An assignment sale is the sale of a contract for a pre-construction property before the unit is even built. The new buyer takes over the contract and will be responsible for the deposit, taxes, closing costs, etc. when they occupy the property.
Assignment sales are common and completely legal. However, these deals can be more complicated than conventional resales, and it’s vital to have an experienced realtor by your side to protect your interests.
Why Do Assignment Sales Happen?
Various life changes are the most common reasons why the original buyer may want to sell their rights to a unit. For example, some people need to relocate for their careers, while others may have started a family and need a bigger place. Some sellers may also be investors that never intended to close.
The Pros And Cons
Are assignment sales worth it for the buyer or the seller? Here are some pros and cons you should consider before making a decision.
For The Buyer
Pros-
- There’s a shorter wait for the finished building in comparison to buying from a builder.
- Assignments are usually cheaper than resale because sellers cannot market them on MLS. This means that there’ll be less competition as fewer buyers know about them.
- Assignments are usually only allowed when the project is almost done, so you won’t need to worry about the project being suspended or cancelled.
- Assignments could be a good option when there’s a listing shortage in the market.
Cons-
- Be prepared to dish out a lot of cash upfront, including deposits, appreciated value, agent commission, closing costs, assignment fee and more.
- Assignment sales can be much more complicated than conventional resale. To make sure everything gets done smoothly and correctly, you’ll need an experienced real estate lawyer and a realtor with a good understanding of the assignment market.
For The Seller
Pros-
- You can take advantage of the rising condo market and sell the unit to reinvest in another project.
- Allows more flexibility. You can walk away without incurring any penalties, and even some profit!
- Avoid paying more in transfer taxes, occupancy costs and occupancy fees.
Cons-
- Assignments can be harder to sell because they’re not allowed to be marketed or listed on MLS. They usually take longer to sell and at a lower price than at resale.
- When you are allowed to sell may depend on factors that you cannot control; for example, some developers require a certain number of units sold before allowing assignments.
- Not all builders allow assignments, so you should always check for the contract’s assignment clause before signing!
- You might incur higher legal fees as assignments are more complex.
When looking to buy or sell an assignment, an agent experienced in this type of sales is your most significant resource as they can leverage their network to connect interested buyers and sellers. So if you’re interested in assignment sales in Vancouver, contact Cherry Yeung, your professional real estate consultant, today!