assignment sell cost

The Lourantos Group

: 416-505-7975

A Comprehensive Guide To Selling Your Assignment Condo

Trying to resell your preconstruction condo before closing? This blog is for you. Assignment sales are more complicated compared to their resale counterparts, but with some guidance, the process is easy.

An assignment sale is a sale where the original buyers of a condo or home resell their contract to another buyer before closing. The most common type of assignment is a preconstruction condo assignment. Preconstruction condo assignments are prevalent because of the time lag between purchasing the home and the move-in date. While condo assignments might be the most popular type of assignment, any real estate contract is assignable. This blog is going to discuss condo assignments since they are the most prevalent, but *most* of the details apply to assigning a home or commercial preconstruction property as well.

In the GTA, our preconstruction market is booming. Toronto alone sees around 30,000 new home completions a year. Around 70% of preconstruction purchasers are investors. The remaining 30% of buyers are end-users who plan to use the property themselves. However, many investors, and end-users, might decide to sell the property before the final closing. Since there is no title to transfer, these buyers have to assign their contract to the next buyer.

What is a preconstruction condo assignment sale?

An assignment is when the original buyers of a preconstruction condo decide to sell their contract with the builder to another buyer before the home is complete. This differs from a regular real estate transaction because we are not buying or selling a home, rather we are buying or selling an interest in a contract to purchase a home once it’s complete. Essentially, the buyers are taking over the seller’s place in the contract with the builder. The new buyer pays the seller their deposits back, as well as any profit. In trying times, there might not be profit, and in extreme cases, the sellers might walk away from their deposits.

Assignments are like the wild-west equivalent of real estate. The buyers are called assignees, the sellers are called assignors, and there is no fixed closing date! You heard that right, the buyer purchases the contract not knowing whether it will close in 4 weeks, 6 weeks, or 8 weeks. In many cases, the buyers only have a rough estimate for the final closing of the property as well.

Every builder’s agreement of purchase and sale is different, so every assignment sale is different. You need legal and accounting advice before, during, and after an assignment sale. A real estate agent’s job in the transaction is to find a buyer, negotiate the contract, and coordinate the sale from start to finish. Your real estate agent might also connect you with accountants, and lawyers who can help make the necessary legal and tax declarations.

The Builder’s Role In Assignments:

Sellers often misinterpret their rights to assign in their purchase agreements with their builder. In the showroom, builders are quick to say their contract is assignable if you want to flip your contract before closing. However, builders can control when, how, and to whom you sell your contract.

It’s important to follow the rules set out by your builder when marketing your assignment. Deviating from the builder’s purchase contract can result in you losing your deposits!

Since all preconstruction home assignments require the builder’s consent, it’s important to prepare the file for their consent at your earliest convenience. The builder will want the same information they collected from you when you first purchased the home: full names, current address, sin, IDs (front and back), telephone number, emails, mortgage pre-approval letter, lawyer information… they will also want the buyer to replace all your cheques. Those could be cheques for future deposits, or cheques for interim occupancy fees. It’s important to advise the buyers to prepare all of this information before submitting the file to the builder, so there is limited delay assigning the property.

How do you sell an assignment condo?

The first step to selling your assignment is to review your original purchase agreement. The builder’s purchase agreement outlines restrictions and fees associated with assignments. An experienced realtor or lawyer can also review the contract with you. Next, email your builder’s customer service account and ask for permission to advertise the property for sale.

It’s important to thoroughly understand your preconstruction agreement, because some incentives offered to you might not be transferable to the buyer. Builders often offer incentives to direct buyers to stimulate sales. However, they sometimes make these incentives non-transferable. That could mean the free design dollars, or the capped development levies might not be available to the next buyer. It’s important not to advertise incentives that aren’t transferable.

The second step is to hire a Realtor to advise you on current market conditions. Your realtor will discuss marketing options as well as help you decide on a market price. There is a strong chance the builder will prohibit MLS listings of their properties. However, many builders will allow online marketing in places like Facebook, Instagram, WhatsApp, and brokerage websites.

While Realtor.ca is the best marketing platform out there, buyers looking for assignments know to look elsewhere. Don’t worry if you cannot market on realtor.ca. One of the advantages of Sotheby’s International Realty Canada is our vast marketing platform outside of Realtor.ca

Important Dates:

The first date you need to consider is the assignment closing date. This is the date the assignee officially takes over the contract from the assignor. On average, assignment closing happens within 3-6 weeks after an offer is accepted. This is when the assignee becomes the new owner of the property, and the assignee receives some of their deposit/profit back.

The second date to consider is the interim occupancy date. When buying preconstruction condos, there is usually a period between when the unit is ready for occupancy and before the building has registered with the city. Since no title exists yet, you cannot get a mortgage. Instead, during this time, you move in and pay the builder rent until final closing. Interim occupancy can last from months to years. During interim occupancy, buyers have the chance to view the unit which could help sell the home. Interim occupancy is when most assignment sales take place.

The third date you need to know is the final closing date. This is the date that the building registers with the city and the assignee pays the builder the balance of the purchase price, land transfer taxes, closing costs etc. Sometimes, assignees will negotiate to pay some of the assignors profit on final closing date, so they can roll it into the mortgage.

What Is Negotiable During An Assignment Sale:

Since the contract with the builder is already firm and binding, there can be no changes to that contract. The buyer is merely stepping into the seller’s shoes, in exchange for their deposits and profits. The assignment contract negotiates the purchase price and the deposit structure. The purchase price will indicate how much profit (or loss) the assignor receives in the transaction.

The payment schedule of an assignment is dependent on whether there is a profit or not. If the seller is making a profit or breaking even, then the buyers are expected to refund the full deposit paid-to-date by the sellers. In many cases, that is 20% of the original purchase price. If the seller is losing money on the assignment, then the buyers will bring a deposit for less than the deposits already paid to the seller. The deposit is due upon acceptance of the offer.

If there is profit, the assignee and assignor will negotiate when that profit is paid out. Remember when we mentioned the three important dates? the assignment closing, the interim occupancy date, and the final closing date? well, when it comes to negotiating when to pay the assignor their profit, we usually pick one of these dates to pay out the assignor’s profit.

The expected final closing is an important consideration for buyers when negotiating when to pay the assignor’s profit. The longer the final closing date, the more risk for the buyer. The reason? there is always a small risk the condo developer cancels the project. If a condo developer cancels the project, the buyers are returned their deposits paid-to-date. However, if a buyer has paid an assignor $100,000 in profit, that money is gone. So if there is a long closing, expect buyers to protect their final deposits by delaying it till interim occupancy, or final closing.

Conditions In Assignment Sales

After finding a buyer, the first hurdle to overcome is negotiating a fair deal. Once both parties are satisfied with the terms of the contract, we make the deal conditional on the lawyer’s review. This gives both the buyer and seller a chance to have the assignment contract, as well as the original purchase agreement, reviewed by a lawyer. Once both parties have spoken to their lawyers and are happy to continue, we put the deal to the developer to approve the new buyer. This condition usually lasts around 30 days. If the developer does not approve the new buyer within 30 days, the deal will become null and void, unless the buyer and seller both agree to extend that condition.

Once the developer accepts the buyer, the assignment will happen within a few days. Most contracts outline an assignment closing within 5 business days after the developer gives their consent. Some buyers will also include financing conditions in their assignment offer, so they have time to run the deal past their mortgage broker. However, most assignments are purchased with only lawyer review and developer consent conditions.

Here’s an example of selling an assignment for profit vs selling an assignment for a loss:

Below are four examples of the deposit/profit payment schedule for assignments.

Example 1 is a fantastic example of a preconstruction condo that appreciated $100,000. In this typical example, the assignee and assignor agreed to a deposit big enough to return all of the assignor’s deposits, as well as some extra profit to cover Realtor commissions. This deposit is usually transferred to the listing brokerage within 1 day of the offer being accepted and is released to the assignor on assignment closing. In this example, the assignor and assignee also agreed to pay the seller the rest of their profit at the final closing.

Example 2 shows the same conditions for the sale, except the assignee agreed to pay the assignor their full deposit and all their profit on the assignment closing date, instead of the final closing date.

Example 3 looks at an assignment where the assignor is taking a $100,000 loss. Instead of being paid their whole deposit on assignment closing, they are paid their deposit minus the difference between the purchase price and the sale price.

Example 4 is a rare case, where the market has turned significantly and the assignor is looking to transfer their assignment for $0. This means the assignor is walking away from all their deposits and will take no money to transfer their contract to the assignee.

