08/28/2026 - Structuring Profitable & Compliant Novation Deals

This CG Novations Call focuses on helping real estate investors structure, negotiate, and execute novation deals while reducing legal and financial risk. The discussion covers improving acquisitions and pricing, positioning novations as a higher-price alternative to cash offers, targeting sellers with sufficient equity, and using transparent documentation and seller communication to protect transactions.

What This Call Covers

• Using Novations in a Changing Market
  • Novations can provide another exit when traditional wholesale spreads are compressed or properties are difficult to move
  • The strategy allows investors to pursue a higher retail price without taking ownership of the property
  • Novations require a defined sales process and proper legal documentation rather than simply adding language to a standard contract
• Improving Acquisitions to Prevent Disposition Problems
  • Many disposition challenges begin with buying the property at the wrong price
  • Create larger margins on difficult properties by negotiating a lower acquisition price
  • Adjust underwriting as market values and buyer demand change
  • Don't rely on dispositions to rescue an acquisition that was too aggressive from the beginning
• Targeting High-Equity Seller Leads
  • Falling property values have created more sellers with limited or negative equity
  • Filter marketing lists toward high-equity properties where wholesale or novation structures have enough room to work
  • Use list-stacking and property data tools such as Property List Manager (PLM) to improve lead quality
• Selling the “Certainty vs. Price” Choice
  • Position the traditional cash offer as the lower-price, higher-certainty option
  • Establish the cash offer first before introducing the novation alternative
  • Present novation as the opportunity for a higher seller price with additional time and uncertainty
  • Help sellers choose based on their priorities rather than negotiating exclusively around price
• Reducing Legal Risk in Novation Transactions
  • Favor direct seller signatures and transparent documentation rather than relying on Attorney-in-Fact authority
  • Clearly disclose how the transaction works and document seller acknowledgment
  • Limited Power of Attorney may be appropriate in certain situations, but the call emphasizes disclosure and legal guidance
  • Avoid transactions where seller capacity creates concerns about consent or potential legal exposure
• Protecting the Investor’s Interest
  • Novation documentation and title protection can vary by state
  • The New York case study discusses using an Installment Sales Agreement to establish equitable interest where standard approaches may not work
  • Work with local attorneys and title professionals familiar with the transaction structure
• Training Acquisitions Teams on Novations
  • Novations should be treated as a distinct acquisition and sales strategy rather than a simple contract addendum
  • Teams need to understand seller positioning, pricing, documentation, and the transaction process
  • Formal training such as the Brewer Method was recommended for investors implementing novations
• Key Takeaway
  • Successful novations depend on buying correctly, targeting sufficient equity, clearly communicating certainty versus price, and maintaining strong documentation and legal safeguards. Investors should build a repeatable process around the strategy rather than treating novations as an improvised alternative when a wholesale deal doesn't work.