Why Novation Are Better Than Wholesaling

Austin, Texas
Wholesaling
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Why Novation Are Better Than Wholesaling

Dawson Brewer
Realtor · Austin, TX · Member since 2020 · 43 posts · 26 votes

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?

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Stephen MoralesBusiness Member
Jacksonville, FL · Member since 2025 · 402 posts · 205 votes
1y

We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.

The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.

We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done. 

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  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    1y
    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?


     So essentially, the result is the same as a “net listing”? 

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  • Dawson Brewer
    OP
    Realtor · Austin, TX · Member since 2020 · 43 posts · 26 votes
    1y

    @Don Konipol i never did a net listing, but from what i understand of what it is, yes the result is the same. 

    1Reply
  • Gary McKay
    Member since 2025 · 3 posts · 1 vote
    1y

    What about if the property requires repairs? Novation here in the DMV is frowned upon; it feels to me to be unethical 

    0Reply
    • Dawson Brewer
      OP
      Realtor · Austin, TX · Member since 2020 · 43 posts · 26 votes
      1y
      Quote from @Gary McKay:

      What about if the property requires repairs? Novation here in the DMV is frowned upon; it feels to me to be unethical 


       You’d take care of that either in concessions or you’d address what you can. 

      0Reply
    • Gary McKay
      Member since 2025 · 3 posts · 1 vote
      1y
      Quote from @Dawson Brewer:
      Quote from @Gary McKay:

      What about if the property requires repairs? Novation here in the DMV is frowned upon; it feels to me to be unethical 


       You’d take care of that either in concessions or you’d address what you can. 


       All the Rehab estimates, fees, and holding costs still need to be completed; the difference is how you construct the deal or create the contract. I don't see a real advantage over an Wholesale or Fix n Flip

      0Reply
  • Cornelius Garland
    Wholesaler · Charlotte, NC · Member since 2015 · 398 posts · 679 votes
    1y

    I wouldn't argue one strategy is better than another. When you've been around for a while, you develop an exit strategy "tool belt" of sorts. I wholesale some properties, and others make sense to take down as rentals. Also, novations are nothing new. This is a catchphrase that people started using a few years back.

    I was essentially doing "novations" way before it ever became a thing, with a limited durable power of attorney, back in 2016. One of the first deals I did was take down a 26-parcel deal in a highly distressed neighborhood and listed it on the MLS. The POA gave us the ability to list it. I'm not a fan of novations where you don't get the purchase agreement notarized and filed at the courthouse. It's too flimsy otherwise. If you're going to go that route with listing it, do it the right way or else you may find yourself in legal trouble, or a buyer may snake the deal from you.

    Again, novations aren't anything new, and most experienced investors are shying away from them these days because they're operating in a legal "grey area". I never want to place a Realtor in a compromising situation, so I always get a notarized POA and file it at the courthouse. This helps the process move much quicker on my virtual deals. In Cleveland, I'm taking down duplexes as rentals and Cuyahoga county requires us to communicate with 3 - 5 departments just to get payoffs. If I had to wait on the seller to do this, it would drag out my closings for months, potentially. There are multiple benefits of using a POA to list the property rather than getting a purchase agreement e-signed with a "listing clause" in it.

    4Reply
    • Dominic Joseph Jean
      New to Real Estate · Bozeman, MT · Member since 2024 · 38 posts · 7 votes
      11mo
      Quote from @Cornelius Garland:

      I wouldn't argue one strategy is better than another. When you've been around for a while, you develop an exit strategy "tool belt" of sorts. I wholesale some properties, and others make sense to take down as rentals. Also, novations are nothing new. This is a catchphrase that people started using a few years back.

      I was essentially doing "novations" way before it ever became a thing, with a limited durable power of attorney, back in 2016. One of the first deals I did was take down a 26-parcel deal in a highly distressed neighborhood and listed it on the MLS. The POA gave us the ability to list it. I'm not a fan of novations where you don't get the purchase agreement notarized and filed at the courthouse. It's too flimsy otherwise. If you're going to go that route with listing it, do it the right way or else you may find yourself in legal trouble, or a buyer may snake the deal from you.

      Again, novations aren't anything new, and most experienced investors are shying away from them these days because they're operating in a legal "grey area". I never want to place a Realtor in a compromising situation, so I always get a notarized POA and file it at the courthouse. This helps the process move much quicker on my virtual deals. In Cleveland, I'm taking down duplexes as rentals and Cuyahoga county requires us to communicate with 3 - 5 departments just to get payoffs. If I had to wait on the seller to do this, it would drag out my closings for months, potentially. There are multiple benefits of using a POA to list the property rather than getting a purchase agreement e-signed with a "listing clause" in it.


       Hello Mr. Garland, 

      Thank you for sharing this great advice. I had a question for you, what would be the right way to do a Novation without getting in legal trouble or sketchy grey areas?

      Thanks,

      Dominic Jean

      0Reply
    • Cornelius Garland
      Wholesaler · Charlotte, NC · Member since 2015 · 398 posts · 679 votes
      11mo
      Quote from @Dominic Joseph Jean:
      Quote from @Cornelius Garland:

      I wouldn't argue one strategy is better than another. When you've been around for a while, you develop an exit strategy "tool belt" of sorts. I wholesale some properties, and others make sense to take down as rentals. Also, novations are nothing new. This is a catchphrase that people started using a few years back.

      I was essentially doing "novations" way before it ever became a thing, with a limited durable power of attorney, back in 2016. One of the first deals I did was take down a 26-parcel deal in a highly distressed neighborhood and listed it on the MLS. The POA gave us the ability to list it. I'm not a fan of novations where you don't get the purchase agreement notarized and filed at the courthouse. It's too flimsy otherwise. If you're going to go that route with listing it, do it the right way or else you may find yourself in legal trouble, or a buyer may snake the deal from you.

      Again, novations aren't anything new, and most experienced investors are shying away from them these days because they're operating in a legal "grey area". I never want to place a Realtor in a compromising situation, so I always get a notarized POA and file it at the courthouse. This helps the process move much quicker on my virtual deals. In Cleveland, I'm taking down duplexes as rentals and Cuyahoga county requires us to communicate with 3 - 5 departments just to get payoffs. If I had to wait on the seller to do this, it would drag out my closings for months, potentially. There are multiple benefits of using a POA to list the property rather than getting a purchase agreement e-signed with a "listing clause" in it.


       Hello Mr. Garland, 

      Thank you for sharing this great advice. I had a question for you, what would be the right way to do a Novation without getting in legal trouble or sketchy grey areas?