What Does It Cost To Sell An Assignment condo:

The major fees when selling an assignment include the builder’s assignment fee, real estate commissions, and tax on the profit. Builder’s assignment fees usually range from $1500-$25,000 (in some extreme cases they go as high as $80,000). The assignor usually pays both the assignor and the assignee’s realtor commissions. The commission is something to negotiate with your agent. The total commission is usually 5% or less of the final sale price. There are likely taxes such as income tax, capital gains tax, or HST on the sale as well. Speak to your accountant about taxes due on the assignment sale.

Taxes due on an assignment sale:

The taxes on assignments are simple, however, buyers and sellers often confuse the HST taxes. That’s because there are two different HST taxes when talking about preconstruction assignments. Let’s clarify this! All new homes are subject to HST, however, end-users don’t notice the HST tax because the builder pays it and claims a $24,000 rebate on the end-user’s behalf. Alternatively, investors who purchase a pre-construction home are charged around $24,000 in HST, and are then able to claim a rebate for the HST they paid, if they rent the property out for one year. There are situations where an assignment will lose its eligibility for the HST rebate. If someone has lived in the home during interim occupancy, it will no longer be eligible for the end-user HST rebate.

The second HST tax we discuss when selling an assignment is the HST due on the profit. In many cases, the profit is subject to a 13% HST tax. In some cases, even the return of deposits is subject to HST.

The third tax is the income or capital gains tax on the profit. Any real estate property that is not your primary residence, as well as any business venture, is taxable as either a capital gain or as income. It’s really important to speak to an accountant before selling your assignment. Only an accountant can advise you whether you owe HST, capital taxes, or income taxes on your assignment sale.

Is it better to sell an assignment or wait till the condo is ready?

The pros to assigning a condo:

Receive your deposits and profit sooner
Avoid market risks. Savvy investors might look to assign their property if they sense the market might depreciate in the coming months/years.
Avoid paying closing costs (land transfer taxes, development levies, utility hookups, and more). These usually come to a little more than 5.5% of the purchase price
No mortgage or financing required
Minimize holding costs (if you sell before interim occupancy or before final closing, there are no property taxes, maintenance fees, utility fees, insurance, mortgage, etc)

Cons to assigning a condo

Developer restrictions (limiting the marketing of the property, limiting when they are accepting assignments)
Market perception and buyer’s hesitancy when buying a property sight-unseen
Market fluctuations suppressing buyer demand
Limited buyer pool and most of the buyers are investors who want a good deal
Usually sell for a lower price than comparable resale properties
Financing challenges for the buyer if the property does not appraise at the new purchase price
Potentially more taxes compared to closing and reselling

The most common mistakes when selling an assignment:

Hiring the wrong representation, or not relying on professional advice:.

As active realtors in the assignment market, we come across quite a few mistakes. But most of them could be avoided if the buyers and sellers were represented by experienced realtors and lawyers. The agreement of purchase and sale for an assignment is very different compared to an agreement of purchase and sale for a resale home. One of the most common mistakes we see from buyers and sellers is assuming the paperwork their realtors drafted is correct, and forgoeing their right to have their lawyer review the assignment paperwork.

Poor communication/understanding:

This happened to my assignment buyers recently. They purchased a home where the seller’s representative told us the finishes had not been chosen yet. We protected our buyers by including clauses to that degree. However, a few days after the assignment closing, we learned the sellers chose the finishes a few days before closing. Luckily, the developer allowed the buyer to make changes to the finishes at an additional fee.

Ignoring deadlines or dragging your feet:

Assignments come with a lot of moving deadlines, and there are a lot more parties involved compared to a resale property. Always return paperwork and signatures as soon as possible. Compared to a resale property where the only parties are the buyer, seller, and their agents and lawyers, an assignment involves the developer, the developer’s lawyers, the buyer and seller agents, and the buyer and seller lawyers. If everyone took 3 days to return paperwork, the conditional period would lapse and the deal would become null and void.

Incomplete Buyer Vetting:

Buying an assignment requires the assignee to have their mortgage preapproval, as well as their purchase funds available very shortly. If the assignee does not have a mortgage preapproval on hand, it could delay the developer accepting the assignment. If they do not have their funds available it could delay the quick closing as well.

It’s important to thoroughly vet buyers because some builders require the assignor to close in the rare chance the assignee cannot close.

Misunderstanding fees:

Builder’s contracts are not standard forms, and their deposit structures and closing fees can vary from site to site. There are a lot of potential fees when buying and selling assignments and they include, but are not limited to: deposits, seller’s profits, upgrades, lawyer’s fees, interim occupancy rent, utility set-up fees, development levies, realtor commissions, accountant fees, HST, and income taxes. These fees can vary from deal to deal, and when they are payable is different in every assignment. For example, some developers require the homeowner to pay for upgrades when they are chosen, and others charge for the upgrades at final closing.

If you have a preconstruction condo or home that you are thinking of assigning. Feel free to reach out to us for some advice and insight.

6 important facts to consider when selling a preconstruction condo.

Everything you need to know to sell your preconstruction condo assignment

5. Is it ethical

Now that we got the “ legal ” question out of the way…

What about “How ethical is it to wholesale”.

Type that into the web and you’ll get thrown into a black hole of comments and forums chatter you won’t ever be able to get out of.

Here’s the bottom line of why it gets so much controversy and what it has to do with assignment fees…

Wholesalers are going around marketing “We buy houses CASH” when in reality, they aren’t buying it cash… they’re assigning the contract for a fee.

This is where everyone gets their tights all tied up in a bunch (did I just make up a word?! Yes! I did). Because if you say you’re going to close it with cash, but you have to walk away from the seller because you can’t find a buyer… how would you feel leaving a seller (who seriously needed to close yesterday), hanging)?

Some with a conscious would feel pretty bad… others don’t care.

So it’s up to you how you feel about the ethics side of things.

Can you close the deal yourself if you can’t find a cash buyer , via a hard money lender or partner? Or will you feel comfortable walking away from the deal? Or will you be confident enough to go up to the seller and tell her the truth, that you intended on selling the contract to a cash buyer but it seems that your priced it too high, can we renegotiate?

The underlying problem with “walking away” from a buyer is not pricing it right.

If you have a good deal, cash buyers will be all over it and be HAPPY to pay you an assignment fee.

Here’s a video on ethical wholesaling:

6. How much should a fee be?

New wholesalers typically aren’t sure what they should charge. But it’s going to vary from deal-to-deal, and market to market.

A decent wholesaling fee can range from $10,000 to $30,000.

There are occasions when you hear about $100,000 assignment fees. And they do happen. It’s just a matter of negotiating a good deal.

While there isn’t a “set fee” that wholesalers should charge, it all depends on how good of a deal you can negotiate, and how high you can mark up the contract for an end buyer.

So there are two components that determine how much you can get paid for an assignment fee:

Seller’s price.
End buyers price.

Later, in another section, I talk about how you can increase your assignment fee… for now, let’s just cover how much your can charge.

Earlier I mentioned that your market might have an influence on how much you can charge. And that has more to do with how low of a discount, sellers are willing to take AND how competitive it is in your market.

Here’s an example:

If a seller talks to three wholesalers, one offers $200,000 while the others offer $180,000, she most likely will go with the higher offer. Well, now those wholesalers might enter into bidding wars in the market, by creeping up their MAOP (Max allowable offer price).

When wholesalers start raising their Max offers (because the market is demanding it), AND if the end buying price (what cash buyers are willing to pay for that deal) does move up with it…

Then you start seeing wholesalers’ assignment fees start shrinking down. We’ll go over later some techniques for helping with this natural occurrence in the market.

Here’s an example of a real wholesaler using our handwritten mailers, in a case study where he made anywhere from $4k fees to $22,500

Assignment fee examples from a case study

7. Who pays for it?

Typically, in a traditional real estate wholesaling model, the end buyer (the cash buyer) is paying for your assignment fee.

For example: You negotiate with the seller to buy the property for $100,000. And the end buyer agrees to buy this deal for $120,000. He enters into escrow and pays the $120,000. You get the difference between the seller price and the end buyer price.

8. Does the seller or buyer see the fee?

In a typical assignment transfer, yes your assignment fee will be inside the closing statements.

After a property closes escrow, every party involved will get “closing statements” that look might look like this (depending on your state and the companies you use):

One of the line items may show up as “Assignment Fee” (or something similar), and show the amount.

Buyers will see these, as well as sellers.

However, a cash buyer (usually) understands that wholesaling is A LOT of work and that you should get paid for it. A good cash buyer understands that.

Sellers, most likely, won’t understand what an “assignment fee” is when they see this doc (they most likely won’t even read it).

On the rare occasion that they actually do ask what that line item is, you can tell the truth like this: “We work with partners and lenders all the time, and sometimes we end up selling the property during escrow to these partners, instead of keeping it ourselves. In this case we ended up selling to them”.

