. Start with a technique or strategy used successfully by KNOWLEDGABLE, EXPERIENCED investors on a rather limited basis (because it’s only OCCASIONALLY applicable
2. Create a methodology which uses this technique or strategy in 10 X the number of situations where it’s appropriate, and only report the few successes, never acknowledging the failures or the risks
3. Write a book about it, utilize paid internet ads to drive book sales, follow on with YouTube videos, webinars, blog casts, on line tutorials, and sell a few one on one coaching sessions.
4. Partner with a real estate marketing company out of Las Vegas or Provo, Utah to market, promote and advertise the “mentorship” system consisting of the free seminar, followed by the modest fee weekend workshop, followed by the $15,000 - $40 000 full mentorship program.

Here are the usual results
1- 99% of “students” never earn back the cost, despite 1000s of wasted hours
2- students learn nothing of real estate principles, real estate finance and real estate law which are the necessary foundation blocks of knowledge necessary for a SUSTAINABLE career in real estate investment 
3- with hundreds or thousands of “students” unleashed on the real estate selling public they’re AT BEST an annoyance of trying to do “unrealistic” deals, AT WORST lead to a disastrous result for vulnerable homeowners.
4 - The career real estate investors, service providers, brokers, lenders, etc are so disgusted with all of it and the outcomes they see that that can’t even comprehend that the subject technique or strategy does have a legitimate use when utilized (1) by and experienced and well capitalized buyer and (2) full disclosure is provided all parties with legal representation.  

Governmental agencies do get involved, often very late in the game and often just having the guru agree to a "cease and desist" order. ( I did nothing wrong and agree never to do it again"). One particularly peculiar case involved John Beck. Full disclosure - I knew John back inthe late 1970s early 1980s when he traveled the guru circuit of those days as guest speaker at REI clubs selling "books and tapes" at the back of the room. He was a good guy" and his information on buying at tax or foreclosure sales was realistic and doable.
Fast forward 25 years later and John decided he wanted the riches associated with the gurus backed by the Vegas/Provo real estate marketing companies. But John got greedy, and went with a fly by night outfit because they offered him the “best” deal.  Anyway, the program was such an obvious BS fluff that an overwhelming percentage of students demanded their money back claiming they were defrauded.  The outrage was such that the AGs of 4 states jointly sued John and the real estate marketing company and won a $400 million judgement!.  (Interesting, because the best guess I’ve seen is that John maybe personally grossed no more than $10 million from this mentorship over a 8 - 9 year period of time). Nevertheless, John walked out of the courtroom after the verdict was delivered, walked by his car, continued walking and has NEVER been seen or heard from again!  This was 18 years ago.