      Thanks,

      Dominic Jean

      You're welcome, Dominic. The best way to stay legally compliant is to be upfront with the seller and tell them what you plan on doing. This is where a lot of investors get stuck because they have difficulty conveying the benefits of working with an investor opposed to going directly to an agent. 

      If a property fits our novations criteria, we'll mention on the first call that we think the property will be a good fit for our "Novations Protection Program". Then my closer goes onto explain how we'll actively market the property through our preferred Realtor network, and if they use a conventional Realtor then they'll just put it on the MLS. We position it like we're a partner in the process. Really, that's the most difficult part: Convincing the seller why they should list the property with you opposed to them going to an agent directly.

      You can then use a standard purchase agreement to get a firm commitment from the seller. Your agent that you partner with will then get the seller to sign a listing agreement, which makes you, the investor, appear very credible.

      0Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    1y
    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?

    1Reply
    • Gary McKay
      Member since 2025 · 3 posts · 1 vote
      1y
      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?

      So here is an example:


      Example:



      • A homeowner has a contract to sell their house.
      • A real estate investor steps in and finds a new buyer willing to pay more.
      • The seller and investor agree to a novation, transferring the contract obligations to the new buyer.
      • The original seller gets paid, the investor profits, and the new buyer completes the purchase.
      I stay away from these sort of deals


      1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    1y
    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..  
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  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    1y
    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?

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    1y
    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.
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  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    1y
    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.

     lol..........I should have known that this nerd would be involved with this B/S.

    1Reply
    • Ken M.
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @James Wise:
      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.

       lol..........I should have known that this nerd would be involved with this B/S.

      On one video he says he has stopped doing novations because they are in the grey area. I think he may have heard from a legal department. ;-) He doesn't stop doing something unless it's by legal notice.
      0Reply
    • James Wise
      Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
      1y
      Quote from @Ken M.:
      Quote from @James Wise:
      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.

       lol..........I should have known that this nerd would be involved with this B/S.

      On one video he says he has stopped doing novations because they are in the grey area. I think he may have heard from a legal department. ;-) He doesn't stop doing something unless it's by legal notice.

       lol he's such a grifter....

      2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    1y
    Quote from @James Wise:
    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.

     lol..........I should have known that this nerd would be involved with this B/S.


    YUP.. 
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    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    1y
    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. 

    Private Mortgage Financing Partners, LLC
    WebsiteView Page
    4Reply
  • Ken M.
    Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
    1y
    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?

    Your comment: "I can offer closer to market value by selling to retail buyers"
    doesn't that make you a real estate agent?

    and what is a "net listing" ?

    0Reply
  • Stephen MoralesBusiness Member
    Jacksonville, FL · Member since 2025 · 402 posts · 205 votes
    1y

    We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.

    The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.

    We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done. 

    [email protected]
    PrimeTracers
    WebsiteView Page
    5Reply
    • Dawson Brewer
      OP
      Realtor · Austin, TX · Member since 2020 · 43 posts · 26 votes
      1y
      Quote from @Stephen Morales:

      We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.

      The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.

      We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done. 


       Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?

      1Reply
    • Stephen MoralesBusiness Member
      Jacksonville, FL · Member since 2025 · 402 posts · 205 votes
      1y
      Quote from @Dawson Brewer:
      Quote from @Stephen Morales:

      We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.

      The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.

      We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done. 


       Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?

      To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest. 


      If they still refuse, you sue them for specific performance. You record a lis pendens during the lawsuit. They have a contractual right to go through with the sale if the other party of the contract (being us) has fulfilled their obligations. 

      Haven't had this be a problem yet though. It's also a good idea to do your homework on who you end up doing novations with as well. 

      [email protected]
      PrimeTracers
      WebsiteView Page
      0Reply
    • Ken M.
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @Stephen Morales:
      Quote from @Dawson Brewer:
      Quote from @Stephen Morales:

      We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.

      The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.

      We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done. 


       Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?

      To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest. 


      If they still refuse, you sue them for specific performance. You record a lis pendens during the lawsuit. They have a contractual right to go through with the sale if the other party of the contract (being us) has fulfilled their obligations. 

      Haven't had this be a problem yet though. It's also a good idea to do your homework on who you end up doing novations with as well. 

      .
      Your comment: "To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest."

      That could get you into a heck of a lot of legal trouble.


      0Reply
    • Stephen MoralesBusiness Member
      Jacksonville, FL · Member since 2025 · 402 posts · 205 votes
      1y
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Dawson Brewer:
      Quote from @Stephen Morales:

      We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.

      The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.

      We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done. 


       Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?

      To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest. 


      If they still refuse, you sue them for specific performance. You record a lis pendens during the lawsuit. They have a contractual right to go through with the sale if the other party of the contract (being us) has fulfilled their obligations. 

      Haven't had this be a problem yet though. It's also a good idea to do your homework on who you end up doing novations with as well. 

      .
      Your comment: "To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest."

      That could get you into a heck of a lot of legal trouble.


      Heck of a lot of legal trouble... or simply unenforceable depending on how the contract is structured.

      If drafted correctly, it is my understanding that you're well within your rights to pursue damages for a seller's breach, which may extend beyond just reimbursing direct investment costs. If there is a valid contact executed, title can file a memo on your behalf. A memo has saved several deals for us in the past and damages were paid by the Seller. 

      As always, agreements should be structured with a qualified real estate attorney familiar with the laws of your operating state and anything I have described is something we do but is not to be taken as legal advice. 

      [email protected]
      PrimeTracers
      WebsiteView Page
      0Reply
    • Ken M.
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Dawson Brewer:
      Quote from @Stephen Morales:

      We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.

      The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.

      We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done. 


       Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?

      To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest. 


      If they still refuse, you sue them for specific performance. You record a lis pendens during the lawsuit. They have a contractual right to go through with the sale if the other party of the contract (being us) has fulfilled their obligations. 

      Haven't had this be a problem yet though. It's also a good idea to do your homework on who you end up doing novations with as well. 

      .
      Your comment: "To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest."

      That could get you into a heck of a lot of legal trouble.


      Heck of a lot of legal trouble... or simply unenforceable depending on how the contract is structured.

      If drafted correctly, it is my understanding that you're well within your rights to pursue damages for a seller's breach, which may extend beyond just reimbursing direct investment costs. If there is a valid contact executed, title can file a memo on your behalf. A memo has saved several deals for us in the past and damages were paid by the Seller. 

      As always, agreements should be structured with a qualified real estate attorney familiar with the laws of your operating state and anything I have described is something we do but is not to be taken as legal advice. 

      Your comment: "If drafted correctly,"

      It has little to do with how it's written (okay, it matters a lot to be sure, about who drafts the document) but to me the concern isn't how it is drafted. It's using a memorandum at all. 