There’s a way to circumvent this potential problem of an assignment fee showing up on the closing documents…

And that’s by doing a double close instead of an assignment.

Let me explain in the next section…

9. Alternatives to an assignment?

As mentioned in the previous section, an assignment fee can have some cons to it. The primary being that sellers AND buyers can see how much you’re getting paid.

However, there is another “tool” you can use that hides this from both parties, and that’s called the “double close” (sometimes referred to as a “simultaneous closing” or “back to back” closing. As the name implies, there are 2 separate closings, not 1 (like our assignment fee transaction).

Here’s an explanation:

The homeowner (party A) agrees to sell to a wholesaler (Party B) for $100,000
They enter escrow
While in escrow, Party B finds a cash buyer (Party C)
Party C agrees to buy that property for $150,000
They enter a second escrow agreement (different from the first)
Party C funds the escrow account to buy the property at $150,000
Party B uses those funds (minus his “assignment fee”) to pay the purchase from Party A

A little confusing?

Maybe this infographic helps:

We won’t go into too much detail about this as this is an article on the assignment fee… But just know that there is an alternative to hiding your fee but using a double close.

The con to this is that you pay a little more because you’re in fact doing 2 closes, not 1. So the times you might want to a double close vs an assignment fee is when you negotiated a very good deal and want to conceal the big check you’ll be getting.

10. Assignment fees and agents?

Anyone can get paid an assignment fee for this kind of “wholesaling” transaction. There’s no law that says agents can’t. However, that agent/broker needs to pay careful attention to their State RE commission laws as they’re put under serious scrutiny if they walk any fine lines.

For instance, if you’re buying the property and wholesaling it AND you’re licensed… in most states, you have to express to the seller that you are a licensed real estate agent but you are NOT representing them, and instead the principle of the transaction.

If you’re an agent wondering if you can (or should) do this, first contact your broker or RE Commission office to find out more.

Secondly, you might want to reconsider doing this as in some markets agent commission fees are higher than typical wholesaling fees. This is rare, but there are some hot markets where wholesalers have to keep raising their prices to win the deal, and therefore lower their assignment fee.

11. How to increase your assignment fees?

As mentioned in a previous section, your fee is greatly dependent on the kind of deal you negotiate.

So if you get a deal at $100,000 and another investor (cash buyer) is willing to pay $150,000 for it, you walk with a $50,000 assignment fee (assuming no closing costs are removed from this).

There are 4 factors to increasing your assignment fees…

Become a better marketer If you improve your knowledge and skill set in marketing, you can essentially get to motivated sellers before anyone else.In the next section, we cover how to find these properties, which has everything to do with marketing, but one way (that we specialize in) is using handwritten mail to gain the best response rates from sellers.
Become a better negotiator If you study and practice good salesmanship you can effectively win deals even if you’re offer is “low” . If you have no experience in sales, this will take time, but there are loads of resources available online (free and paid) that you can take advantage of. But, if you’re planning to stay in this entrepreneurship game for the long haul I HIGHLY suggest you study sales on a regular basis.
Know you numbers Getting better and better at knowing what your market demands in terms of prices, rehab costs , etc… will help determine a more accurate price at a faster rate. Why does this matter to getting paid a higher assignment fee? It’s 2 reasons: First, if you know that cash buyers are willing to pay X, you can raise your asking price from end buyers, or on the flip side of that if, you know that a house needs some major repairs you can use that negotiated a lower price with the seller…Secondly, if you are really good with numbers, you can give an offer faster than your competition who has to take 1-2 days to send an offer in. In competitive markets “ Speed to lead ” wins and the person who can act fastest is usually the one who takes the trophy.
Build a thriving buyers list The second component of the assignment fee and wholesaling business is selling the contract to a cash buyer.And, if you can build a list of buyers who will pay more for a good deal than most of the other “bottom of the barrel” buyers who demand very steep prices.Where do find buyers willing to pay more? It’s usually among high w-2 earners (doctors, lawyers, etc) who like to flip houses on the side. Or high-income business owners looking to park their cash somewhere to earn 15%+ annual ROI by doing so occasional flips.If you can find them, network with them, and add them to your list you can essentially raise your property raise to increase your assignment fee

12. How to find discounted properties to wholesale?

Finally our last section in this article which is probably at the top of some people’s minds:

“ Assignments sound great, but how do you FIND discounted properties!?!?”

Wholesaling is probably one of the toughest occupations in real estate.

You have to be well-rounded in almost every aspect of the industry. And you have to be top-notch in your selling and marketing capabilities.

But with that, there are foundational techniques to help you find these properties on your own. I’m going to give you 2 resources to start below.

First, is our article “ 8 ways to find 100 sellers for under $500”

Second is our eBook on Direct mail

You can get the Ebook for free by subscribing below to our newsletter, where we give lessons, stories, and value every week to real estate investors like you…

Spread the Word. Share this post!

Subscribe to our Newsletter

What is an Assignment Fee? The Ultimate Wholesaler’s Guide

In real estate investing, an assignment fee is the fee paid by the end buyer to the real estate wholesaler at the time of closing.

What is an assignment fee?

How do you assign a real estate contract?

How can you increase your assignment fee as a real estate wholesaler?

Those are just some of the questions we're going to answer in this ultimate assignment fee guide.

Let's dive in!

Part 1. Answering Common Questions About Assignment Fees

To start, we're going to answer some of the most commonly asked questions about assignment fees.

In real estate investing, an assignment fee is the fee paid by the end buyer to the real estate wholesaler at the time of closing.

This is the part of the process where the real estate wholesaler makes their money -- after finding a great deal and getting the property under contract, they then flip (i.e. assign) that contract to a cash buyer for a profit.

How are assignment fees calculated?

Assignment fees are calculated by taking the difference between what the seller was promised and what the buyer is paying.

For example, if a wholesaler has a contract to purchase a property for $100,000 and they assign that contract to a cash buyer for $120,000, then their assignment fee would be $20,000.

Who pays the assignment fee?

The assignment fee is paid by the cash buyer at closing.

And, critically, you -- the wholesaler -- are the person who gets to decide what that assignment fee is... it's only a matter of getting the cash buyer to agree (assuming you're not doing a double closing; more on that later).

What is the average wholesaler’s assignment fee?

The average assignment fee for a real estate wholesaler is between $2000 and $7000.

Of course, this number will depend on the market you're in as well as the level of experience that you have.

Many wholesalers charge upwards of $10,000 or even $20,000 for their assignment fee. Later in this guide, we'll show you how to systematically increase your assignment fee.

REISift users, on average, pull more money per deal than non-members. Here are some testimonials from our members and Sift Dojo attendees.

Are assignment fees taxable?

Yes, assignment fees are considered taxable income.

Be sure to speak with your accountant or tax advisor about the specific rules in your state.

What is a real estate assignment contract?

A real estate assignment contract is the contract between the wholesaler and the cash buyer that assigns (or transfers) the rights of the original purchase agreement to the cash buyer.

This contract will include all of the terms of the original purchase agreement, including:

The price that was agreed to between the wholesaler and seller
The property address
The closing date
Any contingencies that were in the original contract (i.e. financing, inspections, etc.)

Once the assignment contract is signed by both parties, the cash buyer will take over all responsibilities under the original purchase agreement and will be responsible for closing on the property.

What is a double close?

A double close is a type of real estate transaction where the wholesaler sells the property to the cash buyer and then immediately purchases the property from the seller.

In other words, there are two closings -- one for the sale of the property from wholesaler to cash buyer and another for the purchase of the property from seller to wholesaler.

In terms of assignment fees, double closings are often used when the wholesaler wants to keep their assignment fee confidential.

Download Assignment Fee Template

Part 2. how to assign a real estate contract .

Next, we're going to discuss the process for assigning a real estate contract -- from finding a great deal and building your buyers list to acquiring an assignment contract and collecting your assignment fee.

Step 1. Find a Great Deal

The first step in wholesaling real estate -- and thus assigning property contracts -- is finding a great real estate deal.

This is where your marketing efforts will come into play. You'll need to generate a steady stream of leads in order to find the best possible deals on properties that fit your criteria.

There are a number of ways to generate leads, but the most effective method is to use a combination of online and offline marketing.

This could include everything from direct mail campaigns and cold calling to driving for dollars and door knocking.

Check out our complete real estate investor marketing plan to learn more about this part of the process.

Step 2. Build Your Buyers List

A fundamental part of wholesaling real estate is flipping property contracts to cash buyers who have the funds to purchase your deals within just a couple of weeks.

A buyers list is a database of cash buyers (other real estate investors) who are interested in buying your deals.

