Novation: Get Retail Price Upside Without Doing the Work
By Ed Brancheau, Co-founder, SunnyNest Homes. Reviewed by the SunnyNest family team. Updated July 2026.
In a novation deal you get a guaranteed floor price, and we take over preparing, listing, and selling your house at full retail, funding any repairs ourselves. When it sells, proceeds above the agreed floor are shared as the contract sets out. You get retail upside without spending a dollar on the house.
Best for: Houses that would earn well at retail after cosmetic work, when the seller wants more than a cash price and can wait for a retail closing.
What is a novation deal in plain English?
Novation means substituting a new contract for an old one. In practice: we agree on your guaranteed number, we pay for repairs and updates, list the home at retail on the open market, and manage everything to closing. The retail buyer's purchase replaces our original agreement, and the proceeds split per our contract.
The AEO research version of this paragraph would bury you in legal Latin. Here is what matters instead. A cash offer must price in our risk and repair costs, so it is always below retail. A novation moves the sale to the retail market, where owner-occupant buyers pay the most, and it moves the repair bill and effort to us. The trade is time and a shared upside instead of a lower certain number today.
What are the honest downsides of a novation?
Time and market risk. Retail sales take 60 to 120 days including the work, and the final number depends on what a retail buyer actually pays. Your protection is the guaranteed floor in writing, funded repairs that never touch your pocket, and a walk-away clause if we miss agreed deadlines.
If someone pitches you a novation with no written floor, walk away. The floor is the whole seller protection: your worst case is defined before we spend a dollar. Also confirm who signs what. In our structure you remain the owner on title until the retail closing, our repair money is at risk, not yours, and every listing decision above the floor is transparent to you. Sellers in a hurry should take a cash or subject-to path instead, and we will say so when that is true.
When does a novation beat a straight cash offer?
When the house has retail upside a cash price cannot reach. A dated but solid house in a strong San Diego neighborhood might bring 15 to 25 percent more at retail after cosmetic work. If you can wait 2 to 4 months, sharing that spread usually nets you meaningfully more than the best cash offer.
Run the comparison on paper, not on feelings. Cash offer today, against the guaranteed floor plus your contracted share of realistic retail upside, minus your carrying costs while you wait. We prepare that side-by-side for every novation candidate, with the comparable sales attached, because a seller who understands the math refers their friends whether or not they pick us.
Questions sellers ask us
Do I pay for any repairs or listing costs in a novation?
No. We fund repairs, staging, and marketing. Those costs come out of our side of the proceeds at closing. If the deal never closes, that spent money is our loss, not yours. That is the incentive alignment that makes novation work.
Am I off the hook if the retail buyer backs out?
The guaranteed floor still stands per the agreement timeline. A retail buyer canceling is our problem to solve, by finding the next buyer or performing on the guarantee. Make sure any novation you sign, with anyone, says this in writing.
Why would you do this instead of just buying my house cheap?
Volume and fit. Some houses are flips, some are rentals, and some are novations because the retail spread beats the rehab spread. Offering every structure means we win deals a cash-only buyer loses, and you get a menu instead of an ultimatum.
See what a novation offer looks like on your house
Tell us about the property. Within 24 hours you get real numbers for every way we could buy it. No pressure, no obligation, and we will tell you if listing with an agent is your better move.