In this video, Tyson Smith introduces a novel wholesaling strategy that uses novation agreements to sell properties to retail buyers without ever closing on the deals. He explains how traditional wholesaling involves buying a property, closing, and then assigning the contract, which limits fees to cash or hard‑money buyers. By contrast, retail buyers—who finance through banks and often purchase to live in the home—are willing to pay higher prices, allowing wholesalers to earn larger assignment fees. A novation agreement replaces the original purchase contract with a new one while keeping key terms (price, escrow date) unchanged, enabling the wholesaler to list the property on the MLS, attract retail offers, and collect a higher fee without funding the purchase. Smith walks through a detailed Woodbine, New Jersey case study: a seller owed $55k, wanted $5k net, and after analysis, the property was listed at $95k (as‑is market value $100k). The deal netted the seller $60k, the wholesaler $27k profit, and a family a new home—all achieved without the wholesaler ever closing on the property. He highlights how novations revive previously dead leads, double average assignment fees, and scale deal flow for wholesalers doing three or more deals a month. The video concludes with a promotion for his “Novations Mastermind: Wholesaling V2” program, inviting viewers to book a call, comment, like, and subscribe.
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If you're currently wholesaling real estate, did you know that you could start using novation contracts to potentially double your average assignment fee and lock up twice as many deals? My company has developed a new strategy where we are using a novation agreement to allow us to essentially "wholesale" all of our deals without having to close on them. Now, a "wholesale" is a strategy where you buy a property and instead of assigning it before closing, you close on it yourself and turn around and list it right on the real estate market with without doing any renovations. This will often net you a much larger fee than assigning it to a cash buyer because when you do it this way, you open the property up to retail buyers. Now, a retail buyer is somebody who is buying a property using bank financing, whereas cash buyers are limited to just cash or hard money. Retail buyers usually are looking for a property to live in themselves, so they don't care about things like ARV or the potential cash on cash return. Because they get cheaper financing and typically aren't buying the properties to make money, they're usually willing to pay a lot more money for the properties. Now, the issue with wholesaling is that you need to actually close on the property, which means you need to find the funds to buy the property and your risk profile goes up substantially. But if you could sell all of your wholesale deals to retail buyers without having to close on the properties ever? Well, we have found a way to do exactly that using an Ovation Agreement. A novation agreement allows you to replace an existing purchase contract in favor of a new one, provided that certain specified terms stay the same, such as purchase price and close of escrow. So what we do is have our sellers sign our regular wholesale purchase agreement, as well as a novation agreement, and another document that allows us to list their property on the MLS on their behalf. This way, we can list the deal on the MLS and field offers from retail buyers. Now, let me show you a case study from a recent deal we just closed and made over $27,000 on. This property is located in Woodbine, New Jersey, and the seller came to us from one of our Meta Ads. The seller owed $55,000 on the property and wanted to walk away with $5,000 after closing so he could move on with his life. Now, here's our underwriting on the property. At the top, we have our analysis for if we were to wholesale the deal. The ARV on the property is $120,000, and in order to get the property there, we estimated the property would need about $40,000 in repairs. Meaning if we wanted to make $20,000 by wholesaling this, we would have had to contract it for less than $30,000. That would have never worked for the seller, and we would have ended up having to mark this as a dead lead. However, we looked around and we saw that other properties were selling for an as-is condition on the market, and noticed they were selling for around $100,000. So we figured we could list ours at a slight discount of $95,000 in order to ensure it sold quickly, and if we did that, then even after paying all the fees and commissions associated with selling on-market deals, and accounting for a potential $10,000 repair concession we could offer prospective buyers to really sweeten the deal, then we could get the seller the $60,000 they were looking for. So we locked the property up and included the novation contract, letting the seller know that if we were to buy the property, we would have to be at $30,000, but that we were confident we could get them that $60K they were looking for if they just allowed us to shop the property for them. And they happily obliged. Once we got the contracts back, we got photos of the property, got it listed on the market, and within a week or so we were fielding offers. We ended up selling it for $95,000, and after fees and commissions, we I netted $27,000, and the seller got the $60,000 that they were looking for, and a family in the area got a new house. Using Novation contracts has allowed my company to revive so many leads we previously thought were dead because now we're able to offer so much more money. If you're currently running a wholesale company doing at least 3 deals a month and you would like to learn how to inject our Novation strategy into your business, you should consider joining my Novations Mastermind: Wholesaling V2. For more information about Wholesaling V2, click the link below to book a call with me. And if you guys have any questions about novations, make sure to leave a comment, because I'd love to be able to help. Now, if you found this video helpful, please give it a thumbs up and subscribe to the channel. We're getting close to hitting my goal of 2,000 subs. Now, as always, guys, thank you for watching, and we'll see you on the next one.
