On this Novations Call, Rocky Guillory kicked things off by encouraging visual participation, while Joe Cipollini led an in-depth discussion on novation strategies during market downturns. Joe emphasized the importance of evaluating average and median profit margins, especially when novation profits lag behind wholesale. Attendees like Andre Carvalho and Ewens Lizima raised concerns about repairs, lead quality, and conversion, which Joe addressed by stressing structured vetting, due diligence, and the risks of lender-required repairs. Chris and others voiced challenges transitioning to novations due to complex paperwork, prompting Joe to outline best practices and highlight Pennsylvania’s new laws requiring installment sales agreements.
Key issues discussed included lead conversion, identifying ideal novation candidates, and profitability concerns—particularly compared to wholesale deals. Joe advised analyzing both average and median profits to evaluate performance and adjust acquisition processes accordingly. Andre Carvalho shared how repair costs and extended closing timelines impact deal margins, while Joe recommended structured vetting and flexible closing timelines (60 vs. 90 days) to manage risks.
Chris voiced concerns over the paperwork complexity when transitioning from wholesaling to novations. Joe responded by outlining documentation best practices and discussed how new Pennsylvania laws require installment sales agreements to remain compliant. He warned against poor documentation, which could lead to lawsuits.
The conversation also covered negotiation tactics. Joe advised agents not to race to the bottom on price, but instead ask clarifying questions and offer convenience or flexibility in return for better deal terms. He addressed the misuse of Power of Attorney, recommending tools like DocuSign and keeping sellers actively involved to prevent title issues.
Joe differentiated between outbound and inbound leads, noting higher fallout from outbound sources. He urged teams to focus on leads where price is the only barrier. He also shared real-world examples, including a $291K cash offer negotiation that leveraged time and flexibility to meet the seller’s $300K ask.
The call concluded with role-play exercises, emphasizing preparation, managing seller expectations, and using novations as an alternative to traditional listings. Joe reiterated the importance of repair budgeting, clear documentation, and letting market feedback guide pricing adjustments if buyers don’t materialize.
