Navigating Novation Regulations · The Cowboy Sales Process

I. THE BOTTOM LINE UP FRONT (BLUF)

You do not need a registered LLC in a specific state to execute a novation deal. The critical asset is not a corporate entity, but a competent, deal-friendly attorney or title company who understands this strategy. We will break down the exact mechanism—the "Attorney-in-Fact" agreement—that allows you to control and list a property without an LLC, enabling you to make offers far above typical wholesalers.

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II. DEBUNKING THE LLC MYTH

The Core Question: Do I need an LLC registered in the state where I'm doing a novation?

The Short Answer: No.

The Battle-Hardened Reality: While an LLC offers liability protection and is a good business practice long-term, it is not a prerequisite to getting your first, or next, novation deal done. The speaker's first deal was done in Florida using his personal name before an LLC was ever formed.

The true gatekeeper is not the Secretary of State, but the closing agent. If you have a title company or attorney who knows you and understands the mechanics of this specific novation structure, you can operate effectively. Their trust in you is more valuable than your entity status.

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III. THE STRATEGY: A NON-TYPICAL NOVATION

This isn't a standard wholesale deal. You're not assigning a contract. You are stepping into the seller's shoes to market and sell the property for them, guaranteeing them a specific net price. This is accomplished using a key legal document.

The Power Play: The Attorney-in-Fact Agreement

This is the engine of the entire strategy. An Attorney-in-Fact document is a form of limited power of attorney. It grants you (or your company) the legal authority to act on the seller's behalf for the specific purpose of selling the property. You are not taking ownership; you are taking control of the disposition process.

Hypothetical Case Study: Winning the Deal

The Target: A seller, "Courtney," wants to sell his house.

Market Reality: The house's current as-is value is $200,000.

Lowball Offers: Wholesalers are flooding him with offers at $100k, $110k, $120k. Courtney is not motivated by these numbers.

Your Strategic Offer: You come in at $160,000. This immediately separates you from the competition and gets the seller's attention.

Your Condition (The "How"): You frame your ability to pay this high price on a simple condition.

Your Script: "Mr. Seller, I can get you your $160,000 price. To do that, I just need your permission to allow me additional access to the property to bring through my retail investors and partners."

The Seller's Logic: The seller doesn't care how you do it, as long as they get their $160,000. They agree.

There are no rows in this table

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IV. EXECUTION: THE PAPERWORK TRAIL

Executing this strategy requires two key documents signed by the seller.

Purchase and Sale Agreement: This locks in the terms, primarily the seller's guaranteed net price of $160,000.

Attorney-in-Fact Agreement: This is the second, crucial document. It gives you the legal authority to execute the sale.

How to Structure the "Attorney-in-Fact" Authority:

The name listed as the "attorney-in-fact" is what will appear on the listing agreement with a real estate agent to put the property on the market (MLS).

If you have NO LLC: The document and listing agreement will read:

John Doe, attorney-in-fact for Jane Doe

If you DO have an LLC: The document and listing agreement will read:

[Your Company LLC], attorney-in-fact for John Doe

This is the masterstroke. You are now legally empowered to sign the listing agreement on the seller's behalf, get the property on the open market, and manage the sale to a retail buyer to secure your profit above the $160,000 you guaranteed the seller.

Novations work when you have the right leads—Prexium brings them straight to yo. Start today 👉

The Cowboy Marketer⁠

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