Your next novation offer, priced and papered, in the time it takes to read this page.

Seller in Spartanburg County SC. 3/2, 1,450 sq ft, built 1991. Dated kitchen and baths, original carpet in the bedrooms, roof replaced 2016, HVAC 2019. Nothing structural, it is just old. She is relocating for a job in about 90 days. Mortgage balance $96,000, payment is $1,040 a month with taxes and insurance. I offered her $150,000 cash and she turned it down flat. She says she needs $195,000 because her neighbor sold for $210,000 last spring and she is not giving hers away. It has never been listed. What do I do with this?

This is a novation. Do not walk from it, and do not go back with a higher cash number.

Start with condition, because condition picks the structure. Roof 2016, HVAC 2019, nothing structural, just dated. That is a 3 on the condition scale. A 3 passes a financed buyer's inspection, which means a retail buyer with a loan can actually close on it. That is the whole test. A 1 or a 2 goes to a cash investor and you assign it. A 3 or a 4 is where the novation makes you money. Yours is a 3.

Now the number. For a novation you do not use ARV. ARV is a flip metric and it is where appraisal risk lives. The number that matters here is CCRV, Current Condition Retail Value, and the question behind it is simple: if this house went on the MLS today, exactly as it sits, what does it sell for based on the last 90 to 180 days of comps?

Her neighbor at $210,000 is not your comp unless that house was also dated and also sold in the last six months. Pull current-condition solds only and skip the renovated ones. Most of what sells on the MLS is unrenovated, so you will have comps.

Say your verified CCRV comes in at $245,000. Here is the math, line by line:

CCRV: $245,000
Closing costs at 8.5 percent (both-side commissions plus transfer tax): $21,000
Net before profit: $224,000
Desired profit: $30,000
Buyer-credit reserve at 3 percent: $7,500
Offer to seller: $186,500

That buyer-credit line is the one people skip, and it is the one that eats the deal at the closing table. On a financed sale the buyer comes back after inspection and asks for something. A repair credit, a rate buydown, something. You reserve for it now, at underwriting. You do not discover it in week six.

So your number is $186,500. She wants $195,000. You are $8,500 apart, and your profit is sitting exactly at the $30,000 floor, which means you have no room to just hand her the difference. Give her the $8,500 out of your spread and you are working a $21,500 deal for 90 days. That is not the business.

Here is what you actually do. You do not split it and you do not argue about her neighbor. You make the $186,500 the honest consequence of numbers she can see:

"Linda, I want to walk you through how I got to my number, because I think you will find it more interesting than the number itself. Houses like yours, in the shape yours is in, have been selling around $245,000 over the last few months. Not the renovated ones, the ones like yours. Out of that, commissions and closing costs take about $21,000 before anybody sees a dollar. Then whoever buys it with a loan is going to come back after the inspection and ask for a credit, and that runs another $7,500 or so. That is not me being pessimistic, that is just what happens on every financed sale. What is left after all of that is what I can responsibly put in your hands, and that is $186,500.

Now compare that to where we started. My cash offer was $150,000. This is $36,500 more than that, you are not fixing anything, you are not paying a commission out of pocket, and you are out in the window you need for the job. What I need from you is the 90 days. Can you work with that?"

Three things about that script. You gave her the whole build, so the number stops feeling like your opinion and starts feeling like arithmetic. You anchored against your own cash offer instead of against her neighbor, which is the only comparison that helps you. And you ended by asking for time, not for money, which gives her something to say yes to that costs her nothing.

If she still holds at $195,000, you have two honest moves. Go re-comp and see if $245,000 was conservative, because if real CCRV is $253,000 then $195,000 works and you should know that. Or take the deal at $195,000 with your profit at $21,500 only if the rest of it is clean: low balance, motivated, no title issues, fast close. That is a judgment call and it is below your floor, so make it on purpose or not at all.

Paperwork. Four documents, in this order:

1. Purchase and Sale Agreement, As-Is. Signed with her up front.
2. Attorney-In-Fact Authorization. Narrow. It lets you do what you need to do on the listing side and nothing more.
3. Novation and Indemnification Agreement. This is the one that makes the structure work. It goes in the file.
4. Notice of Interest. Recorded with the county after Delivery.

Sign the pack in one sitting. Do not lead with the full stack on the first call, it scares people, but do not dribble it out over three conversations either. And run these documents past a licensed attorney in South Carolina before her signature goes on anything. Novation rules move state to state and I am not your lawyer.

Last thing, and it is the thing that actually kills this deal if you get it wrong. Her mortgage is $96,000 and her payment is $1,040. She keeps making that payment while the house is listed. Say it out loud, now, before she signs, and put it in writing. The deals that blow up at week seven are the ones where the seller assumed the payment stopped the day they signed.

Bottom line: it is a 3, it is a novation, your number is $186,500, and the $8,500 gap closes with the build, not with your spread. Go re-comp tonight and call her tomorrow.