Suppose you’re an investor thinking about whether to sell a home you bought or wait to close and resell. You aim to get the best deal, minimize costs and maximize profits. Then you’ve come to the right place.
You need to watch the market closely. Buy when prices are low and sell when condo prices peak. Before you decide, you must also weigh the pros and cons of resale and assignment.
Finding the best deal on a resale or assignment depends on many factors, such as your patience and sales goals.
This post explores the differences between a resale and an assignment. We also explore the pros and cons of an assignment sale to help you make an informed decision.
- Difference between a resale and an assignment
Marketing restrictions distinguish an assignment sale and a resale. Assignment sales are not listed on the MLS; only an experienced real estate agent can find such a property for you.
With a resale, you buy actual property where the title transfer and land conveyance have already occurred. The building is not yet complete. In an assignment sale, you enter the contractual rights of the original owner (assignor).
You require a mortgage for the resale, and you must close within 60 to 90 days.
With an assignment sale, you don’t need a mortgage up front, but you inherit a contract. However, you must still pay the entire down payment and additional costs.
Carrying and closing costs are also due and depend on how far along the project is when you step in.
- Pros and Cons of an assignment sale
The growth potential of the allocation market is higher than that of the resale market, where sellers speculate.
Buyers who cannot close a deal venture into the assignment market to sell their contracts instead of breaching them.
Investors also want to sell at a profit, and people whose lifestyles have changed wish to sell and move on.
The advantages of assignment sales for sellers
You save because you do not have to pay land transfer taxes, which can be very high, and HST.
Most importantly, you can move on if you can not close on a house. Move to another city or look for a bigger home for your growing family.
Fast return on investment (ROI)
You do not have to make staggered payments of 20% and wait five years for builders to complete the home to get the return. After a sale, you’ll get your deposit back plus profits.
You also have the option to maximize your return when market prices are on a downward trend.
The advantages of assignment sales for buyers
You can buy a new condo much lower than a resale, where bidding wars increase prices.
You can live in a new home no one has ever lived in.
With an assignment sale, the interim occupancy and closing dates are closer, and you don’t have to wait years to move in.
Occupancy fees are lower than a resale’s tax and maintenance costs.
Depending on when you get the contract, you can make changes to the finishes, upgrades, and floor plans and add your style. You also inherit equity.
Disadvantages of assignment sales to the buyer
You’ll need substantial cash to close the deal. The total sum is the deposit and the seller’s profit.
Obtaining a mortgage will take some time. Mortgage financing takes place after the transfer of ownership.
Disadvantages of an assignment sale to the seller
Marketing restrictions are daunting and limit your chances of finding a buyer more than resales. You can only sell a condo once on assignment. In addition, assignment sales only happen once.
Resales have better chances of selling since you can list on popular MLS listings, and it’s easy to value the complete building. Also, it’s difficult to love an incomplete installation.
The smaller number of buyers determines how long it takes to sell, and you may get a lower price than expected. It might also take time.
Because of the marketing and sale structure, assignment sales are complex, and you’ll need a good realtor and lawyer to pull through.
- Next Steps
We can help you buy an assignment sale. Contact us now with a list of what you want your future home to look like, and we’ll give you options.
If you want to sell your condo on assignment, you are steps away from a maximum return. Please reach out.
As your trusted assignment sales expert, we’ll guide you through the next steps to the best deal.
Please don’t wait. Contact us now!