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A Novation agreement allows individuals to fix and flip houses without upfront costs. The speaker illustrates this by explaining how to negotiate for a car on Craigslist. For example, they could offer $8,000 for a Toyota Sequoia listed at $9,000, even if they don't have the funds. Their strategy involves finding someone who can pay the amount. However, the speaker expresses a preference for purchasing properties "subject to" rather than relying solely on Novation agreements, which they believe are often overhyped in real estate discussions. They highlight the likelihood of successfully negotiating a lower price for items listed, such as cars.
