Inside The Real Estate Market
This week I’d like to talk about assignment sales. That’s a big part of the downtown condo market. An assignment is the sale of a condo before it is registered. In other words, assignments are the selling or assigning of the interest in a condo, In other words, a paper transaction. An assignment can take place before a building has even started construction, while it is under construction or when it is occupied but not totally completed and registered.
Assignment sales can be tricky. Builders may not allow owners to advertise on MLS, private sites are used. Sales take place when mortgages cannot even be registered. Take this example; an original purchase price of $250,000 four years ago, with deposits totalling $35,000 by the first buyer. An assignment sale is now made of $300,000. The new second buyer needs to pay back $35,000 of deposits, plus the $50,000 of profit, or $85,000 in total. So how do you finance that? The transaction also involves special clauses and care needs to be taken for HST tax considerations and builder closing costs. That’s why you need to have an agent experienced in assignment sales. When you interview an agent, you will know within the first 5 minutes if they know what they’re talking about in this market.