You're listening to the Sub 2 Breakhouse with Pace Morby on the wholesale hotline podcast.

Hey guys, welcome.

We're going to get right into this topic.

Everybody wants to know this.

In fact, if you go to YouTube and you type in the search bar Pace Morby, one of the top searches is Pace Morby Novation Agreements. Now, I do a lot of novation agreements. I teach Novation Agreements, but I rarely talk about it on the YouTube channel. It's a little bit more of a ninja strategy in terms of acquiring and fixing and flipping a property. Now, first thing you want to know about a novation agreement is that the strategy with a novation agreement is always going to be a

purchase and flip. You're not going to hold it. It's not a long-term investment. Novation agreements

are a fix and flip strategy only. Now, there are three types of ways to do a novation agreement.

First and foremost, let me explain to you what a novation agreement is. A novation agreement is where I go to a seller. Let's say that a seller has a house and let's say this seller's name is Eric because this guy, Eric, has a videography business and he's pretty dope. But you know what Eric's like, I'm ready to sell my property. I want top dollar. I'd save my house is worth $400,000 on Zillow or whatever right MLS whatever that's the

ARV 400,000 dollars and he knows that his house is kind of run down because he's been treating it

like a studio and beating the shit out of it so he knows that it's kind of run down he needs

to sell it at a discounted price there's all sorts of investors that are offering like 275, right? That's where typically most investors are going to offer is $275,000. Eric says, you know what, dude? Like that's not good for me. I don't want that $275,000. But, you know, if I could get $300,000, I would sell. Well, the challenge there is that everybody's offering him $275.

So the obvious answer is for a straight cash deal.

The market is telling you, Eric,

that this house should be sold for $275,000.

Well, that's where a novation agreement comes in.

If you are a fix and flipper or a wholesaler,

you can come in and offer Eric $300,000

with a Novation agreement versus a wholesaler offering $275 or a traditional cash buyer, 275, and you would both

end up making the same amount of money, which is crazy to think about. A Novation agreement is

technically your ability of telling the seller,

I want to fix and flip your property without ever buying it. Yes, that is correct. I want to fix and

flip your property, Eric, without ever buying it. Okay. Now, there are three ways to do this.

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