      When you record a memorandum against the title, you are clouding the title. That is a very serious problem if not done by an attorney. Because, there are plenty of situations an attorney would not even consider using that approach but an inexperienced investor might because they don't have a clue what they're doing and they were told "it's the way to do things". Very bad advice.
      0Reply
    • Stephen MoralesBusiness Member
      Jacksonville, FL · Member since 2025 · 402 posts · 205 votes
      1y
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Dawson Brewer:
      Quote from @Stephen Morales:

      We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.

      The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.

      We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done. 


       Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?

      To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest. 


      If they still refuse, you sue them for specific performance. You record a lis pendens during the lawsuit. They have a contractual right to go through with the sale if the other party of the contract (being us) has fulfilled their obligations. 

      Haven't had this be a problem yet though. It's also a good idea to do your homework on who you end up doing novations with as well. 

      .
      Your comment: "To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest."

      That could get you into a heck of a lot of legal trouble.


      Heck of a lot of legal trouble... or simply unenforceable depending on how the contract is structured.

      If drafted correctly, it is my understanding that you're well within your rights to pursue damages for a seller's breach, which may extend beyond just reimbursing direct investment costs. If there is a valid contact executed, title can file a memo on your behalf. A memo has saved several deals for us in the past and damages were paid by the Seller. 

      As always, agreements should be structured with a qualified real estate attorney familiar with the laws of your operating state and anything I have described is something we do but is not to be taken as legal advice. 

      Your comment: "If drafted correctly,"

      It has little to do with how it's written (okay, it matters a lot to be sure, about who drafts the document) but to me the concern isn't how it is drafted. It's using a memorandum at all. 

      When you record a memorandum against the title, you are clouding the title. That is a very serious problem if not done by an attorney. Because, there are plenty of situations an attorney would not even consider using that approach but an inexperienced investor might because they don't have a clue what they're doing and they were told "it's the way to do things". Very bad advice.

      Appreciate the concern, and you're right, improperly recording a memo without following proper channels can lead to legal issues. But let's not confuse misuse with the tool itself being "very bad advice." 

      Recording a memorandum based on a valid, fully executed contract is 100% legal in Florida and widely used to protect Buyer's interests. I have been doing this for almost 10 years and I have never once had an issue with title or their RE attorney filing one for me. 

      Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch. Heck, most don't even know what a memorandum is, let alone how to file one or even find one. 

      As with anything, this should be done with legal guidance. 

      [email protected]
      PrimeTracers
      WebsiteView Page
      0Reply
    • Ken M.
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Dawson Brewer:
      Quote from @Stephen Morales:

      We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.

      The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.

      We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done. 


       Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?

      To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest. 


      If they still refuse, you sue them for specific performance. You record a lis pendens during the lawsuit. They have a contractual right to go through with the sale if the other party of the contract (being us) has fulfilled their obligations. 

      Haven't had this be a problem yet though. It's also a good idea to do your homework on who you end up doing novations with as well. 

      .
      Your comment: "To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest."

      That could get you into a heck of a lot of legal trouble.


      Heck of a lot of legal trouble... or simply unenforceable depending on how the contract is structured.

      If drafted correctly, it is my understanding that you're well within your rights to pursue damages for a seller's breach, which may extend beyond just reimbursing direct investment costs. If there is a valid contact executed, title can file a memo on your behalf. A memo has saved several deals for us in the past and damages were paid by the Seller. 

      As always, agreements should be structured with a qualified real estate attorney familiar with the laws of your operating state and anything I have described is something we do but is not to be taken as legal advice. 

      Your comment: "If drafted correctly,"

      It has little to do with how it's written (okay, it matters a lot to be sure, about who drafts the document) but to me the concern isn't how it is drafted. It's using a memorandum at all. 

      When you record a memorandum against the title, you are clouding the title. That is a very serious problem if not done by an attorney. Because, there are plenty of situations an attorney would not even consider using that approach but an inexperienced investor might because they don't have a clue what they're doing and they were told "it's the way to do things". Very bad advice.

      Appreciate the concern, and you're right, improperly recording a memo without following proper channels can lead to legal issues. But let's not confuse misuse with the tool itself being "very bad advice." 

      Recording a memorandum based on a valid, fully executed contract is 100% legal in Florida and widely used to protect Buyer's interests. I have been doing this for almost 10 years and I have never once had an issue with title or their RE attorney filing one for me. 

      Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch. Heck, most don't even know what a memorandum is, let alone how to file one or even find one. 

      As with anything, this should be done with legal guidance. 

      Your comment: "Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch."

      Please reference Pace Morby and his SubTo Community of 173,000 on Facebook. That is what they teach. Now, it's one thing to say you do or don't do a certain thing, it's quite something else to say it is NOT widely done.

      In addition, but not related to Pace Morby and his SubTo Community, I invite you to read the following:

      Click To See Complaint

      https://www.azag.gov/sites/default/files/2025-03/CV2025-008402%20State%20of%20Arizona%20v.%20Cameron%20Jones%20et%20al%20FILED%20%281%29.pdf

      It's a common misconception that just because you do something and haven't been caught (been sued for it), means it's okay to do. 

      Not getting caught has nothing to do with whether it is illegal or prudent behavior.

      0Reply
    • Stephen MoralesBusiness Member
      Jacksonville, FL · Member since 2025 · 402 posts · 205 votes
      1y
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Dawson Brewer:
      Quote from @Stephen Morales:

      We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.

      The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.

      We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done. 


       Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?

      To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest. 


      If they still refuse, you sue them for specific performance. You record a lis pendens during the lawsuit. They have a contractual right to go through with the sale if the other party of the contract (being us) has fulfilled their obligations. 

      Haven't had this be a problem yet though. It's also a good idea to do your homework on who you end up doing novations with as well. 

      .
      Your comment: "To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest."

      That could get you into a heck of a lot of legal trouble.


      Heck of a lot of legal trouble... or simply unenforceable depending on how the contract is structured.

      If drafted correctly, it is my understanding that you're well within your rights to pursue damages for a seller's breach, which may extend beyond just reimbursing direct investment costs. If there is a valid contact executed, title can file a memo on your behalf. A memo has saved several deals for us in the past and damages were paid by the Seller. 

      As always, agreements should be structured with a qualified real estate attorney familiar with the laws of your operating state and anything I have described is something we do but is not to be taken as legal advice. 

      Your comment: "If drafted correctly,"

      It has little to do with how it's written (okay, it matters a lot to be sure, about who drafts the document) but to me the concern isn't how it is drafted. It's using a memorandum at all. 

