Eric Brewer
Eric Brewer has been a guest on Collecting Keys, the real estate investing podcast hosted by Mike DeHaan, Dan Austin and Dylan Koch.
Mastering Novation Agreements with Eric Brewer
Eric Brewer explains how novation agreements work mechanically and how he has used them for over a decade to sell wholesale-condition houses to retail financed buyers without taking title. He breaks down his "seller seesaw" lead framework, the exact language he uses with sellers (the "equity protection program" and "staging service"), limited powers of attorney, and a cover sheet that pre-answers a seller's attorney's objections.
Key takeaways
- A novation is a conditional release of the original purchase agreement replaced by a new one, which makes the deal financeable — unlike an assignment, which FHA, VA, Fannie and Freddie borrowers cannot use.
- Because you're selling to a retail buyer rather than a cash investor, Brewer says investors doing novations can pay up to 85% of current condition market value on properties valued around $250k and up.
- Brewer's lead math: out of 100 net leads, about 10% convert to a wholesale offer, about 60% have no motivation and go to long-term nurture, and about 30% are "balanced sellers" who can be novated or seller-financed.
- Be fully transparent up front about marketing the property and making a spread. Seller blowups come from the gap between expectations and reality, not the size of your profit.