Assignment Sales are a great way to make money or find a good deal.
With the number of construction projects underway, expansion of communities there are high number of master-planned communities, and both pre-construction sellers (assignors) or buyers (assignee) can enter into win-win agreements where the Assignor is making a return on their investment and buyers can secure a brand new home at a price BELOW where existing and comparable units are selling.
Why would Assignors assign their unit?
- An assignor may look to sell their preconstruction condo on assignment due to changes in their life situation. Many of these agreements were entered into years ago and their situation may have changed.
- They make have entered into the agreement years ago as an investment strategy to gain exposure to the real estate market without having to obtain a mortgage and is looking to realize their profit.
- Avoid closing costs – By assigning their unit prior to Closing Date, the Assignee may not be responsible to pay for closing costs (development charges, land transfer tax, etc.)
Why Consider Buying A Condo on Assignment?
- Pre-construction condos is typically be covered under Tarion warranty so you have peace of mind that any defects will be covered for a period of time.
- Many of our buyers realize instant equity as they obtain properties under market value.
- In Today’s market where many existing condos are selling without inspections, buying something new can help give you some peace of mind about your purchase!
- Many pre-construction condos are sold 4-5 years in advance, by buying on assignment, you can purchase and lock-in a price today and have some extra time before you need to get a mortgage.
- New Condo builds typically are built more eco-friendly and efficient which usually leads to lower maintenance fees.
Typical Costs Involved in Closing on Assignment Purchase (For the Assignee)
- Land Transfer Tax (Provincial)
- Development Charges
- Utility Connection Fees
- HST (Consult your Accountant on if this can be rebated per the CRA Policy). Typical HST fee is $24,000.
- Legal Fees
- Occupancy Fees – Paid during the interim period of unit possession and unit ownership. Estimate 2/3 of the estimated monthly mortgage amount as a guideline.
Typical Costs Involved in Closing on A Detached or Townhouse Assignment Purchase (For the Assignor)
- Realtor Commission Fees
- Assignment Fees
- Administrative Fees
- Legal Fees
- Other Fees As Agreed Upon in the Agreement of Purchase and Sale
Why Work with An Experienced Agent on Assignment Purchases and Sales
- We know and work with Reputable builders and their build quality and for ease of approvals
- Most Assignment deals are done privately, we have a network of past and current assignment data to help advise you accordingly.
- Most agents do not know how to structure these transactions, we ensure your interest is protected through clauses throughout the agreement.
- When dealing with pre-construction condos, there are additional considerations that must be evaluated to ensure your interests are protected such as:
- Deposits held in trust or with the Builder – As this can impact how much is insured
- Builder Reputation – There are a large number of builders that have gone under. Working with an experienced agent can help you identify the builders to work with
- Appraised Value vs. Sale Value – Many pre-construction condos are sold at a premium to what they are worth today. Understanding the specific project and the price gap can allow you to make a sound investment decision.