If you’re wholesaling or flipping creatively in 2025, you’ve probably heard the buzz: “Novation is the new assignment.”

But let’s be clear, that’s not always true.

Assignment contracts still work. They’re faster. Simpler. More common.

But there are moments when an assignment will blow up your deal, and a novation is the only move that keeps it alive (or turns it into a much bigger payday).

So the real question is:

When do you use an assignment… and when should you pivot to a novation?

That’s what this guide is for. We're breaking it down into a clear, actionable decision tree so you know exactly what to do based on:

• The seller’s needs

• The buyer’s funding

• The legal or compliance environment

• Your deal exit strategy

Let’s dive in.

Start Here: Did You Lock Up the Property Already?

Before anything else, ask:

“Do I already have the property under contract with a motivated seller?”

If not → you're still in acquisition mode. You can choose to pursue either strategy depending on what buyers and market conditions demand.

If yes → continue below.

Step 1: Will Your End Buyer Be Paying Cash?

If your buyer is a cash buyer (actual cash, not “hard money” with layers of underwriting), you can likely assign the deal without friction.

Assignment is the fastest path to closing.

Use an assignment if:

• Your buyer has real cash

• The seller is OK with assignment clauses

• The title company allows assignments

• You’re not worried about disclosure or pushback

Be cautious if:

• You’re not sure about the buyer’s funds

• You’ve used a “no-assignment” clause to get the deal

• The seller expects you to close yourself

If the buyer plans to use conventional or FHA/VA financing → do not use assignment. You’ll trigger problems with the lender.

Use a novation instead.

Step 2: Does the Seller Know You’re Not the Final Buyer?

Be honest.

• Did you explain that you may assign the deal?

• Or did you tell the seller you’re the buyer and plan to close?

Many wholesalers present themselves as the buyer, only to assign behind the scenes.

That can work. But it breaks when:

• The seller gets spooked by someone else showing up at closing

• The deal falls apart and the seller blames you

• A state law requires full disclosure or brokerage license for assignment profits

If the seller knows (and is OK with it), you can assign.

If the seller would flip out if they saw your assignment fee or found out you’re not the buyer → use a novation. It’s more transparent and structured.

Step 3: Are You Planning to List the Property?

You can’t list a property on the MLS with an assignment.

That’s because you don’t own the house, and you don’t have equitable interest that allows MLS exposure.

• Want to take the deal to retail?

• Want to reach FHA/VA buyers?

• Want to sell for a higher price using agent marketing?

Use a novation.

It allows:

• The seller to remain the owner on title

• You to legally help market and dispo the property

• A new buyer to enter the contract via novation

• Title to pass cleanly to the end buyer

Assignments will get you booted from the MLS, or worse.

Step 4: Do You Need to Make Repairs, Stage, or Renovate?

If you're planning to:

• Paint

• Stage the property

• Clean up the yard

• Or do light cosmetic upgrades...

…you can’t legally do that under an assignment unless you already own the home.

You’re not allowed to modify property you don’t own.

If your exit strategy requires cleanup or repositioning:

• To raise the ARV

• To justify listing it retail

• To change how buyers perceive it

Use a novation. It creates a structure where you can legally perform work while the seller remains the owner, with written consent.

Step 5: Are You in a State That Heavily Regulates Assignments?

Some states (like Illinois, Oklahoma, and others) have passed laws requiring:

• Disclosure of assignment fees

• Limits on the number of assignments

• Broker licenses to assign for profit

If you’re operating in a heavily regulated state or a compliance-conscious metro, assignment may be too risky.

Instead, use a novation, which:

• Transfers contracts legally via substitution

• Doesn’t require a license in most cases

• Allows more flexibility with how the deal is structured

Bonus: Most attorneys, brokers, and title companies are more comfortable with novations when the paperwork is tight.

Summary Decision Tree (Visual Flow)

Here's a simplified version of your internal decision tree for choosing between assignment and novation:

Buyer is paying cash?
→ Yes → Assignment OK
→ No → Go to next

Will seller accept being assigned?
→ Yes → Assignment OK
→ No or unsure → Go to next

Want to list on MLS or reach retail buyers?
→ Yes → Use Novation
→ No → Go to next

Need to make repairs or stage?
→ Yes → Use Novation
→ No → Go to next

Are local laws anti-assignment?
→ Yes → Use Novation
→ No → Assignment may work

Bonus: The Hybrid Strategy

There’s a third option savvy investors are using:

Start with an assignment. If it doesn’t move, pivot to a novation.

You can:

• Lock the deal under an assignable contract

• Try to dispo to your cash buyer list

• If no traction in 3–5 days, renegotiate seller expectations and present novation as a new path to higher profit

This gives you two exits instead of one, and you don’t waste good leads.

Know Your Tools, Use Them Strategically

The point isn’t that novation is better than assignment.

It’s that they’re different tools for different problems.

Use assignment when:

• The buyer is cash

• The seller is informed

• The deal is quick and clean

Use novation when:

• You want higher margins

• You need MLS exposure

• You’re operating in stricter markets

• The seller or buyer situation demands it

If you want to succeed in 2025 and beyond, you can’t just know how to wholesale. You need to know how to adapt.

And knowing when to use a novation could be the difference between a dead lead and a $35,000 payday.