Q&A part 2 · The Cowboy Sales Process

Q1: What's the core problem with trying to wholesale a newer property, like the 2019 home discussed in the video?

The main problem is that newer properties typically lack the deep equity or distress needed for a traditional wholesale deal. Wholesaling relies on buying at a massive discount (e.g., 60-70% of market value) to sell to a cash investor.

A seller of a well-maintained, newer home is rarely desperate enough to accept such a lowball offer, making the lead seem "un-workable" to most investors.

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Q2: What's the simple difference between a Wholesale and a Novation?

Wholesaling: You get a property under contract at a steep discount and then assign that contract to a cash buyer (an investor) for a quick assignment fee. The focus is on speed and a deep discount.

Novation: You get a property under contract and then find a retail buyer who will use a traditional loan (like FHA or Conventional). You facilitate the sale between the original seller and this new buyer, and your profit is the spread between your contract price and the final sales price. The focus is on creating a win-win with a higher price for the seller.

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Q3: Why would a standard wholesale offer almost certainly fail on this 2019 property?

A wholesale offer would fail for a few key reasons:

Limited Buyer Pool:

The only potential cash buyer for a newer home is a landlord, not a flipper.

Price Ceiling:

That landlord will not pay full retail. They'd cap their offer at around 80% of the market value, at best.

Unattractive Offer:

To make a profit, you would have to offer the seller even less than that 80%. A seller in a nice, newer home knows its value and will almost always reject such a low offer, seeing it as disrespectful.

There are no rows in this table

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Q4: How does a Novation "unlock" this seemingly dead lead? 🔑

A novation unlocks the deal by completely changing the target end-buyer. Instead of a bargain-hunting investor, you're now selling to a regular family looking for a home to live in.

This new buyer is willing to pay full market value and will use a traditional mortgage to do so. Because your end price is much higher, you can offer the original seller a much more attractive price, making the deal possible. You are essentially creating a solution where a traditional wholesaler can't.

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Q5: So, how do the offer numbers actually compare? 💸

The difference is significant and is the key to getting the contract signed.

Wholesale Offer: To be profitable, your offer to the seller would have to be extremely low, likely in the range of 50-60% of market value. This is a tough conversation to have.

Novation Offer: You can comfortably offer the seller 70-80% of market value. This is a much more compelling offer that respects the seller's equity, while still leaving a potential 20% profit spread for you when you sell it to the retail buyer.

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Q6: Besides newer homes, where else is the Novation strategy a secret weapon? 🗺️

Novations are incredibly effective in small towns and rural markets.

Competitors ignore these areas because there are very few cash buyers or flippers. However, these towns are full of regular, working-class people who want to buy a home with a loan. By using a novation, you can serve this exact market. Leads are cheaper, there's virtually no competition, and you can become the go-to problem solver for sellers in the area.

If you’re looking for novations, Prexium is where you’ll find the right leads to close more deals. Start today 👉

The Cowboy Marketer⁠

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