You can find cash buyers by networking with other investors, attending real estate meetups and seminars, or searching online.

Here are 10 more ways to find cash buyers .

Step 3. Acquire an Assignment Contract

Once you've found a great real estate deal and got under contract with the seller, it's time to acquire an assignment contract.

You can do this by searching online for assignment contract templates or hiring a local lawyer to put the contract together for you. The assignment contract will pass the purchasing power and obligations from you to the new buyer.

Step 4. Collect Your Assignment Fee

After the new buyer has closed on the property, it's time for you to collect your assignment fee. This is typically done by wire transfer or check at the closing table via a title company.

And that's it! You've now successfully assigned a real estate contract and collected your assignment fee.

Part 3. The Pros & Cons of Assignment Contracts

Now let's take a moment to look at the pros and cons of assignment contracts.

It's Cheaper Than Double Closing: Double closings can be more expensive (in terms of both time and money) than assignment contracts.
It's Simple: Assignment contracts are relatively simple compared to other types of real estate transactions.
It's Fast: Assignment contracts can be completed in as little as a week or two.
It's Transparent: Unlike double closings, there is no need for two sets of escrow accounts, two sets of title insurance policies, or two sets of closing costs.
Your Assignment Fee is Visible: Because your assignment fee is paid at closing, it will be visible to everyone involved in the transaction.
It's Not Always Allowed: Some states have laws that prohibit or restrict the use of assignment contracts.

Part 4. 10 Ideas For Increasing Your Assignment Fee as a Wholesaler

To close out this guide, we're going to share 10 different ways that you -- the real estate wholesaler -- can increase your assignment fee.

1. Start With Great Deals

The better the deal, the higher your assignment fee will be.

This is why finding great deals -- and double-checking your math as well as your due diligence -- is absolutely critical to increasing your assignment fee.

So how do you find great real estate deals?

We have a detailed guide on finding great real estate deals over here .

2. Learn to Negotiate (With Sellers)

If you want to increase your assignment fee, you need to be able to negotiate with sellers.

The better you are at negotiating and sales — which in large part, just depends upon being an empathetic and helpful person — the better deals you’ll be able to get and the higher your assignment fee will be.

After all, if the seller agrees to a lower price, then that means you make a bigger profit.

The caveat here would be that you should always do right by your sellers. Don’t be afraid to negotiate (start lower than your max offer)... but also don’t try to screw anyone over.

3. Follow Up

It’s very rare that you’re going to turn someone from a lead into a deal with just a single phone call.

The nature of wholesaling real estate is that it requires a consistent and systematic follow-up process with seller leads to be successful.

Following up will help you close more deals… and closing more deals will give you the confidence, experience, and volume you need to increase your assignment fee.

4. Find Your Offer Min & Max

Good real estate deals are just a result of good due diligence and good math.

Determine how much money your cash buyer is going to want to pull, factor in your assignment fee, consider repair costs and holding costs… and calculate your max offer on the property.

Do this before you negotiate with the seller.

And make sure that when negotiations begin, you start well below your max offer so that you have room to adjust based on their response to your initial offer — this is your minimum offer.

You might find your max offer by using the popular 70% rule — which states that a real estate investor should pay no more than 70% of a property’s ARV (After Repair Value) — but you can find your starting offer by decreasing that to 50% or lower.

5. Qualify Your Cash Buyers

The amount of your assignment fee — as well as the efficiency with which your business operates — depends upon high-quality cash buyers.

Most wholesalers are a little over-eager to add email addresses to their cash buyer list.

But remember: quality over quantity.

You might have 500 cash buyers on your list… but only 20 or 30 of those are actually high-quality buyers.

Before adding buyers to your list, get proof of funds and make sure they’ve bought properties via assignment before.

Those buyers are going to move faster, pay the asking price for your properties, and return for more properties to buy.

6. Identify Cohorts of Cash Buyers

The instinct for most wholesalers is to send every deal to every cash buyer… but that actually wastes a lot of time.

It’s not in your interest to have to help every potential buyer determine whether or not they’re the right buyer for this deal.

It’s far more efficient to learn about your buyers upfront and determine what type of cash buyers they are — rehabbers, landlords, etc.

Using simple software, you can then create cohorts of cash buyers and send the right deal to the right people to get faster turn-around-times, less questions, and bigger assignment fees.

7. Text Your Buyers

Email is easy and popular… but it’s not necessarily the best channel when promoting deals to your list of cash buyers.

In fact, SMS or text messaging has some clear advantages.

Just consider these stats from ManyChat …

269 billion emails are sent every day with roughly 50% of them ending up in spam folders.
SMS has a click-through rate of 19% and email has a click-through rate of 3.2%

The point is, if you want to get the attention of your high-quality buyers, then it’s probably worth sending both emails and text messages.

The faster you reach the right buyer, the easier it’ll be to get the assignment fee you want.

8. Don’t Negotiate (With Buyers)

As the wholesaler, realize that you determine your assignment fee.

No one else gets to decide what your assignment fee is going to be — now if you can’t get the buyer to agree to pay it, then that’s another problem… but you can always walk away and find another buyer.

If you’re going to raise your assignment fee, then it’s important to understand that all you have to do is… well, raise it. And see what happens.

High-quality buyers aren’t going to care about how much you’re making so long as they’re also making a good chunk of money.

9. Work With Real Estate Agents

Real estate agents control a huge part of every real estate market.

So if you exclude working with real estate agents to find cash buyers, then you’re ignoring a huge portion of the market’s revenue and potential.

Plain and simple.

Good real estate agents who work with cash buyers will understand your business model and be more than willing to coordinate the deal for you.

You will have to pay a bit of commission — or at least, the buyer will — but you’ll get to remove all the drama from the equation by working with agents. They understand how assignments work, and they negotiate on the behalf of the cash buyer.

It might not drastically increase your assignment fee, but it will help you dispose of deals far more efficiently.

10. Require a Nonrefundable Fee

When it comes to wholesaling, time really is money — the faster you can find a high-quality cash buyer, the more likely you are to get the assignment fee you want.

And one of the worst things that can happen is that your buyer will back out of the deal and you’ll have to restart the entire process.

That’s why you should make the buyer have skin in the game.

Require a nonrefundable fee from cash buyers who are ready to take action — this fee should be upwards of $3,000 and it can contribute to your total assignment fee.

If a buyer refuses to pay this to secure the deal as they’re own, then you probably want to find a different buyer anyway.

Final Thoughts on Real Estate Assignment Fees

We hope this guide has helped clear up any confusion you had about assignment fees and how they work in wholesaling real estate.

Remember: if you want to increase your assignment fee, focus on finding (and negotiating) great deals, following up with leads, qualifying cash buyers, and being systematic in your business.

Do those things, and you’ll be well on your way to making more money per deal.

Listen on other platforms

Join our ninja newsletter.

Subscription implies consent to our privacy policy

Ready for more?

Subscription implies consent to our privacy policy.

Testimonials

What is Assignment Selling?

Do you find your business spends too much time on bad-fit customers and answering the same questions over and over? If so, assignment selling could be the solution.

Assignment selling is a hugely effective way to build trust, reduce poor quality leads and get higher click-through rates.

In a nutshell, assig nment selling is about creating content to answer your customer's most asked questions before they make a purchase. By making this content available, and using it in your sales process, you allow customers to find the answers they need so that they can decide if your brand will be a good answer to their problem.

Before your sales team tries to make a deal, the customer has already taken the time to educate themselves and are less likely to drop out of a purchase because they know exactly what to expect.

At Vanguard 86, we believe in using the assignment selling method as part of the ‘They ask, you answer’ framework. Using informative blogs, videos, and FAQ articles to answer the burning questions of their customers, we attract the buyers that are most likely to make a purchase and give them the answers they need. With customers feeling empowered and brands making more sales, it’s a no-brainer.

Assignment selling is an uncomfortable concept for many salespeople because it involves giving the prospect homework. Why is this offensive to some salespeople? Because they see their role as doing work for the prospect, not giving them more.

Some even see their role in the relationship as being there to take work off the customer’s hands. It’s this misconception that stops many good salespeople from becoming great salespeople.

Assignment selling in a nutshell

During the sales process, a salesperson can lean on assignment selling for several reasons. These reasons include:

Educating the customer on their options

Vetting the prospect’s suitability as a customer

Testing the lead’s level of interest

Reducing the chance of issues after the sale.

All of these are great reasons to use assignment selling. They benefit both parties equally and build a very different relationship between the salesperson and the prospect. Let’s explore each in more detail.

Educating the customer

This is one of the most valuable ways in which assignment selling is used. The homework you set the prospect could be to gather more information to ensure the solution you, as the salesperson, propose is the correct one. It may involve completing a survey, taking a quiz or asking other decision-makers key questions.

