Assignment Pre-sales Sales Explained by Donna Fuller - REALTOR®
An assignment sale is a type of new condominium or townhouse sale which occurs between the original buyer, (the Assignor), and a new buyer, (the Assignee). The Assignor purchases a unit from the condo developer with the intention of selling before the project closes. From there, the Assignor works with a broker to market the unit to potential Assignees (new buyers). It must be noted that before an Assignment will be allowed to go on MLS® (Multiple Listing Service), the developer usually wants the entire project sold out - in other words no competition. You may also and often have to get written permission to put it on MLS® (Multiple Listing Service) from the developer. Some developers only allow "EXCLUSIVE" listings for their Assignments. Check your developers contract for conditions on selling the assignment first if your soul reason for the investment is to flip it before completion.
Offers: After reviewing offers from the potential Assignee, the Assignor will go to the developer for approval. Often there is a deal fee the developer charges for approval that the Assignor is responsible to pay once approved by the developer. If the developer approves the assignment sale, the Assignor sells their interest, also known as their Agreement of Purchase and Sale and now the pre-sale home transfers to the Assignee who is now the new owner of the unit. The "Lift" is dollar amount referred to as the profit the Assignor will gain from the Assignee when a deal is transferred to the Assignee.
For Sellers of assignments: In most cases, the original buyer, (the Assignor) is obligated to complete, if for whatever reason the new buyer, (the Assignee) cannot complete on final registration day in land titles the liability falls back on the original buyer, (the Assignor) to complete (however keep in mind you will now have their deposit to keep, plus the rights to the assignment are back in your hands). All you must do is some fast footwork to complete including a last minute mortgage, (if required) and pay the PPT and GST - if you have the strength to get through that, then it is not much of a risk because afterall now you have the default money in hand too!
For Buyers of assignments: The original deposit amount the original buyer, (the Assignor) paid, PLUS the "Lift" must be paid to the original buyer (the Assignor) and it cannot usually be financed (check with your lender first to confirm). These two combined amounts can be quite substantial as a deposit (NOTE: it is harder to finance because it is a deposit, you would be better off if you have CASH - confirm with your lender first if necessary)
For Sellers of assignments: the original buyer, (the Assignor) will not be the one completing and therefore can avoid paying any new condo GST and the Property Purchase Tax.
For Buyers of assignments: Much shorter period to wait until registration, often still getting a price below market value on registration date if prices are rising.
There are many reasons why an Assignor may choose to sell on assignment including:
1.) They are an investor looking to profit from price appreciation
2.) They may have experienced a change in lifestyle (new job, moving to another city, etc.),
3.) They are no longer able to close. (job loss, sickness etc)
Remember Pre-sale Assignments in Kelowna or any other area of BC are not without Risk and can be quite complex and involved. Don't take a chance by hiring a novice that has never dealt with an Assignment - that can cost you time, money and energy in the end and worst a lost deal!
It is strongly advised you get a professional seasoned REALTOR® like myself, Donna Fuller to help you through the process from start to finish. Donna Fuller has lots of experience in these matters and will protect you properly whether you are buying or selling! Fill in this CONTACT FORM if you wish to buy or sell Assignments or have any questions.
Publishing rights Author Donna Fuller - REALTOR®
*** This article contributed by Donna Fuller and may not be copied or reproduced in while or in part without the full written consent of the contributor***
Due to complexity of Assignments Buyers and Sellers are recommended to seek independent accounting or legal advise - this article should not to be taken in any way as accounting or legal advise. Check with your lender regarding financing. (Tax and Finance Laws change frequently).