July 7, 2021 | Condos

Our Guide To Condo Assignment Sales

Our Guide To Condo Assignment Sales

The City of Guelph has some ambitious plans for the future. According to the city’s official growth management strategy, Guelph has plans to expand its local population to a minimum of 203,000 residents by 2051.

One way Guelph is planning to accommodate for the huge projected population growth over the next 30 years is by building up. That is, starting construction on taller residential buildings like condos. From a real estate perspective, we know that can only result in one thing—more condo assignment sales.

Here’s everything you need to know about condo assignment sales…

What Are Condo Assignment Sales?

Assignment sales occur when a home’s original owner decides to sell their home before closing on it. Yes, that means selling a home before they ever even move in.

While that might sound strange, it actually happens all the time—most commonly with new-build condo units. During the planning phase of most new condo builds, a certain percentage of the units are sold before construction ever begins.

But who is selling these pre-construction units, and how?

About Developers

In the world of pre-construction real estate, developers tend to be the ones pulling all the strings. From the very inception of a new condo building all the way through to the selling of its units, developers manage and supervise every detail.

In fact, real estate developers even pick the location, source the financing, and hire the design and construction teams of most new-build condos! It’s a very labour-intensive and high-risk investment on their behalf, but if it all pays off in the end, developers earn the biggest rewards.

About Assignors

Once the developers have taken a pre-construction project past the initial designs and into the marketing stage, it’s time for them to start identifying interested buyers. This is where the assignors come into play.

Assignors are the primary buyer of a pre-construction property—whether it’s a detached house, a townhome, or in this case, a condo unit, assignors are the first ones to buy the real estate.

However, things get complicated when you remember that the physical structure assignors are buying doesn’t even exist yet. In fact, in order for most pre-construction condo buildings to break ground, financiers usually require developers to have sold about 70% of the units to assignors before releasing the funds for construction.

That’s why assignors can commonly range from real estate investment companies, private investors, or even just regular people who are prepared to purchase a property for the future.

About Assignees

Now, if in the time between an assignor purchasing a pre-construction property and their move-in day an assignor decides to sell their pre-construction property, this would constitute an assignment sale.

As you may have guessed, the new buyer of an assignor’s pre-construction property is called the assignee. At this point in a condo assignment sale, the ownership of a pre-construction unit that doesn’t even physically exist yet (or is yet to be completed) has changed hands twice—once from the developer to the assignor, then to the assignee.

What’s The Risk?

When managed by reputable development companies and knowledgeable real estate professionals, condo assignment sales are generally very safe transactions. While the properties being bought and sold aren’t move-in ready, there are usually many terms and conditions that protect all parties involved in condo assignment sales.

However, we’ve also heard some negative stories when it comes to condo assignment sales that are completed privately between assignors and assignees behind closed doors. Just like buying a used car, it’s always worth it to have a professional present to inspect the deal and ensure your investment in real estate is protected.

Are you interested in learning more about condo assignment sales or want to know more about upcoming real estate developments? Our team of local Guelph real estate professionals can ensure your investment in a pre-construction development is done safely. Simply contact us here to get started.

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