A Novation Agreement lets you step into the seller's position and control their property for the purpose of listing and selling it — without ever buying it. You take on the seller's role, list the property, find the buyer, close the transaction, and split the profit above an agreed floor. Zero acquisition capital. Zero loan. Maximum upside relative to risk.
The Novation Agreement legally substitutes you as the party responsible for the sale. You take on the obligation to list, market, and close the transaction.
Because you're not wholesaling or flipping, the property goes on the MLS at retail price. You capture the full buyer pool — not just investors willing to discount.
You agree to guarantee the seller a minimum net amount. Everything above that floor — after commissions and closing costs — splits between you and the seller per your agreement.
Novation works when the seller wants full market value but can't (or won't) go through a traditional listing — maybe they're behind on payments, the property needs work, they want to leave before closing, or they just want someone else to handle everything. The key: there must be equity above the seller's floor for a profit split to make sense.
You and the seller agree on a "net to seller" minimum — the guaranteed amount they walk away with regardless of sale price. This floor accounts for their mortgage payoff (if any), closing costs, and whatever cash they need. You're on the hook to deliver at least this amount.
The Novation Agreement is a legal contract that substitutes you as the controlling party in the real estate transaction. It authorizes you to list the property, negotiate with buyers, sign off on contracts, and handle the sale process — in coordination with a licensed real estate agent. A real estate attorney reviews the agreement before execution.
Working with a licensed agent, you list the property on the MLS at full market value. You can authorize light repairs or staging to maximize the sale price. The seller doesn't need to do anything — you've taken on that responsibility under the agreement.
When a buyer's offer comes in, you evaluate it against the floor commitment and the split structure. You negotiate to maximize the sale price — your profit is a function of every dollar above the floor, so you're highly motivated to get top dollar.
Title closes in the normal way. The seller receives their guaranteed floor amount. The profit above the floor (after commissions, closing costs, and any repair credits) is split per your agreement. Depending on the deal, CCL clients typically capture 40-60% of the upside above the floor.
Wholesale Assignment: You find a distressed seller, put a property under contract below market value, then assign that contract to an investor buyer for a fee ($5K–$25K typically). Fast, but you're capped by what an investor will pay — always a discount to retail.
Novation Agreement: You list the property on MLS at retail price and sell to a conventional buyer using their financing. Because you're selling to an end-user (not an investor), you access the full buyer pool and full market value. On a $350K ARV deal where a wholesale fee might be $15K, a novation profit split might return $35-60K.
The trade-off: novation takes longer (30-60 days vs. 7-14 for wholesale) and requires managing a listing. For motivated sellers with equity and flexibility on timeline, it's almost always the higher-return play.
Motivated seller owns a home in Colorado Springs. ARV: $385,000. Mortgage payoff: $210,000. Seller is relocating for work and leaves in 3 weeks. They don't want to deal with showings, negotiations, or a traditional listing. They agree to a novation with a guaranteed floor of $240,000 net to them (covers payoff + $30K in their pocket). Anything above floor splits 50/50.
If you're already finding motivated sellers and assigning contracts, novation is the natural upgrade — same lead flow, 3-5x the profit per deal. You're leaving money on the table by not selling retail.
You don't need cash to close, rehab budget, holding costs, or ARV risk. Novation is a fee-for-service model where your compensation scales with the sale price — not your capital at risk.
If you have a pipeline of sellers who need help but have equity, novation gives you a structure to serve them without buying. Even licensed agents can use novation to serve sellers who otherwise wouldn't qualify for a traditional listing.
Book a free discovery call. CCL will show you how to identify novation candidates, structure the agreement, and calculate the profit split — so you go into every deal knowing exactly what you'll make.