When buying a pre-construction condo, there are several different purchase options available to you. One of these is the assignment sale. But what exactly is an assignment sale? And what are the benefits and drawbacks of this type of purchase?
In this article, we will explore the definition and implications of an assignment sale in the pre-construction condo market.
What is an assignment sale in the pre-construction market
An assignment sale is a type of real estate transaction where the contract for a pre-construction condo unit is assigned or transferred from the original buyer to a new buyer before the closing date.
This can happen for a variety of reasons – perhaps the original buyer needs to sell for personal reasons, or they’ve found another property they prefer and no longer want to wait for their condo unit to be completed. In any case, assignment sales are common in the pre-construction market, and there are a few things potential buyers should know before considering this option.
First, it’s important to understand that an assignment sale is different from a resale. When you purchase a resale condo, you’re buying an existing unit from another owner who has already gone through the process of waiting for construction to be completed.
With an assignment sale, on the other hand, you’re effectively taking over the original buyer’s contract with the developer.
How does it work?
An assignment sale usually works like this: the original buyer enters into a contract with the developer to purchase a pre-construction condo unit.
The buyer then pays a deposit, and the developer begins construction of the unit. Once the unit is completed, the buyer can either move in or sell the unit on the open market.
If the buyer decides to sell before moving in, they will need to find a new buyer who is willing to take over their contract. The original buyer and the new buyer will then agree on a price, and the new buyer will pay the original buyer the agreed-upon amount.
The new buyer will then take over the contract with the developer, and the process will continue as normal.
The benefits of an assignment sale
There are several benefits to an assignment sale. First, it allows the buyer to lockdown a property at today’s prices and sell it for a profit when construction is completed and prices have increased.
Second, it offers flexibility in terms of timing, as the buyer is not committed to taking possession of the unit until construction is complete.
Lastly, it provides an opportunity to purchase a unit that has not yet been built, which can be especially advantageous if the project is expected to sell out quickly. For these reasons, assignment sales are becoming increasingly popular in the pre-construction market.
Is It Worth It to Buying an Assignment sale in the pre-construction market
When considering whether to buy an assignment sale in the pre-construction market, there are a few things to keep in mind.
First of all, you’ll be getting a brand-new unit that has never been lived in before. Additionally, you’ll be covered by the seven-year Tarion Warranty Program, which protects buyers in the event that any defects are found in the unit.
However, it’s important to note that you may not be able to move into your unit right away – typically, occupancy is only available once the building has been completed. As a result, buying an assignment sale can be a great option for those who are patient and don’t mind waiting a bit longer to move into their new home.
The Bottom Line
An assignment sale is a type of real estate transaction where the contract for a pre-construction condo unit is assigned or transferred from the original buyer to a new buyer before the closing date.
This can happen for a variety of reasons, but it’s important to understand that an assignment sale is different from a resale.
With an assignment sale, you’re effectively taking over the original buyer’s contract with the developer, while with a resale you’re buying an existing unit from another owner.