The idea that traditional real estate agents and wholesalers are rivals is outdated.

In 2025, we’re seeing a quiet evolution in how deals get done, especially as distressed inventory tightens and motivated sellers become savvier. And at the heart of this shift is the novation agreement: a once-niche strategy that now bridges the gap between investors and retail professionals.

More and more MLS agents are partnering with investors using novation deals, and for good reason. These partnerships unlock opportunities that weren’t viable before: retail pricing without retail friction, commissions without listing delays, and profits without massive capital risk.

But like all new tools, it’s not just about knowing it exists. It’s about knowing when, how, and why to use it, and what MLS agents need to feel safe doing it with you.

Let’s break it down.

What Is a Novation (In Plain English)?

A novation is a legal agreement that replaces the original purchase agreement between a seller and a buyer, allowing a new party (your end buyer) to step in and close, typically at a higher price.

Unlike an assignment:

• You’re not just selling your contract.

• You’re helping the seller reach a higher price point by listing on-market (yes, the MLS).

• You’re typically bringing in a retail buyer, not another investor.

In practice, this lets investors:

• Lock in a low price with a motivated seller

• List the property on the open market

• Capture the spread between what they contracted for and what the new buyer pays

• All without owning the property

But that access to the MLS? It doesn’t happen without an agent.

Why Agents Are Warming Up to Novation

At first glance, many realtors resist the idea of novations. They’ve been trained to steer clear of wholesalers. But here’s why some of the sharpest agents are now initiating these conversations themselves:

1. They Get Paid Without Waiting on a Retail Seller

Retail sellers can be difficult. Emotional. Price-anchored. And worst of all, indecisive.

By working with an investor using novation:

• The seller is already signed to a lower agreement

• The investor handles repairs, staging, or listing prep

• The agent just markets the property and gets a commission on the retail price, not the lowball

2. They Get More Listings Without Prospecting

Agents are always chasing listings. But investors who use novations are bringing listings to the table.

And because these sellers are often:

• Out-of-state

• Tired landlords

• Facing urgent timelines… They’re less likely to haggle or interfere.

That means the agent gets a smooth listing experience, minus the seller babysitting.

3. They Stay in Compliance

Unlike assignments (which agents may not understand), novations are formal legal substitutions.

That makes brokers more comfortable.
That makes E&O insurance happy.
And that keeps both parties protected, especially when proper disclosures and paperwork are used.

What Investors Bring to the Table in a Novation Partnership

The agent isn’t the only one winning here. As the investor, you can:

• Expand your exit options

• Access retail buyers and conventional financing

• Use the agent’s network and listing tools

• Let the agent handle the dispo while you focus on acquisitions

This turns your novation strategy into a repeatable system, not just a one-off hustle.

What Agents Need Before They’ll Say Yes

Most agents still have never done a novation. So your job is to de-risk the relationship.

Here’s what they need:

1. Clear and Transparent Communication

Be upfront about:

• Your role in the transaction

• The paperwork involved (you should have a standard novation agreement)

• Who pays what and how commissions are split

If they feel you’re hiding something, they’ll run.

2. Assurance They’ll Get Paid

Explain that:

• You’re not assigning the deal and cutting them out

• Their commission will be based on the final purchase price

• They will be named in the listing agreement and on the settlement statement

A simple side-by-side HUD breakdown can go a long way.

3. Broker Buy-In

Some agents love it, but their brokers are nervous.

Come prepared with:

• Novation explanation docs

• Legal templates (from your attorney)

• Past case studies or examples

If you can show it’s been done (even in another market), it builds trust fast.

Best Types of Agents to Partner With

Not every agent is novation-ready. Here’s who to target:

1. Investor-Friendly Agents

These are agents who:

• Work with wholesalers or flippers

• Sell distressed properties regularly

• Understand off-market dynamics

They’re often already flexible and think like entrepreneurs.

2. Hungry New Agents

New agents are:

• Eager for deals

• More coachable

• Less jaded by traditional dogma

They may need more education but often work harder to close.

3. Flat-Fee or Hybrid Brokers

Agents at shops like eXp, Real, or side-brokerages may have more flexibility around novation-style models.

Look for entrepreneurial ones who value volume and velocity over perfection.

Structuring a Novation with an Agent Involved

Here’s how a typical deal looks:

1. You contract the property off-market at a discount

2. You explain to the seller that you’ll help them get a better price via MLS, but you’ll handle everything

3. You partner with an agent who lists the property using a novation-friendly agreement

4. The agent markets, shows, and manages the sale

5. You bring in a retail buyer

6. At closing, the original contract is novated to the new buyer

7. The agent gets their commission, the seller gets their contracted price, and you keep the spread

Clean. Compliant. Profitable.

Common Pitfalls to Avoid

Novations with agents are powerful, but fragile. Avoid these mistakes:

• Trying to sneak a novation in without explaining it

Always disclose clearly to both the seller and the agent.

• Forgetting who represents whom

The agent represents the seller unless otherwise stated. Don’t assume they work for you.

• Leaving the paperwork sloppy

You need:

• A strong novation agreement

• Clear disclosures

• An understanding of how commissions are paid and split

• Overpromising timelines or prices

Retail deals take longer. Make sure both your seller and agent are prepped.

Case Study: Novation with a Top-Producing Agent

Let’s say you’re in Tampa.

You lock up a property from an absentee landlord at $195,000.

You know, based on minor repairs and comps, that it could sell for $265,000 on-market.

You bring in an agent who agrees to list it for 1.5% commission. You handle minor repairs, photos, and copywriting.

The property sells in 9 days for $267,000.

• Seller receives the $195,000 as agreed

• Agent earns ~$4,000 commission

• You net $64,000 spread minus listing costs and repairs

Everyone wins, and you just opened a pipeline for the agent to send you more deals.

This Is the Future of Hybrid Investing

We’re entering a new era where the line between wholesaler and retail agent is blurring.

• The best investors know how to work with agents

• The best agents are embracing creative strategies like novation

• And the biggest spreads are coming from hybrid deals that combine both

If you want to scale, build real relationships, and keep sellers (and brokers) happy, learn how to pitch novations as a win-win.

Because when done right, this isn’t a gimmick.

It’s a long-term model.