Novation agreements are finally getting the attention they deserve in real estate investing circles, and not just among creative finance geeks.

Why? Because when used correctly, novations allow you to:

• Sell properties to retail buyers using conventional financing

• Avoid transactional funding and double close fees

• Pocket larger spreads, sometimes way larger, than wholesale assignments

• Create alignment between you, the seller, and the end buyer

But not every seller is a fit. In fact, if you try to pitch a novation to the wrong kind of homeowner, you’ll create confusion, resistance, and ultimately kill your own deal.

In this article, you’ll learn exactly which types of sellers are perfect candidates for a novation structure, and how to spot them early in the conversation.

What Makes a Seller a Fit for Novation?

Before we list the four seller profiles, it’s important to understand what you’re asking a seller to agree to when proposing a novation:

• The seller stays on title during the process

• You (the investor) market and show the property like a listing agent would

• The end buyer pays the full price, and the investor earns their spread via the HUD

• The seller receives the exact net amount they were promised

There’s more paperwork involved. There’s more waiting (retail buyers mean longer timelines). And the seller needs to have a reasonable level of trust in you, because you’ll be actively representing the property in the open market.

That’s why seller psychology matters just as much as the numbers.

Let’s break down the top four seller types who are typically a good fit for novation deals.

1. Sellers Who Want a Certain Net, Not a Fast Close

Not every seller is in a desperate rush. In fact, many want top dollar… but don’t want to list with an agent.

They might say things like:

• “I’m not giving this house away.”

• “I know what it’s worth, and I’ll just wait for the right buyer.”

• “I don’t want to pay commissions, I just want to walk away with $X.”

These sellers are price-conscious, but not unreasonable. They’re open to waiting a few weeks if it means they walk away with their desired net.

Perfect.

With a novation, you can structure the deal so they get the exact net they want, and you pocket the spread above that. And unlike a traditional agent relationship, they’re not paying a listing fee or commission out of pocket.

When you explain this clearly, many of these sellers prefer a novation to a listing or lowball offer.

How to spot this type early:
Ask: “Are you more focused on getting a certain amount, or selling quickly?”
If they say they’d wait for a better number, probe to find their walkaway net. Then build your novation pitch around it.

2. Out-of-Town Sellers Who Don’t Want the Hassle of Listings

Inherited properties. Former rentals. Homes the owner moved away from long ago.

These sellers typically don’t want to:

• Fly in for showings

• Clean or repair anything

• Deal with flaky buyers or nosey neighbors

• Coordinate with a local agent they don’t know

They just want the property gone, and often have no emotional tie to it.

This is your opportunity.

With a novation, you can explain:

• You’ll take care of everything, marketing, showing, and coordinating with title

• They’ll never have to step foot in the house

• They’ll get a clear net number and a hands-off process

• They can sign everything remotely

You essentially become their local “deal executor.” And because they’re removed from the property emotionally, they’re more likely to say yes to a fair net, especially if they avoid commissions and repairs.

How to spot this type early:

Ask: “Are you local to the property, or managing this from a distance?”
Then say: “Would it help if I handled all the boots-on-the-ground work and just delivered you a simple closing packet?”

This opens the door for a novation, without needing to explain the whole term right away.

3. Sellers with “Almost Retail” Properties

This is one of the biggest overlooked seller types for novations: the home that almost qualifies for a traditional sale, but needs just enough work to make it hard for agents or FHA buyers.

Think of homes with:

• Peeling paint or outdated fixtures

• Unfinished cosmetic updates

• A few missing appliances

• Pets that caused minor damage

• Old HVAC, roof, or windows (but still functional)

These properties often sit in limbo. They don’t need a full rehab, so flippers won’t bite. But they don’t look great in MLS photos, so retail agents can’t sell them easily either.

That’s where you come in.