      When you record a memorandum against the title, you are clouding the title. That is a very serious problem if not done by an attorney. Because, there are plenty of situations an attorney would not even consider using that approach but an inexperienced investor might because they don't have a clue what they're doing and they were told "it's the way to do things". Very bad advice.

      Appreciate the concern, and you're right, improperly recording a memo without following proper channels can lead to legal issues. But let's not confuse misuse with the tool itself being "very bad advice." 

      Recording a memorandum based on a valid, fully executed contract is 100% legal in Florida and widely used to protect Buyer's interests. I have been doing this for almost 10 years and I have never once had an issue with title or their RE attorney filing one for me. 

      Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch. Heck, most don't even know what a memorandum is, let alone how to file one or even find one. 

      As with anything, this should be done with legal guidance. 

      Your comment: "Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch."

      Please reference Pace Morby and his SubTo Community of 173,000 on Facebook. That is what they teach. Now, it's one thing to say you do or don't do a certain thing, it's quite something else to say it is NOT widely done.

      In addition, but not related to Pace Morby and his SubTo Community, I invite you to read the following:

      Click To See Complaint

      https://www.azag.gov/sites/default/files/2025-03/CV2025-008402%20State%20of%20Arizona%20v.%20Cameron%20Jones%20et%20al%20FILED%20%281%29.pdf



      People who play football in traffic should expect to get hit by a car once in a while.

      Oh! this was a great read, I remember seeing it earlier this month. In this case, this was essentially organized fraud/crime that was taking place. They were creating fictitious entities and sometimes assigning contracts that didn't exist because they were using forged signatures. The victims were literally being lied to about what they were signing in some cases. 

      The Arizona case isn't about using memos, it's literally about abusing them through fraud, extortion, forgery and coordinated deception. 

      Filing a memo with an actual, valid purchase agreement is completely legal and again, commonly done to protect equitable interest. Especially in the case where you have an agreement with the Seller to improve their property and have invested time and capital with the clear intent to complete the sale. 

      This is a perfect example that legal tools should be used properly, not an argument against the suggestion  of using the tool itself. 

      As for Pace Morby's group, sure he's got reach. And yes, if he's over here teaching people to file their own memos without legal counsel that is VERY BAD advice indeed. Some new investors listening to him might misuse the memo, but that doesn't change the fact that when used correctly, its a legitimate and valuable tool to protect contractual rights. 

      Anyone getting into this space should seek legal counsel especially when it comes to contracts, agreements and recording of said instruments. 

      Anyway, it seems like your set on being right and that's fine. Let's just agree to disagree and leave it at that.

      [email protected]
      PrimeTracers
      WebsiteView Page
      0Reply
    • Ken M.
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Dawson Brewer:
      Quote from @Stephen Morales:

      We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.

      The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.

      We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done. 


       Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?

      To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest. 


      If they still refuse, you sue them for specific performance. You record a lis pendens during the lawsuit. They have a contractual right to go through with the sale if the other party of the contract (being us) has fulfilled their obligations. 

      Haven't had this be a problem yet though. It's also a good idea to do your homework on who you end up doing novations with as well. 

      .
      Your comment: "To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest."

      That could get you into a heck of a lot of legal trouble.


      Heck of a lot of legal trouble... or simply unenforceable depending on how the contract is structured.

      If drafted correctly, it is my understanding that you're well within your rights to pursue damages for a seller's breach, which may extend beyond just reimbursing direct investment costs. If there is a valid contact executed, title can file a memo on your behalf. A memo has saved several deals for us in the past and damages were paid by the Seller. 

      As always, agreements should be structured with a qualified real estate attorney familiar with the laws of your operating state and anything I have described is something we do but is not to be taken as legal advice. 

      Your comment: "If drafted correctly,"

      It has little to do with how it's written (okay, it matters a lot to be sure, about who drafts the document) but to me the concern isn't how it is drafted. It's using a memorandum at all. 

      When you record a memorandum against the title, you are clouding the title. That is a very serious problem if not done by an attorney. Because, there are plenty of situations an attorney would not even consider using that approach but an inexperienced investor might because they don't have a clue what they're doing and they were told "it's the way to do things". Very bad advice.

      Appreciate the concern, and you're right, improperly recording a memo without following proper channels can lead to legal issues. But let's not confuse misuse with the tool itself being "very bad advice." 

      Recording a memorandum based on a valid, fully executed contract is 100% legal in Florida and widely used to protect Buyer's interests. I have been doing this for almost 10 years and I have never once had an issue with title or their RE attorney filing one for me. 

      Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch. Heck, most don't even know what a memorandum is, let alone how to file one or even find one. 

      As with anything, this should be done with legal guidance. 

      Your comment: "Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch."

      Please reference Pace Morby and his SubTo Community of 173,000 on Facebook. That is what they teach. Now, it's one thing to say you do or don't do a certain thing, it's quite something else to say it is NOT widely done.

      In addition, but not related to Pace Morby and his SubTo Community, I invite you to read the following:

      Click To See Complaint

      https://www.azag.gov/sites/default/files/2025-03/CV2025-008402%20State%20of%20Arizona%20v.%20Cameron%20Jones%20et%20al%20FILED%20%281%29.pdf



      People who play football in traffic should expect to get hit by a car once in a while.

      Oh! this was a great read, I remember seeing it earlier this month. In this case, this was essentially organized fraud/crime that was taking place. They were creating fictitious entities and sometimes assigning contracts that didn't exist because they were using forged signatures. The victims were literally being lied to about what they were signing in some cases. 

      The Arizona case isn't about using memos, it's literally about abusing them through fraud, extortion, forgery and coordinated deception. 

      Filing a memo with an actual, valid purchase agreement is completely legal and again, commonly done to protect equitable interest. Especially in the case where you have an agreement with the Seller to improve their property and have invested time and capital with the clear intent to complete the sale. 

      This is a perfect example that legal tools should be used properly, not an argument against the suggestion  of using the tool itself. 

      As for Pace Morby's group, sure he's got reach. And yes, if he's over here teaching people to file their own memos without legal counsel that is VERY BAD advice indeed. Some new investors listening to him might misuse the memo, but that doesn't change the fact that when used correctly, its a legitimate and valuable tool to protect contractual rights. 

      Anyone getting into this space should seek legal counsel especially when it comes to contracts, agreements and recording of said instruments. 

      Anyway, it seems like your set on being right and that's fine. Let's just agree to disagree and leave it at that.

      I'm not quite sure why you are so sensitive about this issue, my point is that anyone who files memorandums as a means of hopefully keeping someone in a novation, is playing with fire. 

      Having a novation is nothing like creating a joint venture agreement with legal interest. The courts align with the owner of the property and creating a memorandum to cloud title is foolish. That's all. People should either enter into a bonified agreement or buy the property.

