Novation Using Flat-Fee Brokers?

Question

Yesterday I heard a guy mention using a flat-fee broker site as one of his 4 dispo strategies. It got me thinking, is it possible to do Novation deals without having to outsource a local realtor? It seems it would be a lot more simple, save on fees, and allow you more options for sellers who want closer to retail. I have about 75+ in my pipeline as well speak who are eager to sell, yet the traditional wholesale method will not work because their asking price is outside my MAO. Thoughts?

Jay Boone · Answer

@Don Konipol Great questions. As far as value goes, I suppose that's subjective. I personally see flat-fee brokerages as only one tool in the kit. From experience, when dealing in financial/property distress, these sellers tend to be a bit less sophisticated, or ambitious in terms of doing the work themselves (which is probably why they're in the situation to begin with). Also, I recently sold a property no realtor would touch. Most of them said it wouldn't sell at my price point, and I sold it in well under the amount of time homes sit on the MLS in that locale.

Izaiah Barba · Answer

Here is more context on one of our business models and why sellers go with us:

When we run our Concierge Program, which is our novation option, we operate a little differently than a traditional agent.

Outside of utilizing a flat fee service to list the property, we also bring capital and structure to the table.

First, we provide seller advances when needed. If a seller needs funds to move, catch up on bills, or handle a transition, we can advance that money upfront and simply get reimbursed at closing.

Second, we front the cost of strategic repairs. If the roof, flooring, or other items are holding the property back from selling at top dollar, we will fund those improvements ourselves. Most agents are not writing checks to fix a property before it sells. We are willing to do that because it increases the likelihood of a strong backend sale.

Beyond the money, we provide certainty.

Our sellers typically want a clear number and a clear date. They do not want to deal with showings, constant negotiations, or price drops. We agree on a concrete net amount, and we handle the negotiations, buyers, and moving parts behind the scenes.

They get peace of mind. We take on the risk, coordination, and execution.

That combination of capital, structure, and certainty is why many sellers choose this route over a traditional listing.

Jay Boone · Answer

@Don Konipol ...and at the end of the day, it all comes down to marketing. We all have a service. Who can reach the seller first and communicate our value before someone else does? That's it.

Jay Boone · Answer

@Graeme "GP" Hind Awesome information. Thank you for the plug.

Jay Boone · Answer

@Bo Smith Thank you for the insight Bo! Yes, that's what I was referring to by when I said, "traditional wholesale method will not work because their asking price is outside my MAO." Realtor Novation adds another layer, allowing me to service more people than what I was doing first. But if you can eliminate the realtor and use a flat-fee broker, that's even better. What do you think?

Izaiah Barba · Answer

Yes, we offer a cash option and a novation option that we call, our concierge program. Both offers are tailored towards what works best for the seller. @Jay Boone

Bo Smith · Answer

Flat-fee brokers work great for novation but the real trick is having your marketing funnel set up to pre-qualify which sellers are novation candidates vs wholesale. Most investors lose deals because they're trying to force wholesale pricing on people who'd say yes to novation at 85-90% ARV. Are you currently segmenting your pipeline based on motivation level and price expectations?

Jay Boone · Answer

@Izaiah Barba thank you for that insight. This is your main exit strategy, meaning your primary seller type wants close to retail?

Izaiah Barba · Answer

Hey Jay, this is the main exit strategy that we do for our novation deals. We set proper expectations with the seller and then flat fee the property! Something to be aware of though is depending on the flat fee service provider you're using, they may require additional documentation. Such as floor plan measurements, the sellers IDs, etc. This helps prevent any fraudulent activities. But if you incorporate it into your process, you can streamline it and save much more.

Feel free to shoot me a DM and I can share more on this.

Novation Using Flat-Fee Brokers?

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