As a savvy investor with a retail buyer pipeline, you can:

• Take possession via a novation

• Tidy up just enough for clean showings

• Pitch the property as “priced accordingly” to FHA/VA/Conventional buyers

• Avoid the need for rehab loans or hard money

You bridge the gap between “not quite flip-ready” and “not quite market-ready.” And that’s where big margins often live.

How to spot this type early:
Ask: “If a buyer were to walk through tomorrow, would the home pass a basic inspection?”
You’re listening for: “Well… mostly, but it needs XYZ…”

That’s your cue. Lean into the opportunity to help them skip repairs while still attracting a solid buyer.

4. Sellers Who Are Suspicious of Realtors

Whether they’ve had a bad experience, or just don’t like the idea of working with an agent, many sellers have a gut resistance to listing their property.

You might hear things like:

• “I don’t want a bunch of strangers walking through.”

• “Agents just list it and wait, they don’t really sell the property.”

• “I’d sell it myself if I had time.”

These sellers still want top dollar… but without the perceived “hassle” of agents.

That’s where you frame the novation as a hybrid.

• You’re not charging them a listing commission

• You’re not asking for exclusive listing rights

• You’ll be investing your time and resources into finding a buyer

• They keep control of the deal, and you both win when it sells

In many cases, you’re solving their agent skepticism while still giving them an MLS outcome. That’s a powerful offer.

How to spot this type early:
Ask: “Have you considered listing it?” and just listen.
Their tone and reasoning will tell you if they’re a potential fit for the non-agent, but retail result approach.

Bonus: A Note on Seller Sophistication

You might be wondering:

“Doesn’t this require the seller to understand complex contract stuff?”

Yes, but only if you explain it poorly.

The key to pitching a novation is simplicity.

Don’t say:

“We’ll execute a tri-party novation agreement which substitutes my position as buyer into a new arrangement with a retail buyer…”

Say:

“Instead of me buying it directly, I’ll bring in a buyer who’s using bank financing. You’ll still get your exact price. I’ll make the difference. You stay on title during the process, and I handle everything.”

If the seller asks for paperwork or has questions, that’s great, you’re dealing with a serious person.

Just make sure your contracts are clean, your title company understands the process, and you’re transparent every step of the way.

Key Advantages for These Seller Types

Here’s why novations work so well for the four seller types above:

They don’t want speed. They want certainty.
Novations offer a defined net number without the games.

They don’t want to do the work.
With you taking control of the resale process, they can sit back.

They don’t trust agents or don’t want to pay one.
You give them retail exposure without the baggage of commissions.

They don’t want to talk to multiple buyers.
You act as the single point of contact, handling everything.

That’s the core value of a novation. You create convenience, not just cash.

Final Tips for Making Novation Pitches Work

If you’re planning to do more novations this year, here’s what you need to be successful:

• A trusted title company that understands novation deals

• Solid disclosures (use an attorney-drafted novation agreement)

• Access to the MLS (direct or through an agent partner)

• Professional photography, you’re marketing to retail buyers

• The ability to explain the seller's net clearly and confidently

• Confidence to ask for a price lock, show access, and exclusive control

Remember: you’re not just flipping houses, you’re solving seller positioning problems. And novations are the perfect tool when the seller has equity, is realistic on price, and doesn’t want to go the traditional route.

Wrapping Up

Novations aren’t for every seller, but when they’re the right fit, they create win-win deals with bigger spreads, happier sellers, and less competition.

To recap, the four best seller types for novation deals are:

• Sellers focused on net proceeds, not speed

• Out-of-town sellers with no time or interest in managing the sale

• Owners of “almost retail” homes with light cosmetic issues

• Sellers who dislike or distrust real estate agents

The key is to listen carefully to motivation, ask the right questions, and frame the novation structure as the most convenient path, not just the most profitable.

The flippers and wholesalers who master novations in 2025 will be the ones getting bigger checks from the same deals their competitors are walking away from.

Want to win bigger? Find the right seller. Offer a smarter structure. And close like a pro.