      On a related matter, the states are clamping down on wholesaling as well. Several states have new laws affecting wholesaling as of 2025. Old videos on youtube are not reliable information, and probably haven't been for a while. 

      By the way, I write this for the lurkers (not really for you)

      so that innocent people won't be lulled into thinking they can do what is commonly believed to be acceptable, but isn't. If you or anyone else has consulted an attorney and the attorney is filing the memorandum, you are generally okay. But, if you make a copy of a memorandum and sign it, you are playing with fire. The court will ask who wrote and filed the memorandum.

      0Reply
    • Peter Walther
      Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
      1y
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Dawson Brewer:
      Quote from @Stephen Morales:

      We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.

      The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.

      We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done. 


       Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?

      To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest. 


      If they still refuse, you sue them for specific performance. You record a lis pendens during the lawsuit. They have a contractual right to go through with the sale if the other party of the contract (being us) has fulfilled their obligations. 

      Haven't had this be a problem yet though. It's also a good idea to do your homework on who you end up doing novations with as well. 

      .
      Your comment: "To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest."

      That could get you into a heck of a lot of legal trouble.


      Heck of a lot of legal trouble... or simply unenforceable depending on how the contract is structured.

      If drafted correctly, it is my understanding that you're well within your rights to pursue damages for a seller's breach, which may extend beyond just reimbursing direct investment costs. If there is a valid contact executed, title can file a memo on your behalf. A memo has saved several deals for us in the past and damages were paid by the Seller. 

      As always, agreements should be structured with a qualified real estate attorney familiar with the laws of your operating state and anything I have described is something we do but is not to be taken as legal advice. 

      Your comment: "If drafted correctly,"

      It has little to do with how it's written (okay, it matters a lot to be sure, about who drafts the document) but to me the concern isn't how it is drafted. It's using a memorandum at all. 

      When you record a memorandum against the title, you are clouding the title. That is a very serious problem if not done by an attorney. Because, there are plenty of situations an attorney would not even consider using that approach but an inexperienced investor might because they don't have a clue what they're doing and they were told "it's the way to do things". Very bad advice.

      Appreciate the concern, and you're right, improperly recording a memo without following proper channels can lead to legal issues. But let's not confuse misuse with the tool itself being "very bad advice." 

      Recording a memorandum based on a valid, fully executed contract is 100% legal in Florida and widely used to protect Buyer's interests. I have been doing this for almost 10 years and I have never once had an issue with title or their RE attorney filing one for me. 

      Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch. Heck, most don't even know what a memorandum is, let alone how to file one or even find one. 

      As with anything, this should be done with legal guidance. 

      Your comment: "Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch."

      Please reference Pace Morby and his SubTo Community of 173,000 on Facebook. That is what they teach. Now, it's one thing to say you do or don't do a certain thing, it's quite something else to say it is NOT widely done.

      In addition, but not related to Pace Morby and his SubTo Community, I invite you to read the following:

      Click To See Complaint

      https://www.azag.gov/sites/default/files/2025-03/CV2025-008402%20State%20of%20Arizona%20v.%20Cameron%20Jones%20et%20al%20FILED%20%281%29.pdf



      People who play football in traffic should expect to get hit by a car once in a while.

      Oh! this was a great read, I remember seeing it earlier this month. In this case, this was essentially organized fraud/crime that was taking place. They were creating fictitious entities and sometimes assigning contracts that didn't exist because they were using forged signatures. The victims were literally being lied to about what they were signing in some cases. 

      The Arizona case isn't about using memos, it's literally about abusing them through fraud, extortion, forgery and coordinated deception. 

      Filing a memo with an actual, valid purchase agreement is completely legal and again, commonly done to protect equitable interest. Especially in the case where you have an agreement with the Seller to improve their property and have invested time and capital with the clear intent to complete the sale. 

      This is a perfect example that legal tools should be used properly, not an argument against the suggestion  of using the tool itself. 

      As for Pace Morby's group, sure he's got reach. And yes, if he's over here teaching people to file their own memos without legal counsel that is VERY BAD advice indeed. Some new investors listening to him might misuse the memo, but that doesn't change the fact that when used correctly, its a legitimate and valuable tool to protect contractual rights. 

      Anyone getting into this space should seek legal counsel especially when it comes to contracts, agreements and recording of said instruments. 

      Anyway, it seems like your set on being right and that's fine. Let's just agree to disagree and leave it at that.


      I think what Ken is trying to get you to understand, is that filing a memo regarding an unrecorded agreement could be construed to be a slander of the title to the property, particularly if both parties to the agreement do not agree to the recording of the memo.  If a property owner disagrees with what the agreement means and the rights and obligations created by the agreement, and later is unable to sell or borrow against his property because the title is clouded by the memo, the other party might be found to have slandered the title and be liable for damages.

      0Reply
    • Ken M.
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @Peter Walther:
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Dawson Brewer:
      Quote from @Stephen Morales:

      We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.

      The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.

      We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done. 


       Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?

      To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest. 


      If they still refuse, you sue them for specific performance. You record a lis pendens during the lawsuit. They have a contractual right to go through with the sale if the other party of the contract (being us) has fulfilled their obligations. 

      Haven't had this be a problem yet though. It's also a good idea to do your homework on who you end up doing novations with as well. 

      .
      Your comment: "To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest."

      That could get you into a heck of a lot of legal trouble.


      Heck of a lot of legal trouble... or simply unenforceable depending on how the contract is structured.

      If drafted correctly, it is my understanding that you're well within your rights to pursue damages for a seller's breach, which may extend beyond just reimbursing direct investment costs. If there is a valid contact executed, title can file a memo on your behalf. A memo has saved several deals for us in the past and damages were paid by the Seller. 

      As always, agreements should be structured with a qualified real estate attorney familiar with the laws of your operating state and anything I have described is something we do but is not to be taken as legal advice. 

      Your comment: "If drafted correctly,"

      It has little to do with how it's written (okay, it matters a lot to be sure, about who drafts the document) but to me the concern isn't how it is drafted. It's using a memorandum at all. 

      When you record a memorandum against the title, you are clouding the title. That is a very serious problem if not done by an attorney. Because, there are plenty of situations an attorney would not even consider using that approach but an inexperienced investor might because they don't have a clue what they're doing and they were told "it's the way to do things". Very bad advice.

      Appreciate the concern, and you're right, improperly recording a memo without following proper channels can lead to legal issues. But let's not confuse misuse with the tool itself being "very bad advice." 

      Recording a memorandum based on a valid, fully executed contract is 100% legal in Florida and widely used to protect Buyer's interests. I have been doing this for almost 10 years and I have never once had an issue with title or their RE attorney filing one for me. 

      Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch. Heck, most don't even know what a memorandum is, let alone how to file one or even find one. 

      As with anything, this should be done with legal guidance. 

      Your comment: "Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch."

      Please reference Pace Morby and his SubTo Community of 173,000 on Facebook. That is what they teach. Now, it's one thing to say you do or don't do a certain thing, it's quite something else to say it is NOT widely done.

      In addition, but not related to Pace Morby and his SubTo Community, I invite you to read the following:

      Click To See Complaint

      https://www.azag.gov/sites/default/files/2025-03/CV2025-008402%20State%20of%20Arizona%20v.%20Cameron%20Jones%20et%20al%20FILED%20%281%29.pdf



      People who play football in traffic should expect to get hit by a car once in a while.

      Oh! this was a great read, I remember seeing it earlier this month. In this case, this was essentially organized fraud/crime that was taking place. They were creating fictitious entities and sometimes assigning contracts that didn't exist because they were using forged signatures. The victims were literally being lied to about what they were signing in some cases. 

      The Arizona case isn't about using memos, it's literally about abusing them through fraud, extortion, forgery and coordinated deception. 

      Filing a memo with an actual, valid purchase agreement is completely legal and again, commonly done to protect equitable interest. Especially in the case where you have an agreement with the Seller to improve their property and have invested time and capital with the clear intent to complete the sale. 

      This is a perfect example that legal tools should be used properly, not an argument against the suggestion  of using the tool itself. 

      As for Pace Morby's group, sure he's got reach. And yes, if he's over here teaching people to file their own memos without legal counsel that is VERY BAD advice indeed. Some new investors listening to him might misuse the memo, but that doesn't change the fact that when used correctly, its a legitimate and valuable tool to protect contractual rights. 

      Anyone getting into this space should seek legal counsel especially when it comes to contracts, agreements and recording of said instruments. 

      Anyway, it seems like your set on being right and that's fine. Let's just agree to disagree and leave it at that.


      I think what Ken is trying to get you to understand, is that filing a memo regarding an unrecorded agreement could be construed to be a slander of the title to the property, particularly if both parties to the agreement do not agree to the recording of the memo.  If a property owner disagrees with what the agreement means and the rights and obligations created by the agreement, and later is unable to sell or borrow against his property because the title is clouded by the memo, the other party might be found to have slandered the title and be liable for damages.

      @Peter Walther: Well stated, thank you.

      0Reply
    • Peter Walther
      Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
      1y
      Quote from @Ken M.:
      Quote from @Peter Walther:
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Ken M.:
      Quote from @Stephen Morales:
      Quote from @Dawson Brewer:
      Quote from @Stephen Morales:

      We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.

      The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.

      We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done. 


       Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?

      To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest. 


      If they still refuse, you sue them for specific performance. You record a lis pendens during the lawsuit. They have a contractual right to go through with the sale if the other party of the contract (being us) has fulfilled their obligations. 

      Haven't had this be a problem yet though. It's also a good idea to do your homework on who you end up doing novations with as well. 

      .
      Your comment: "To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest."

      That could get you into a heck of a lot of legal trouble.


      Heck of a lot of legal trouble... or simply unenforceable depending on how the contract is structured.

      If drafted correctly, it is my understanding that you're well within your rights to pursue damages for a seller's breach, which may extend beyond just reimbursing direct investment costs. If there is a valid contact executed, title can file a memo on your behalf. A memo has saved several deals for us in the past and damages were paid by the Seller. 

      As always, agreements should be structured with a qualified real estate attorney familiar with the laws of your operating state and anything I have described is something we do but is not to be taken as legal advice. 

      Your comment: "If drafted correctly,"

      It has little to do with how it's written (okay, it matters a lot to be sure, about who drafts the document) but to me the concern isn't how it is drafted. It's using a memorandum at all. 

      When you record a memorandum against the title, you are clouding the title. That is a very serious problem if not done by an attorney. Because, there are plenty of situations an attorney would not even consider using that approach but an inexperienced investor might because they don't have a clue what they're doing and they were told "it's the way to do things". Very bad advice.

      Appreciate the concern, and you're right, improperly recording a memo without following proper channels can lead to legal issues. But let's not confuse misuse with the tool itself being "very bad advice." 

      Recording a memorandum based on a valid, fully executed contract is 100% legal in Florida and widely used to protect Buyer's interests. I have been doing this for almost 10 years and I have never once had an issue with title or their RE attorney filing one for me. 

      Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch. Heck, most don't even know what a memorandum is, let alone how to file one or even find one. 

      As with anything, this should be done with legal guidance. 

      Your comment: "Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch."

      Please reference Pace Morby and his SubTo Community of 173,000 on Facebook. That is what they teach. Now, it's one thing to say you do or don't do a certain thing, it's quite something else to say it is NOT widely done.

      In addition, but not related to Pace Morby and his SubTo Community, I invite you to read the following:

      Click To See Complaint

      https://www.azag.gov/sites/default/files/2025-03/CV2025-008402%20State%20of%20Arizona%20v.%20Cameron%20Jones%20et%20al%20FILED%20%281%29.pdf



      People who play football in traffic should expect to get hit by a car once in a while.

      Oh! this was a great read, I remember seeing it earlier this month. In this case, this was essentially organized fraud/crime that was taking place. They were creating fictitious entities and sometimes assigning contracts that didn't exist because they were using forged signatures. The victims were literally being lied to about what they were signing in some cases. 

      The Arizona case isn't about using memos, it's literally about abusing them through fraud, extortion, forgery and coordinated deception. 

      Filing a memo with an actual, valid purchase agreement is completely legal and again, commonly done to protect equitable interest. Especially in the case where you have an agreement with the Seller to improve their property and have invested time and capital with the clear intent to complete the sale. 

      This is a perfect example that legal tools should be used properly, not an argument against the suggestion  of using the tool itself. 

      As for Pace Morby's group, sure he's got reach. And yes, if he's over here teaching people to file their own memos without legal counsel that is VERY BAD advice indeed. Some new investors listening to him might misuse the memo, but that doesn't change the fact that when used correctly, its a legitimate and valuable tool to protect contractual rights. 

      Anyone getting into this space should seek legal counsel especially when it comes to contracts, agreements and recording of said instruments. 

      Anyway, it seems like your set on being right and that's fine. Let's just agree to disagree and leave it at that.


      I think what Ken is trying to get you to understand, is that filing a memo regarding an unrecorded agreement could be construed to be a slander of the title to the property, particularly if both parties to the agreement do not agree to the recording of the memo.  If a property owner disagrees with what the agreement means and the rights and obligations created by the agreement, and later is unable to sell or borrow against his property because the title is clouded by the memo, the other party might be found to have slandered the title and be liable for damages.

