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Selling Pros

Benefits of selling my presale before completion
In today’s market, obtaining a mortgage is increasingly difficult with the incasing interest rates. By selling before completion, you eliminate the headaches of securing financing.
You’ll realize immediate profits, and the best part is that it’s leveraged. Your initial deposit, typically around 15-20%, can be even less based on the project and the timing of the contract assignment. Your selling price will be based on the market value of the entire property.
Selling early shields you from potential real estate price fluctuations by the time the building registers. Strike while the iron is hot! Sell in a Sellers Market!
While you might have capped your development charges and levies at the time of purchase, additional closing costs, such as HST, land transfer taxes, legal fees, and utility deposits, can still arise. Selling before completion allows the next buyer to deal with these expenses.

Selling Cons

Downfalls of selling my presale
When marketing your property for assignments, be aware of any restrictions imposed by the developer. In preconstruction agreements, advertising your property for sale on the MLS or elsewhere may be prohibited to avoid competition with the developer’s remaining inventory. Violating these terms could be considered a breach of the original Agreement of Purchase and Sale, leading to potential legal disputes. It is essential to fully understand the terms and implications before proceeding with an assignment.
The assignment fee, which could outweigh the benefits of the assignment itself, even if the developer permits it. If the new purchaser fails to close on the property, you may still be legally obligated to complete the purchase, causing potential challenges if you are not prepared for such a situation.
Selling early shields you from potential real estate price flselling before completion might mean selling yourself short, as property values often increase after the building is registered and vacancies are filled. Determining an asking price can be challenging since there are no directly comparable properties available. You may have to use indirect comparisons from other buildings or neighboring developments.uctuations by the time the building registers. Strike while the iron is hot! Sell in a Sellers Market!
Be cautious of potential tax implications when considering an assignment of the Agreement of Purchase and Sale. This is akin to selling the contract between you and the developer, and it may be regarded as business income by the Canada Revenue Agency, subject to full taxation, unlike capital gains exemptions for property sales.

Buying Pros

Advantages of Buying an Assignment Property
Assignments might be a good deal if the seller or original purchaser (assignor) is in a distressed situation. This can lead to a win-win situation, where you can negotiate a great price and the assignor gets out of a difficult situation.
Assignment properties can be cheaper than similar resale properties in the current market. The seller (assignor) may offer incentives to compensate for uncertainties since the property might not be built yet. Additionally, there could be room for negotiation, especially if property values have significantly increased since the original purchase. However, in a seller’s market or a high-demand property, this may not be the case.
An assignment property will be brand new and never lived in, offering a fresh start like that new car smell.
If you need more time before closing, assignments can work in your favor, as they are typically sold well before the final closing date.

Buying Cons

What are the potential pitfalls of buying a presale before completion?
Purchasing an assignment property can be costly, as the seller or original purchaser (assignor) typically expects their initial deposit and profit upfront. This requires a significant amount of cash at closing, as mortgages are usually unavailable until the final closing date. Lenders typically want to secure their loans on the property’s title, but interim occupancy makes this challenging.
There’s always a possibility that the developer might cancel the project. If this occurs, you may receive a refund of the original deposit with minimal interest, but you could be left trying to recover the sizeable profit the assignor may have already spent. Although rare, this scenario can lead to a challenging situation.
As the new purchaser, you’ll bear additional closing costs, such as development levies and utility hookups. If your REALTOR didn’t account for holding back funds for property taxes from the assignor’s occupancy date until final closing, you may need to chase them for the retroactive tax bill.
The time it takes to reach final closing can expose you to a changing market. While it can work in your favor, it can also result in higher interest rates if your bank’s rate hold period is short. Alternatively, prices may drop, requiring a larger-than-expected down payment.

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Whether you’re a homeowner looking to sell your assignment or an investor seeking prime opportunities, we provide a comprehensive range of services tailored to your specific needs. Trust the Van City Network to be your trusted partner in the dynamic landscape of assignment property buying and selling in Vancouver.

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