What is a Condo Assignment? - When an investor books a pre-construction condo using the services of a Platinum/VIP Realtor, like myself, they will get an assignment clause put into their contract to protect themselves. An assignment clause gives the Investor an out! If for any reason they don't have the funds to close on the deal, or want to sell prior to closing because they need to consolidate their funds for other investments, etc. they can do so by "selling" or "assigning" the contract to a Buyer who is looking to live there.
Unfortunately, I see Buyers who make the mistake of going directly to a builders sales office and buying a unit and not getting an assignment clause. They are unaware of the nuances and the protections our experience can provide them at no cost to them. So make sure if you are planning to buy, pre-construction, under-construction or new that you always get a REALTOR experienced with condos to represent you. You get all the protection at ZERO cost. Without an assignment clause, Buyers can lose their deposit, which is often 20%, and at today's prices can easily be $60K plus.
Why do people Assign/ Sell their Condo? A few reasons are:
- They want to save on inconvenience of closing and the additional costs associated with it.
- They need the money for other investments.
- Their circumstances have changed and they no longer can hold on to the investment. Might be moving.
- They can't come up with closing costs so they need to Sell!
Selling a Condo Assignment is just like selling a house or condo that is occupied with a few limitations.
What is the process?
1. You will book an appointment at our office and bring in a copy of your original contract that you signed with the builder. Most of our clients e-mail their assignment clause to us so we can see what the limitations and costs of doing their assignment.
2. PRESALE- We'll book an appointment to see you, either at our office or a convenient location to sign the paper work needed to market and advertise it like a listing.
3. DURING- We will complete all the necessary paper work with the Buyer and the Builders and keep you posted on the developments.
4. ON COMPLETION- You get your deposit money and any profit minus our fees. So if you are considering selling your condo, why not try to assign it... it costs you nothing until it is sold!
Who should Buy a Condo Assignment? - Anybody with sufficient savings or a good line of credit. Parents helping their son or daughter as first time buyers. Baby-boomers downsizing. Investors looking to hold and lease the Condo unit. Professionals that don't want the responsibilities of maintaining a house or who travel often.
Top 3 benefits of buying a Condo Assignment?
- Primary benefit is you purchase a Condo unit for usually below market value, whereas in resale you pay Market Value!
- Secondly, your money wasn't tied up for 3-5 years as the Assignors in a pre-construction condo purchase.
- Thirdly, a short closing, convenience of buying brand new
What is involved in Buying a Condo Assignment?
- First you need to be able to afford to pay the "original buyers" deposit money they have already given to the builder. That can be 10 to 25% of the original purchase price.
- Second- you have to pay the difference between what you and the original buyer agree to as the new purchase price. At the minimum the REALTOR® fees, assignment fees, so at least $15K more than what the orginal price.
- Thirdly - you have to be Mortgage Approved by the bank for the original purchase price.
Original Purchase Price: $300,000 20% Deposit Paid = $60,000
New Sale Price: $320,000 New Market Value: $325,000
Cash New Buyer Requires: First: 20% deposit. $60,000 Plus: $20,000 for New Sale Price
Total Cash: $60K + $20K = $80,000
New Buyer must also be Mortgage Approved for $240,000 ($300,000 - $60,000 deposit)
A mortgage approval (commitment) is required not a pre-approval.
Buyers - Let us know what your needs are. How much deposit you have. What you are mortgage approved for.
Sellers - Send us a copy of your assignment agreement. Final Occupancy Date. Price. Deposit Structure so we can better assist you.
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