This application of assignment selling can help a salesperson consult on the best solution with greater levels of accuracy, and makes the customer feel more involved and like the solution is tailored to their needs.

Vetting the prospect’s suitability

This additional homework can also be beneficial in the salesperson’s vetting process. You don’t sell to everyone in the world, and some people are better customers than others. Assignment selling helps you to weed out the good fit prospects from the tyre kickers.

For a busy, or apex salesperson focusing efforts on the leads that are more likely to generate success is key.

Many prospects say all the right things, have an urgent need and have an approaching deadline yet, somehow, they suddenly go quiet. This could be because their level of interest was lower than communicated.

Assignment selling helps you to assess their actual interest by giving them a small hoop to jump through. If they’re not willing to put in a little bit of work then chances are they’re not actually that keen.

A quick sale is a good sale but not if it’s because someone bought something when they thought they were getting something else.

Assignment selling can educate a customer on the long-term maintenance requirements, common challenges or situations for which your solution isn't suitable so they can avoid any post-purchase regrets.

How does it fit into ‘They ask you answer’?

The framework of ‘ They ask you answer ’ is built on the idea that customers are more likely to buy from a business they trust. By creating relevant content that addresses customer concerns, a business can foster that trust and build a rapport with them.

Giving prospective customers content to actively engage with before you make a sales pitch makes them feel connected, understood and well-informed. Assignment selling can often pull on articles created under the Big 5 as the sales people set the ‘homework’ of reading an article the company has produced, as an example.

The Big 5

There are five key categories for this kind of content marketing, which are known as ‘The Big 5’ . These categories include all the topics that customers are most interested in and are likely to search for.

By creating content about each of these five categories, your business can intercept prospective customers, give them relevant answers to their questions and build trust with them.

Let's break down the big 5 to help you get started assignment selling today.

Before making a purchase, customers want to know how much they’ll need to pay, and why. But in reality, many companies choose to shy away from this question for the fear of scaring customers off.

However, even if a customer is attracted in the early stages, that doesn't mean that they won't back out later. That’s why providing clear, informative content about your pricing from the beginning can put you well ahead of your competition by building your authority in the industry and reducing wasted leads.

For some industries, giving a set price isn’t always possible, but that doesn’t mean you can’t still create this kind of content marketing. At the very least, you should be explaining what factors can affect the pricing and why the quotes you give are as high or low as they are.

In this way, customers will be assured they’re getting a fair price and know exactly where their investment is going. You can also discuss the long-term costs of a certain product or alternative solution. The costs that may arise from getting the decisions wrong are also good to cover in blog articles.

If you’re concerned to be talking about costs in your industry, then don’t be. Another perspective on this is to think back to your feelings the last time you wanted to know the cost of something but couldn’t find the price. Did you cut the business some slack and pick up the phone to talk about it or did you move on to the next Google search result to see if they were more transparent?

Examples of cost articles :

HubSpot software pricing explained
How Much Does It Cost To Be Successful With LinkedIn Ads?
How Much Do Google Ads Cost?

Problems

Similarly to pricing, businesses tend to avoid talking about the problems with their product or service. But customers know nothing is perfect so by not disclosing this information, businesses can seem deceptive and deter customers without even realising.

On the other hand, you can cultivate an open, honest relationship with your customers by giving a clear, informative explanation of everything that can go wrong with your product or service. For the most part, customers will feel more comfortable making a purchase knowing they’ve heard all sides to the story, and if not, then they weren’t a good fit anyway.

A great way to format a problems article is to give clear, helpful information for each potential issue, including why it might occur, and follow it with solutions your company is offering to counteract it. This way customers are aware of the problems from the beginning but also know exactly how your company is addressing them.

Problem articles can help bad-fit prospects opt-out when your solution doesn’t apply to them, as long as you are transparent and honest about it. For example, a digital marketing agency like Vanguard 86 isn’t a good fit for a business that wants a completely hands-off approach to its marketing. T

he reason for this is that we still need ongoing input from the business, such as relevant details, approvals and feedback to ensure the marketing is working.

Examples of problems articles :

Problems with Review Tui customer feedback software
Avoid these critical LinkedIn mistakes
Problems with customer feedback

Comparisons

If customers are wanting to make a purchase, it’s common for them to compare one brand to another. The best way to target these customers is with content that gives objective evaluations of each version of the product, and what each brand caters to. It can be tempting to talk your competitors down here, but be wary of this because it can detract from your authority.

The key is to be unbiased so that your readers continue to trust your brand and the information you provide. If you make baseless claims you can leave your customers feeling misled and disappointed, and more likely to look elsewhere. However, by stating your bias openly and sticking to the facts, you can reassure them that your brand is reliable, honest and knowledgeable.

As long as you’ve been clear about your bias previously, the outro is a good opportunity to include a prompt for customers to engage with your brand further. Whether it be a link to your website, a call with a sales rep or a products page, you can frame this in a way that encourages customer buy-in without detracting from their trust in you.

Examples of comparison articles

Which social media platform should I use for my business?
Ask Nicely vs Review Tui - what's the difference?
Blogging vs Content Marketing – what’s the difference?

‘Best of’

Just like with comparisons, customers like to know they’re buying the best possible version of a product. That’s why marketing content that outlines the best of a certain product is a great option for assignment selling. No matter what industry you are in, your customers are looking for the best fit for them, so all you need to do here is reassure them.

The blog content can be specific to a certain location, target market or style so that anyone looking for the best version of that specific product is more likely to find your website.

It doesn’t always mean you’re targeting every customer within your industry, but rather the customers who are most likely to buy from you because they are a great fit for your brand. This situation is a win-win because both you and the customer find your ideal match, and can be confident it is based on shared values and expectations.

Examples of ‘best of’ articles :

What is the best tool for customer satisfaction surveys?
Top 10 customer feedback management platforms

With a flood of advertising content reaching customers, reviews are a great way for them to distinguish the good from the bad. People tend to trust other customers’ reviews and an online review can influence up to 67.7% of purchasing decisions , which makes it well worth spending the time to create your own review content.

In this case, we don’t mean reviews like star ratings or forum comments, but rather a full summary of a product or service, written out in an accessible, objective way. Using a blog is an excellent way to do this as it can present all the benefits and drawbacks of a given product or brand in one location, and can also link to other useful blog marketing.

Picture this, a prospective customer is searching for a “review of X product”. Now think about what information might come up for that search, is it likely to convince them to buy from you? If not, you should be producing your own blog content for that search to be part of the conversation and generate positive sales leads.

Examples of review articles :

An Honest Review of HubSpot Video
Squarespace Review: Is It Right for Your Business Website?
Review: What Are the Real Limitations of HubSpot Marketing Pro?

How to get started with assignment selling

For assignment selling, a good place to start is with a collaborative strategy session including your sales team, marketing team and senior management.

In these sessions, you should list all the commonly asked questions about your brand and what customers are most interested to know. This conversation needs to include the customer service team because they deal with customers directly, and the marketing team because they’ll create the content.

It’s a good idea to start with the most asked question so that you can link back to it in future content, and build authority as you go. This way, as your marketing team continues to produce more and more content, your customers will have a wealth of information to find.

You should also use an SEO strategy throughout your content to ensure you get higher clickthrough rates and increase traffic to your website.

Within a few months of implementing an assignment selling strategy, your brand will build authority and become a trusted voice within your industry. Your customers will respect you and be more loyal to your brand, and you’ll have much better rates of return on your content overall.

Download your free guide to generate more leads

In this guide, we'll share 30 top ways your business can generate more leads by harnessing digital marketing effectively.

They Ask, You Answer: The Big 5 explained

Benefits of case studies

Why delighting your customers is so important for success

Now answering calls 24/7

Justin Dossey

8 ways to increase your assignment fee as a wholesaler.

April 11, 2023
, How to , Real Estate Investing Tips

What is an assignment fee in real estate?

What’s the difference between an assignment contract and a double close?

Most importantly, how can you increase your per-deal profitability as a wholesaler?

Those are the questions we’re answering in this guide!

What is an Assignment Fee in Real Estate?

An assignment fee is the money a real estate wholesaler makes when flipping a contract to a cash buyer.

Let’s walk through an example.

If you’re a real estate wholesaler , then your job is to find homes for good deals and flip them to cash buyers.

(Here’s our complete beginner guide to wholesaling )

Imagine that you find a property that the seller is willing to sell for $80,000. You determine that the ARV ( After Repair Value ) of the home is about $200,000 and, after crunching the numbers, determine that the deal is a profitable one even after the cost of repairs.

