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Subject 2 vs. Novation
You don't fit the seller to your strategy; you fit the strategy to the seller's exact problem.
This is about moving from a single-weapon amateur to a multi-option professional who can monetize leads others throw away.
1. THE BATTLEFIELD SCENARIO: A Market of Low-Interest Prisoners
A question was posed by many investors on the field
"A lot of homes got locked in at low interest rates, like at 1.9%, 2.9%... Maybe these people are having difficulty financially... When you come across a deal, it's good to ask what the rate is... Maybe this could turn into a better Subject 2 because of the low rate versus a flip [or novation]..."
This isn't just a question; it's a strategic map. Millions of homeowners are in this exact position. They have incredible financing but a pressing life problem. Your job is not to just buy their house; it's to solve their entire problem. The interest rate is a core part of that problem and, for you, the key to the solution.
2. THE CORE PRINCIPLE: ONE TRICK PONY = BROKE INVESTOR
Your lead generation costs are real. Whether it's $100 or $200 per qualified lead, every seller you talk to is an investment. If your only tool is a hammer (the lowball cash offer), every problem that isn't a nail goes unsolved, and your investment is wasted.
The mission is to "have all the tools in your toolbelt" and to "maximize everybody I talk to."
The amateur hears "no" to their cash offer and hangs up. The pro understands "no" simply means "not that way." The seller is motivated, but not for your offer.
3. THE STRATEGIC ARSENAL: Choosing Your Weapon
Here are the three primary solutions discussed. Understand when and why to deploy each one.
Strategies
Subject To ("SubTo")
You take title to the property and take over the seller's existing mortgage payments. The loan stays in their name.
The "Payment Problem" Seller: They have a phenomenal interest rate but can't afford the monthly payment. They need debt relief more than a huge cash payout. They may have little to no equity.
Acquire cash-flowing assets with built-in, low-interest, long-term financing that is impossible to get from a bank today. A true wealth-building tool.
Novation Agreement
You get the property under contract, then find a retail buyer who wants the home. You substitute ("novate") the retail buyer into your contract with the seller, and you get paid the difference.
The "I Want More" Seller: They have a nice house and enough equity that a lowball cash offer is insulting. They want a price close to retail but value the convenience and certainty of your off-market process.
Generate profits significantly larger than a standard wholesale fee without needing your own capital for a full purchase and rehab (a flip). You're selling a turnkey home to a retail buyer.
Wholesale (Cash Offer)
The classic "we buy houses" model. You offer a discounted price for a quick, all-cash, as-is close.
The "Time Bomb" Seller: They are in absolute distress. Facing imminent foreclosure, dealing with a trashed inheritance, etc. Their #1, and often only, priority is speed and certainty. Price is secondary.
The fastest and simplest way to generate lump sums of cash. It requires the least amount of seller negotiation and is purely transactional.
There are no rows in this table
4. FIELD DIAGNOSTICS: How to Expose the REAL Problem
Your first conversation with a seller is a diagnostic session. Your job is to ask questions that reveal their true pain point. Stop pitching and start listening.
Key Diagnostic Questions to Uncover the Path:
To Test for Wholesale/Distress:
Column 2
To Test for a Novation Opportunity:
Column 2
Column 2
Execution is everything. If you don't close, someone else will. The seller has a property they must sell. Your ability to present the right solution determines whether the profit ends up in your pocket or your competitor's.
Novations work when you have the right leads—Prexium brings them straight to yo. Start today 👉
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