      @Peter Walther: Well stated, thank you.


       Sure thing.

      1Reply
  • Courtney Pollmann
    Realtor · NE · Member since 2024 · 2 posts · 2 votes
    1y

    I having my first Novation experience this month, actually I am the Realtor who was hired to assist in the final sale of the property and we are currently under contract.  It's been a great learning experience!

    1Reply
    • Ken M.
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @Courtney Pollmann:

      I having my first Novation experience this month, actually I am the Realtor who was hired to assist in the final sale of the property and we are currently under contract.  It's been a great learning experience!

      So, you're putting personal money into a property you don't own. What could possibly go wrong. Experienced investors won't do novations, they became "experienced" by doing novations. (far too risky and too much work)

      Seriously though,
      Why not protect yourself and just lend them the money instead with a Promissory note and deed of trust?
       
      What happens if the property doesn't sell?
      What happens if the owner changes his mind and doesn't list?

      What if "life" happens? 

      0Reply
    • Na Na
      Member since 2025 · 1 post · 2 votes
      1y

      @Ken M. I put no personal money into this property, I am the Realtor selling it on the MLS for the investor.
      As far as your other questions, I've learned that Life will ALWAYS happen.  You can "what if" yourself out of every situation.  Every investment is a risk, it's a personal decision on how much risk you can afford.

      2Reply
    • Dawson Brewer
      OP
      Realtor · Austin, TX · Member since 2020 · 43 posts · 26 votes
      1y
      Quote from @Ken M.:
      Quote from @Courtney Pollmann:

      I having my first Novation experience this month, actually I am the Realtor who was hired to assist in the final sale of the property and we are currently under contract.  It's been a great learning experience!

      So, you're putting personal money into a property you don't own. What could possibly go wrong. Experienced investors won't do novations, they became "experienced" by doing novations. (far too risky and too much work)

      Seriously though,
      Why not protect yourself and just lend them the money instead with a Promissory note and deed of trust?
       
      What happens if the property doesn't sell?
      What happens if the owner changes his mind and doesn't list?

      What if "life" happens? 

      Fix and flip: what happens if the rehab is more expensive? what happens if the contractors steals your money? what happens if the property doesn’t sell for what you thought it would sell for?

      Wholesale: what happens if the property doesn’t sell? What happens if the owner changes their mind and doesn’t sell? What happens if the buyer needs it for less than what you have it locked up for?

      Buy and hold: what happens if your renters doesn’t pay and you have to evict? What happens if your renters causes a lot of damage? What happens if you get sued by your tenants?

      Lending money: what happens if you don’t get paid and have to file a lawsuit? What happens if they claim bankruptcy to avoid paying you? 

      I know plenty of experienced investors who do Novations and just like anything else in terms of making money, there’s always risks associated with it. I’ve put $600 in one deal and made $10k. I put 1k into another to make 6k. I’ve put $500 in one and made $0. 

      2Reply
    • Ken M.
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @Dawson Brewer:
      Quote from @Ken M.:
      Quote from @Courtney Pollmann:

      I having my first Novation experience this month, actually I am the Realtor who was hired to assist in the final sale of the property and we are currently under contract.  It's been a great learning experience!

      So, you're putting personal money into a property you don't own. What could possibly go wrong. Experienced investors won't do novations, they became "experienced" by doing novations. (far too risky and too much work)

      Seriously though,
      Why not protect yourself and just lend them the money instead with a Promissory note and deed of trust?
       
      What happens if the property doesn't sell?
      What happens if the owner changes his mind and doesn't list?

      What if "life" happens? 

      Fix and flip: what happens if the rehab is more expensive? what happens if the contractors steals your money? what happens if the property doesn’t sell for what you thought it would sell for?

      Wholesale: what happens if the property doesn’t sell? What happens if the owner changes their mind and doesn’t sell? What happens if the buyer needs it for less than what you have it locked up for?

      Buy and hold: what happens if your renters doesn’t pay and you have to evict? What happens if your renters causes a lot of damage? What happens if you get sued by your tenants?

      Lending money: what happens if you don’t get paid and have to file a lawsuit? What happens if they claim bankruptcy to avoid paying you? 

      I know plenty of experienced investors who do Novations and just like anything else in terms of making money, there’s always risks associated with it. I’ve put $600 in one deal and made $10k. I put 1k into another to make 6k. I’ve put $500 in one and made $0. 

      You are correct of course. However, if things go awry, I get to make the decisions about how to deal with it and I don't have a seller making the decision for me. ;-)
      1Reply
  • Rob K.
    Encinitas, CA · Member since 2011 · 191 posts · 252 votes
    1y
    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?


    I'm not understanding the use of the term Novation as used by the poster and why it is different from just an assignment of an existing contract. In legal terms a Novation is generally a new agreement with different terms or different parties that is a substitute for an earlier agreement that is then extinguished with the consent of all parties.

    If someone could explain the structure of a novation as used in the OP's original post, it might make this discussion clearer. FYI, I do not watch you tube videos or guru stuff, so maybe I am missing some context here.

    0Reply
    • Ken M.
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @Rob K.:
      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?


      I'm not understanding the use of the term Novation as used by the poster and why it is different from just an assignment of an existing contract. In legal terms a Novation is generally a new agreement with different terms or different parties that is a substitute for an earlier agreement that is then extinguished with the consent of all parties.

      If someone could explain the structure of a novation as used in the OP's original post, it might make this discussion clearer. FYI, I do not watch you tube videos or guru stuff, so maybe I am missing some context here.

      They way they use the term is to have an "investor" provide money to rehab a house which is then put on the market and they split the profits. The title stays in the owners' name, it is not a loan since no loan documents are used and the "investor" is dependent on the homeowner to honor his word. 

      A one sided memorandum is recorded which clouds title and purportedly gives the "investor" authority to "collect" money, either the amount lent or the amount assumed to be what the profit would be.

      It is often used to discourage a homeowner from accepting better, competing offers, from other wholesalers who learn of the deal.

       The memorandum is a blunt instrument of extortion and is treated that way by the court. While the memorandum exists, the homeowner can't get title insurance so can't refinance or sell. Most "wholesalers" don't release the memorandum even if they can't find a buyer and simply wait until the seller attempts to sell or refinance. Then they hold the homeowner hostage to be paid a fee, usually in the tens of thousands of dollars. That is now being prosecuted in several states.