So you and the seller sign an assignment contract, which is basically your promise to purchase the home for $80,000 within a certain period of time.

But instead of purchasing the home, you flip this contract to a cash buyer (usually another real estate investor with cash on hand) for $90,000. Since your assignment contract with the seller was $80,000, you make an assignment fee of $10,000.

You can look at this as your fee for finding the deal for the cash buyer.

Assignment Contract or Double Close?

Now you might be thinking to yourself, “Why would a cash buyer be willing to pay $10,000 more for the home than they need to?”

First, if the cash buyer still stands to make a hefty profit after factoring in your assignment fee (which they should), then it’s not really a big deal to them.

In fact, high-quality cash buyers rarely care how much your profit is so long as they’re getting a good deal.

However, if you (the wholesaler) are still worried about the cash buyer rejecting your assignment fee, then you can instead double close. Double closing in real estate is when two transactions happen simultaneously (the seller sells to you and you sell to the cash buyer).

Here’s how RE Tipster explains it…

“A Double Closing (also known as a simultaneous closing) is a coordinated real estate transaction involving three parties: a seller, a real estate wholesaler (acting as a middle man) and an end-buyer. As the name implies, double closings involve two separate transactions that occur on the same day. The initial purchase and sale between the seller and the investor is the A-to-B transaction, and the purchase and sale between the investor and the end-buyer is the B-to-C transaction.”

In this case, it’s not necessary to disclose your assignment fee to your cash buyer.

How To Increase Your Assignment Fee as a Wholesaler

When Ryan Dossey — the founder of Call Porter — started wholesaling real estate, he was doing a lot of $3k and $4k deals.

His cost for acquiring those deals hovered between $1k and $2k… so he was barely breaking even.

Watching other wholesalers profit $10k, $20k, even $50k from a single deal, Ryan committed to doing things differently — learning from those with larger assignment fees and applying those lessons to his own business.

Now he regularly does wholesale deals that profit $16,000 or more.

Check out the video below!

1. Use The 75% Rule

The 75% rule states that investors should pay no more than 75% of the property’s ARV minus the cost of repairs. As a wholesaler, you also need to subtract out your assignment fee. Here’s how that formula works…

(ARV x .75) – Repair Costs – Assignment Fee = Max You Should Pay

Imagine that you found a property with an ARV of $250,000 and you expect repair costs to be about $20,000. Also, you want to make $10,000. Here’s how the math would work out…

($250,000 x .75) – $20,000 – $10,000 = $157,500

(For the cost of repairs, Ryan doesn’t just look at what needs to be fixed right now , but within the next 1-3 years… because this is what your buyers are going to care about)

This means that you should pay a max of $157,500 — that’s your max allowable offer (see the next section). This ensures that you and your buyer will make good money on the property.

2. Find Your Max Allowable Offer

One of the biggest game-changers for Ryan’s business is that he implemented a max allowable offer. After you’ve calculated the ARV of the home as well as your ideal offer using the 75% rule, set your MAO as a tangible number .

Then, when you negotiate with the seller, you’ll know the most amount of money that you’re willing to offer — this removes any guesswork from the equation and gives you permission to say, “No. I’m sorry. Our business just can’t afford to go any lower than XX.”

This is a tactic that salespeople use all the time… and it’s very effective.

When you have a clearcut offer that you can’t exceed, then it’s just business… and the seller can choose to accept or reject your offer.

Don’t sit down at the negotiation table without knowing your MAO… and make sure you have the willpower to stick to that number.

3. Learn To Negotiate

It’s a little funny. But the first time that Ryan reached out to his friend who’d been doing high-profit wholesale deals and asked, “How are you doing it?” Ryan’s friend responded and said…

“You know why you’re not making more money on your deals, Ryan? It’s because you’re a bitch.”

What he meant was that Ryan didn’t have the confidence to negotiate high-profit deals with sellers… and until he garnered that gusto, he’d continue to make less money than he desired.

That’s why knowing how to negotiate is so important.

Without the confidence (and math ) to say, “This is what my business can offer.” you’re going to make very little money on your deals.

Using the 75% rule and having a max allowable offer will help you negotiate more effectively with sellers. You’ll know what you can realistically afford and what you stand to make.

And then, you’ll increase how much money you’re making on each deal and how profitable your business is overall!

4. Double Close Bigger Deals

It’s possible that as your assignment fee increases, certain cash buyers will shy away from working with you… because they don’t like that you’re making so much money.

(Of course, high-quality cash buyers won’t if they’re getting a good deal — see the next tip)

If that happens — or even if you’re just worried about it — you can start double closing your deals, which makes it so that you don’t have to disclose the size of your assignment fee.

Find great deals, make sure they’re still profitable for your cash buyers, raise your assignment fee, and then double close.

Easy peasy.

5. Find High-Quality Cash Buyers

As I’ve mentioned before, high-quality cash buyers won’t care about how much your assignment fee is so long as you keep passing them good deals.

So it’s worth spending a bit of time to find these types of buyers.

Check out our full guide to finding cash buyers over here.

6. Stop Trying to Convince Every Prospect to Work With You

Not everyone wants to work with you.

There, I said it.

I know you’re an amazing sales person (it probably comes naturally to you). I know that you’ve convinced people in the past to do things that they weren’t prone to do.

But here’s the truth: those instances are the exception, not the rule.

More often than not, unmotivated sellers, or kinda motivated sellers aren’t going to work with you.

They’re just going to waste your time.

And the faster that you kick those time-wasters to the curb, the better.

But isn’t that just a part of the business? Isn’t it natural to win some and lose some?

Yes. Of course.

But it’s not natural (or healthy) to spend time with tire-kicking prospects when you could spend that same time with motivated sellers…

…people who are in a hurry to sell their home. They’re in a bind and they aren’t just thinking of working with you, but your very business is a god-send.

They need to work with you. They need to sell their home. They need a way out of their situation.

Why are those people more profitable?

For a few reasons:

They’re easier to convince to work with you in the first place (meaning you waste less time and money trying to convince them).
They’re less interested in arguing against your offer and more interested in escaping their current situation.

So, recognize time-wasting prospects faster, kick them to the curb, and spend more time on the phone with their motivated counterparts.

You’ll decrease time-and-money overhead and increase the profitability of each deal that you do.

Schedule a demo with us to find out how we can help you spend less time on the phone and more time closing high-profit deals.

7. Don’t Try to Be Different (Do What Works )

Be different.

Be special.

Be a lone wolf.

The entrepreneurial world is riddled with these messages. Go against the grain. Forge your own blade. Blaze a new trail.

That’s where success lies. And to follow the crowd is madness.

But here’s what’s easy for us entrepreneurs to forget: by building a business (or starting a side hustle), we’ve already gone against the grain.

(most people never start their own business)

And there is a point where fighting what works becomes a silly battle of the ego rather than a good business idea (think Google Glass or Google+ – sorry Larry and Sergey).

Point is, doing what you already know works is often more profitable than trying new things.

Know which marketing channel brings in leads? Do more of that. Know which sales script converts the most prospects? Use that. Know which zip codes provide the best ROI, increase your marketing budget for that area.

Sure. Trying new things is important when what you’re doing isn’t already working .

But as my pops always said, “If it ain’t broke, don’t fix it.”

Spend more resources on what works and cut resources on what doesn’t. Your per-deal profitability will naturally increase.

8. Use the 80/20 Rule

Just a few of the things that you do every day…

…are sustaining your business…

…growing your business…

and increasing your profitability.

While many of the things that you do are a complete and utter waste of time.

Maybe you spend too much time on the phone with people who don’t actually want to work with you.

Maybe you spend too much money trying to make marketing methods work for your business (even though they don’t) because they work for someone else’s business.

Whatever the case, remember this all-important rule: 20% of the work produces 80% of the results. And 80% of the work only produces 20% of the results.

This is true with everything in life.

It’s why going on just one date with your spouse makes you feel a million times closer.

It’s why many of the most profitable deals you’ve ever done were also some of the easiest to nail down.

It’s why some things just seem to work and other things don’t.

Fortunately, you can use the 80/20 rule to your advantage.

By focussing more resources on the 20% of work that produces 80% of the results and spending less or no time on the near-worthless 80%.

Do what works. Cut what doesn’t.

Final Thoughts on Increasing Your Assignment Fee

There are two ways to build your business.

You can increase the number of deals you do every month with similar profit margins ($5k-$10k, for instance) and you can work like a dog. You can wonder why your business isn’t providing you with the time freedom that you crave and why you’re less happy than you were even at your W-2.

Or you can work smarter, not harder.

You can increase the profit on each deal you do by focussing on higher-quality deals, spending less time on the phone with half-motivated sellers (who are just there to waste your time), and building a business that serves you.

