What Makes a Good Novation Deal?

A “good” novation deal is one where a managed retail exit is a rational business decision—not a hopeful one. Use these filters as conversation starters with your team or disposition partner. None of them guarantee a sale price or timeline.

Meaningful retail equity

Start with a sober after-repair or as-is retail value, then subtract contract basis, expected selling costs, holding costs, and any work required to present the property. If the residual is thin, wholesale may still be the better path.

Spread that survives a retail process

Retail disposition has friction: days on market, buyer financing fallout, inspection credits, and price discovery. The spread needs room for that reality. Paper profit that disappears after one inspection credit was never real inventory for this exit.

Property marketability

Can a retail buyer picture living in it—or financing it—with a clean listing presentation? Extreme condition, unique functional issues, or markets with weak end-buyer demand push toward investor buyers instead.

Seller and structure fit

Motivated sellers and contracts that allow the intended path matter. Ambiguous authority, brittle timelines, or structures that cannot support retail marketing are early red flags—regardless of ARV screenshots.

Wholesale leaves too much on the table

Compare credible investor demand against a realistic retail path. If wholesale bids are competitive with net retail after costs, take the cleaner exit. If wholesale pricing is dramatically lower and the asset can present, novation disposition is worth evaluating.

When you are ready for a partner to run that evaluation and exit, use NOVA's novation disposition services or submit a deal directly.