      1Reply
    • Dawson Brewer
      OP
      Realtor · Austin, TX · Member since 2020 · 43 posts · 26 votes
      1y
      essentially, the sellers are giving you, the investor, permission to list the property on the market through a realtor or flat free brokerage to find an end buyer. The novator is typically in charge of making repairs to the house, covering the seller closing costs, and paying the agent’s commissions.

      Quote from @Rob K.:
      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?


      I'm not understanding the use of the term Novation as used by the poster and why it is different from just an assignment of an existing contract. In legal terms a Novation is generally a new agreement with different terms or different parties that is a substitute for an earlier agreement that is then extinguished with the consent of all parties.

      If someone could explain the structure of a novation as used in the OP's original post, it might make this discussion clearer. FYI, I do not watch you tube videos or guru stuff, so maybe I am missing some context here.


      0Reply
    • Peter Walther
      Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
      1y
      Quote from @Rob K.:
      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?


      I'm not understanding the use of the term Novation as used by the poster and why it is different from just an assignment of an existing contract. In legal terms a Novation is generally a new agreement with different terms or different parties that is a substitute for an earlier agreement that is then extinguished with the consent of all parties.

      If someone could explain the structure of a novation as used in the OP's original post, it might make this discussion clearer. FYI, I do not watch you tube videos or guru stuff, so maybe I am missing some context here.


       I think you're correct, using the word in this context is a misuse of the term.

      0Reply
    • Peter Walther
      Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
      1y
      Quote from @Dawson Brewer:
      essentially, the sellers are giving you, the investor, permission to list the property on the market through a realtor or flat free brokerage to find an end buyer. The novator is typically in charge of making repairs to the house, covering the seller closing costs, and paying the agent’s commissions.

      Quote from @Rob K.:
      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?


      I'm not understanding the use of the term Novation as used by the poster and why it is different from just an assignment of an existing contract. In legal terms a Novation is generally a new agreement with different terms or different parties that is a substitute for an earlier agreement that is then extinguished with the consent of all parties.

      If someone could explain the structure of a novation as used in the OP's original post, it might make this discussion clearer. FYI, I do not watch you tube videos or guru stuff, so maybe I am missing some context here.



       If you don't own the property, why wouldn't you need to be a broker or agent to do this?

      0Reply
    • Tom GimerBusiness Member
      DMV · Member since 2017 · 3k+ posts · 3k+ votes
      1y
      Quote from @Peter Walther:
      Quote from @Dawson Brewer:
      essentially, the sellers are giving you, the investor, permission to list the property on the market through a realtor or flat free brokerage to find an end buyer. The novator is typically in charge of making repairs to the house, covering the seller closing costs, and paying the agent’s commissions.

      Quote from @Rob K.:
      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?


      I'm not understanding the use of the term Novation as used by the poster and why it is different from just an assignment of an existing contract. In legal terms a Novation is generally a new agreement with different terms or different parties that is a substitute for an earlier agreement that is then extinguished with the consent of all parties.

      If someone could explain the structure of a novation as used in the OP's original post, it might make this discussion clearer. FYI, I do not watch you tube videos or guru stuff, so maybe I am missing some context here.



       If you don't own the property, why wouldn't you need to be a broker or agent to do this?


      Every net listing needs a listing.

      Gimer Law516 Reviews
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      0Reply
    • James Wise
      Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
      1y
      Quote from @Peter Walther:
      Quote from @Dawson Brewer:
      essentially, the sellers are giving you, the investor, permission to list the property on the market through a realtor or flat free brokerage to find an end buyer. The novator is typically in charge of making repairs to the house, covering the seller closing costs, and paying the agent’s commissions.

      Quote from @Rob K.:
      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?


      I'm not understanding the use of the term Novation as used by the poster and why it is different from just an assignment of an existing contract. In legal terms a Novation is generally a new agreement with different terms or different parties that is a substitute for an earlier agreement that is then extinguished with the consent of all parties.

      If someone could explain the structure of a novation as used in the OP's original post, it might make this discussion clearer. FYI, I do not watch you tube videos or guru stuff, so maybe I am missing some context here.



       If you don't own the property, why wouldn't you need to be a broker or agent to do this?


       You do. People who are down for this have no idea what they are talking about. They are just talking about brokering real estate illegally.

      1Reply
  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    1y

    It's rare to find an investor who knows how to properly structure a deal involving a novation.

    If you do a deal involving the novation of a contract and you don't have all three parties (original buyer, seller, replacement buyer) sign the replacement contract personally your transaction is uninsurable from a title insurance perspective. No, as the buyer you cannot also be the "attorney-in-fact", "agent" or administrator" of the seller. Just stop.

    If you have to hide what you're doing it's probably not legal.

    Gimer Law516 Reviews
    WebsiteView Page
    2Reply
  • Eric N.
    Member since 2024 · 153 posts · 67 votes
    11mo

    I know what Novation is. And there are multiple ways to do it. Simples is, essentially, net listing. You lock it for whatever seller agrees to (close to retail), and then list it on MLS. More complicated Novations involve lengthy agreements, where you do some repairs to property before listing it, while property stays under the seller's name. Too many novators got burned doing it, btw.

    But whenever I look at any business model, my first question is: how is this a viable model? Because it has to be viable for you to scale it by rinse-and-repeating it. To net sell (let's call it "doing Novation", I don't care what it's called), I have to convince seller to allow me do what he can do by posting his property on Zillow as FSBO or by paying flat fee of $500 to a local broker, to list it on MLS and have it marketed anywhere MLS listings show up.

    Now, why would seller agree to do that? Some sellers will agree to do it. I get it, there are people who will agree to be flagellated, they feel good about it and there is nothing unethical about it if they want it. But how many people in their right mind will agree to this arrangement where you essentially do exact same thing they can do, except if they list it FSBO or pay flat fee to broker, they don't have to settle for fixed amount. They can take offers all day long and accept the highest (what you would accept if you were doing it on their behalf).

    Selling this to 99% of the retail sellers I come across with would be insurmountable challenge. There are some unsavvy people, but they are few and between. In fact, I found out from my dealings that a lot of so called "vulnerable" sellers (those aged 80+ years, females and etc.) are often savvier than their younger counterparts. You are more likely to talk to unsavvy 30 year old dude than a 70 years old unsavvy woman. These people grew up in 60's and 70's, not in 1890's. They know where the political winds blow and will do whatever they can to throw you under the bus and raise Hell if they notice you are making a "serious" profit off the net-listing. And anything above $500 is a "serious profit and scamming" in their view. You will end up with bitter experience, some legal hassle and stress with nothing to show at the end of the day. But most likely, you will end up so few deals that your cost of marketing and locking those deals will far exceed any profits you will make by the end of the year. 

    So, who do you think will buy your Novation agreements? 

    1Reply
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