One, even, that you can leave behind every now and again to go on vacation with your family…

Without stressing about the darn thing going under.

So use the above three tips to build a business that makes you more money with less work.

Choose to work smarter, not harder, and your average assignment fee will naturally increase.

What Is an Assignment Sale? Understanding the Ins and Outs of This Real Estate Process

An assignment sale occurs when the original buyer of a property (the assignor) transfers their rights and obligations of the property contract to another buyer (the assignee) before the official closing of the sale.

This process allows the assignee to step into the original purchaser's shoes, taking on the commitments of the property purchase, which could be a pre-construction condo, house, or any other form of real estate.

Now, let's delve deeper into understanding how assignment sales work, their intricacies, and what they mean for buyers and sellers in the real estate market.

Demystifying the Elements of an Assignment Sale

Embarking on a real estate journey often introduces many terms and processes that may seem complex at first glance, with 'assignment sales' leading the pack in complexity and confusion.

Whether you're the original buyer looking to navigate away from closing costs or a savvy purchaser hunting for a valuable investment, understanding the nuts and bolts of assignment sales is an invaluable asset in the dynamic landscape of real estate.

How Assignment Sales Work

Assignment sales introduce a unique dynamic in real estate transactions, particularly in bustling markets like Vancouver Island and the Sunshine Coast .

When you buy a pre-construction unit, the property is yours, albeit not immediately ready for occupation. Life changes or financial circumstances sometimes evolve between the original purchase agreement and the final closing, necessitating a shift in plan.

Here's where assignment sales come into play. The original buyer can sell their interest in the property before the final sale, sidestepping typical hurdles like mortgage payments or land transfer taxes that come with a regular sale. This method provides a strategic avenue for purchasers to hand over their contractual obligations to another party without waiting for the property's completion.

The Assignment Clause: A Vital Cog in the Wheel

The assignment clause in the original contract is central to these types of transactions. This clause allows the transfer of the buyer's rights and responsibilities to another person.

It's crucial to understand that not all pre-construction sales agreements have an assignment clause, and most builders or developers might impose restrictions or require consent before any assignment deal can proceed.

Understanding the Financials: Costs and Fees

Engaging in assignment sales tends to involve several costs that both the buyer and seller must anticipate.

These include the assignment fee charged by the developer, legal fees for contract transfer, and possibly higher legal fees due to the complexity compared to a resale property. There could also be tax implications depending on the nature of the transaction and the parties involved.

Navigating Through the Interim Occupancy Period

A common scenario in assignment sales, especially in pre-construction condos, is dealing with the interim occupancy period.

This period arises when the assignee can take possession (though not ownership) of the unit while the property is not officially registered. During this phase, the assignee pays occupancy fees, akin to rent, which don't go towards mortgage payments.

Understanding this period helps both parties make an informed decision and prepare for the financial responsibilities it entails.

The Pros and Cons of Assignment Sales

Navigating assignment sales requires a balanced understanding of its advantages and drawbacks. While these transactions open avenues for lucrative deals and flexible arrangements, they also carry inherent risks and complexities that can impact buyers and sellers.

This exploration will provide clear insights, aiding your decision-making in the vibrant real estate market.

The Bright Side: Benefits of Assignment Sales

Less Competition, More Opportunities: One advantage that makes assignment sales attractive, particularly in areas prone to bidding wars like Vancouver Island , is less competition. Fewer buyers are willing or informed about engaging in this kind of sales transaction, reducing the frenzy often seen in hot real estate markets. This situation can present a more favourable buying environment for those ready and willing to proceed with an assignment purchase.
Potential for a Better Deal: For buyers, assignment sales sometimes offer the opportunity to get into a brand-new unit at a potentially lower cost. Since the assignee is stepping into an existing agreement, they might benefit from the original purchase price, which could be lower than current market rates, especially in fast-growing communities.
Flexibility for the Original Buyer: For the original buyer, an assignment sale offers a way out, potentially recouping the deposit paid and avoiding financial penalties that might come with breaking a purchase agreement. This strategy can be particularly advantageous if the purchaser's circumstances change and needs to free up cash or avoid taking on a mortgage.

The Flip Side: Challenges and Risks of Assignment Sales

Complexity and Higher Legal Fees: Assignment sales are not your straightforward real estate transaction. They require additional steps, such as securing the developer's consent, and the legal process is more complex than purchasing resale properties. As a result, both parties might incur higher legal fees to facilitate the transaction.
Financial Overheads and Closing Costs: For the assignee, the initial cost outlay can be substantial for the assignee. They must reimburse the original buyer's deposit, pay the assignment fee, cover land transfer taxes, and prepare for other closing costs. These expenses require careful consideration and financial planning.
Uncertainties and Marketing Restrictions: In some cases, developers impose marketing restrictions, making it challenging to advertise the assignment sale. Additionally, the assignee, now the new buyer, takes on certain risks like development charges or changes in market conditions, which could affect the property's value upon final closing.

Making the Move: Deciding If an Assignment Sale Is Right for You

Deciding to engage in an assignment sale is a pivotal moment, requiring a blend of financial foresight and market understanding.

As we delve into this decision-making process, we'll consider critical personal and economic factors that ensure you're making a choice that aligns with your real estate ambitions and lifestyle aspirations.

Conduct Due Diligence: Know What You're Getting Into

Involving real estate agents experienced in assignment sales is a prudent step for guidance through the intricacies of these transactions.

Also, consulting with a real estate lawyer ensures you understand the legalities, your rights, and any potential liabilities you might be assuming.

Consider Your Financial Standing and Long-Term Goals

Reflect on your current financial health and future plans.

For original buyers, if life changes dictate a change in your real estate investments, an assignment sale could be a viable exit. For potential assignees, consider whether this buying pathway aligns with your investment strategy and if you're comfortable with the associated risks.

Stay Informed About Market Conditions

Market dynamics greatly influence real estate valuations. A clear picture of current trends, especially in your buying area (like Fort St John or cities in the Okanagan ), helps make an informed decision.

Understanding these trends could offer insights into whether you're setting yourself up for a profitable investment or a potential financial misstep.

Bringing It All Home with LoyalHomes.ca

Navigating the world of assignment sales can be a complex journey, laden with opportunities and pitfalls. Whether you're considering selling your contractual rights or stepping into an existing purchase agreement, the route is layered with legal, financial, and market considerations.

At Loyal Homes, we understand that your real estate journey is more than just a transaction; it's a pivotal chapter in your life story. We're here to guide you through each step, ensuring you're equipped with the local, accurate, and relevant information to make decisions confidently. Our team is committed to providing a service that stands a notch above the rest, focusing on relationships and community at its core.

Ready to take the next step in your real estate adventure in British Columbia? Whether it's finding the perfect neighbourhood, exploring investment opportunities, or seeking your dream home, we're here to assist.

For a personalized experience tailored to your unique needs, consider our Personalized Home Search . If you're on the selling side and need to understand your property's current market standing, request a Free Home Valuation . Or, for any other inquiries or guidance, feel free to contact us . Your journey to a successful real estate experience in British Columbia starts with LoyalHomes.ca, where your peace of mind is our highest priority.

Frequently Asked Questions

Is it good to buy an assignment sale.

Buying an assignment sale can be advantageous, offering lower purchase prices compared to current market rates for similar properties, especially in hot real estate markets. However, this venture also requires thorough due diligence to ensure that the agreement terms, property details, and financial implications align with your investment goals.

Can You Make Money on an Assignment Sale?

Yes, there is a potential to make money on an assignment sale, particularly if the property's value has increased since the original purchase date. This profit occurs due to appreciation over the period, especially in high-demand areas, but it's crucial to factor in any assignment fees, legal costs, and tax implications to understand the net gainfully.

What Are the Risks of Buying an Assignment Sale?

The risks include a lack of guarantees on the final product as specifications might change, potential delays in construction, and complexities in financing, often requiring a more substantial initial deposit. These elements underscore the importance of legal counsel to navigate contract specifics and to prepare for any contingencies or additional costs.

How Do I Sell My Pre-Construction Assignment?

Selling a pre-construction assignment involves marketing to potential buyers, typically requiring the developer's consent and possibly entailing a fee. Engaging with a real estate professional who understands the local market nuances and legalities of assignment sales is essential to ensure a smooth, compliant transaction.

Do I Pay Tax on Assignment Sale?

Tax implications on assignment sales can be multifaceted, potentially involving income tax on profits and GST/HST on the purchase, depending on factors like the property type and the seller's tax status. It's advisable to consult with a tax professional to accurately determine specific obligations and strategize for tax efficiency based on your circumstances.

What Is the Difference Between a Transfer and an Assignment?

