What Is An Assignment Sale?
An assignment is a sales transaction of a property that has not yet closed with the builder. The buyer, called an “Assignee,” is purchasing the rights and obligations under the original Agreement of Purchase and Sale from the original buyer, the “Assignor”.
A Seller/Assignor does not own the property yet; they are selling their contract with the builder rather than the property itself. The Buyer/Assignee is the one who will complete the final steps with the Builder.
Why would someone want to sell on assignment?
There are often many years between when someone purchases pre-construction and final incorporation. The two most common reasons someone wants to sell on assignment is a change in plans or for financial reasons. It’s possible they don’t have or can’t get the financing to complete the sale, or maybe they purchased as an investor without any intention to close.
How do I know if I should sell on assignment or wait for resale?
It is important to understand all of the implications of both before making your decision. There are pros and cons to both sides. I’m going to list out some of the more common of each, but these lists are far from exhaustive!
Pros of Selling on Assignment
- lock in your profit sooner
- get back the deposits you’ve paid sooner
- avoid paying HST
- personal reasons: financial or lifestyle
Cons of Selling on Assignment
- the buyer pool is much smaller
- assignments typically sell for less than re-sale properties
- assignments can take a long time to sell
- they are extremely complex, so be prepared and always hire an experienced realtor and lawyer to guide you
How do you buy/sell on assignment?
Many builders restrict a purchaser’s ability to sell on assignment. Even if you decide an assignment sale is right for you, you may not have that option. Looking at the clauses in an original Agreement of Purchase and Sale or contacting the builder could be a good first step.
Some builders only allow assignments for a certain period of time, others may restrict your representation. There can be penalty fees or marketing restrictions, such as not advertising through MLS. It is not straight forward from the seller OR buyer’s side and is considered the most convoluted real estate transaction.
I strongly strongly suggest you seek real estate or legal advice with a professional well versed in assignment sales and NEVER try to execute one without guidance. The risk is not worth it.
Stay on the look out for a follow up assignment sale blog where I will go a bit more in depth about the process. In the mean time, I’m always happy to answer any question you have about assignment sales or anything else related to the real estate world!
Lara Stasiw • Real Estate Agent & Home Design Connoisseur
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