A transaction that many people are not aware of is an assignment sale. This is when an original buyer allows another person or entity to take over the sale, including all the rights and obligations that were outlined in the Agreement of Purchase and Sale. This transaction occurs before the original buyer closes on the sale. Here are some details and benefits.
If the buyer purchased the property at a cost that was lower than it is or will be at the time of the assignment, that first buyer gets the profit without the necessity of securing a mortgage. In addition, he or she gets the full deposit returned so those funds can be used for something else.
First Time Homebuyer
If the initial buyer qualifies as a first-time homebuyer, he keeps that status because, technically, he or she never owned the property.
The first buyer won’t be obligated for the Land Transfer Tax, Interim Occupancy Fees, or closing costs. This saves a lot of money.
New Developments
New developments can take a long time to come to completion. During that time, the funds on deposit are sitting there tied up. As the second buyer, you get to be an owner of this new project, even if you missed the initial investment. You will get to reap the ongoing profits while someone else tied up the seed money.
If you are going to buy into one of these arrangements, the original buyer could be motivated to get out of the deal, and you can negotiate a price lower than the current market value. As the ultimate buyer, you have built immediate equity and profit.
As you can tell, either side of an Assignment of Sale can be beneficial.
As the first buyer, you can come out with instant gains. You won’t need to hassle with financing, which saves time and energy. If the market is in flux, you won’t need to worry about the end results of making money or not. If you bought into it as an investment, you get to realize the gains immediately without waiting years to recoup your initial investment. If the property changed during the development, like the surroundings were not as glamorous as expected or you couldn’t envision the final product from the blueprints, then you are out of the deal with no harm. Those final closing costs, utility fees, and whatnot are not your responsibility.
As the second buyer, you could get a better deal if the value declined over the building time or if the original buyer ran into some problems and needed to get out of the deal fast. Brand new properties often sell quicker because of the latest amenities and freshness of the property never having been lived in. If you have been looking for a while and can’t find what you want, it will be sitting there waiting for you.
Get Help From Our Representatives Today
Easyhouseloan.ca often encounters opportunities for an Assignment of Sale on either side of the table. We are adept at helping folks get that first mortgage in the Greater Toronto Area, including Etobicoke and Mississauga. Our representatives are ready to help you with your mortgage needs.