A transfer and an assignment differ significantly; a transfer involves changing property ownership after a project's completion, whereas an assignment sells one's interest in a property before it's finished. Understanding this distinction is crucial as it affects the contractual obligations, rights transferred to the new buyer, and the legal and financial processes involved in the transaction.

Photo: @ irina88w via Canva.com
Photo: @ AndreyPopov via Canva.com
Photo: @ putilich via Canva.com

Mortgage Broker or Bank: Navigating Your Best Path in Home Financing

Choosing between a mortgage broker and a bank for your home financing needs is a crucial decision. Whether you're eyeing the vibrant real estate ... Read More

Complexities of a Lien on the House: A Comprehensive Guide

Navigating the complex world of property liens can be daunting. Liens on a house represent a legal claim against a property, often resulting from ... Read More

Have a Question or Want a Free Market Report?

Advanced Search
Search by Map
Property Tracker
Featured Listings
Vancouver Island Communities
Lower Mainland Communities
Sunshine Coast Communities
Thompson Okanagan Communities
Kootenay Rockies Communities
Cariboo Communities
Northern BC Communities
Mortgage Calculator
Mortgage Pre-Approval
First Time Buyers
Making an Offer
What Are Closing Costs?
Financial Terms Glossary
Personalized Home Search
Factors to Consider When Moving to a New City
Selling a Home
Pricing Your Home
Marketing Your Home
Showing Your Home
Adding Value
Free Market Analysis
Join Our Group

Wholesaling made simple a comprehensive guide to assigning contracts.

Land Investing , Creative Financing, Making Offers, Mindset Training, Video Tutorials

REtipster does not provide legal advice. The information in this article can be impacted by many unique variables. Always consult with a qualified legal professional before taking action.

For several years, my real estate investing business followed a simple model that worked extremely well about 80% of the time.

I would find boatloads of motivated sellers , make deeply discounted offers to them, and when I found a seller willing to accept, I could buy their property outright and pay cash for it.

Once I owned a property, I could list it for sale (usually within 24 hours) and flip it for a MUCH higher price than I paid.

In a lot of cases, the process worked perfectly . Going through these motions, I could squeeze a lot of free equity out of each property. In the best-case scenario, I could move through the entire process in just a few weeks.

The Problem With a Cash Business

Even though this business model was pretty effective, I found it had some limitations.

It was surprisingly easy for me to find cheap properties and buy them free and clear with the cash I had, but the real challenge was getting these properties sold quickly .

After my first dozen deals, I learned that some properties were MUCH harder to sell than others, and I didn't always have the foresight to know which properties would take significantly longer to sell .

This was a big problem for two reasons:

1. I had a limited supply of cash to work with.

Even if I knew how to get every property on earth for 20% of market value, I didn't have enough money to buy them all . At some point, I had to be smart about which properties to pour my limited resources into.

2. It was hard to know when a property would sell.

One of the unpredictable elements of land investing is that some properties will sell quickly, and some will sit on the market for months on end, and the situation usually ISN'T obvious until you list the property for sale and see how the market responds.

Of course, a few indications can give off some warning signs, and some markets are known for selling faster than others, but when you're working in an unfamiliar territory (like I was most of the time), this can be a tough nut to crack.

RELATED: How to Find the Perfect Market for Flipping Vacant Land

Once I started pushing up against the limitations of my finite supply of cash AND my inability to predict the future, I started thinking to myself,

“There MUST be a better way to monetize these deals without tying up my cash!”

I kept seeing deal after deal hit my desk – and they were great deals – but they just weren't great enough to justify investing my own money .

Buying a property for 60% of market value is great for the average investor, but if I couldn't get a property for a next-to-nothing price tag, it just wasn't “risk-free” enough to tie up my limited funds!

Wholesaling Through Assignments

Around this time, I started exploring how to assign contracts (i.e. – wholesaling, arbitrage, etc.).

Rather than signing a purchase agreement and buying each property outright, I had heard other real estate investors talking about this ingenious way of signing a purchase agreement and selling that contract to another investor so that THEY could close on the deal – with me just acting as a middleman and collecting an assignment fee in the process.

In short, I would effectively be selling a piece of paper because that paper (i.e. – the purchase agreement) represented a TON of valuable real estate equity that would go to whoever closed on the deal and took ownership of the property.

In some ways, assigning a contract wasn't all that different from acting as a real estate agent because I would be wearing many of the same hats and doing some of the same things an agent would do for their client.

The difference was that I had a signed purchase agreement between myself and the seller, giving me an equitable interest in the property. I wasn't selling a property on behalf of someone else, I was selling a contract that entitled me to close on the deal and could be assigned to any other investor who wanted to jump into my shoes.

This contract was like a paper asset I could sell to a third party and get paid an “assignment fee” without owning the property myself.

Legal Disclaimer: In some states, this process of assigning a contract is considered synonymous with working as a real estate agent. Even though it's technically a different type of agreement, some jurisdictions don't distinguish between the two. If you decide to pursue this strategy, check with the laws in your area to make sure you aren't required to have a real estate license to complete this process. If a license is required, you don't want to attempt this without your real estate license.

This presented a few obvious benefits:

I didn't need to put up any of my own cash.
I didn't need to shoulder any liability as a property owner.
I didn't need to stress out if I couldn't find a buyer immediately (because once the purchase agreement expired, I was free to walk away from the deal).

As I became increasingly strapped for cash (all while the opportunities continued to pour in faster than I could handle), this whole “Assignment” business sounded like the PERFECT solution to my problem.

The Mechanics of Assigning a Contract

Now, the idea of assigning contracts (aka – “wholesaling”) always sounds great on paper – but let me tell you, I struggled for YEARS to understand the mechanics of how this process really worked.

I understood the “20,000-foot-high” concept of assignments, but when it came down to figuring out the real, nitty-gritty details (for example)…

What kind of Purchase Agreement was I supposed to use?
What kind of Assignment Agreement needed to be signed?
How was I supposed to get the deal closed?
Where could I find the right closing agent to work with me?
When would I get paid in the process?
What if the buyer went behind my back and talked to the seller?
What if I couldn't find a buyer before the original contract expired?

…I had heard so many different opinions from so many different people about how the process was supposed to work. All the advice I saw on the various real estate forums and blogs would constantly contradict each other, making it even harder for me to nail down the “correct” way to move through this process.

Since I struggled with it for a long time, I will save you a ton of hassle and confusion by laying it all out below.

The 4 Stages of Assigning Contracts

Assigning a contract is (in theory) a pretty simple concept.

When an investor (we'll call this the ‘middleman') finds a great real estate deal and signs a Purchase Agreement with the Seller, they have the option ( if their Purchase Agreement contains the right language ) to “assign” (aka – sell) this piece of paper to an outside investor.

When the wholesaler/middleman assigns the Purchase Agreement to the outside investor, they can do it with a simple, 1-page document called an Assignment Agreement . This document legally transfers the original buyer's rights (as written in the original Purchase Agreement) to the new buyer. It also releases the original buyer (i.e. – the “Assignor”) from any liability or obligation and substitutes the new buyer (“Assignee”) in their place.

Essentially, the outside investor is jumping into the shoes of the wholesaler and can purchase the property directly from the Seller, at the same price, at the same terms, with the same deadlines, exactly as the terms were stated in the original Purchase Agreement. The only difference is that it now applies to the new buyer (Assignee) instead of the original buyer (Assignor).

I always find that visual aids are helpful, so here's my best attempt at showing you another representation of how the process works:

Stage 1: Contract Signed between Wholesaler and Seller

Stage 2: Wholesaler Finds an Outside Investor to Buy Under the Terms of the Original Purchase Agreement

Stage 3: Wholesaler Assigns the Contract to the Outside Investor and Gets Paid a Deposit

Stage 4: Seller, Wholesaler, and Outside Investor Close. The Wholesaler is Paid the Balance of the Assignment Fee at Closing.

As you can see, the Wholesaler (Original Buyer or Assignor) is acting as the “middleman” (or middlewoman, in this case), getting paid in the form of an Assignment Fee from the Outside Investor (Assignee).

In the process I follow (which I'm about to explain further), a portion of this payment is made when the Assignment Agreement is signed by both parties (Stage 3 – above), and the remainder is paid when the deal is closed, and the property officially changes hands (Stage 4 – above).

How the Process Works

Over the years, I have heard numerous explanations (all of which were different) about how the wholesaling process is supposed to work.

Most of these explanations only got me 80% there . They never closed the loop on how to get through the closing process, abide by the law, get paid, AND not be a scumbag .

The process outlined below seems to check all of these boxes and get the job done.

Finding the Motivated Seller

I've already thoroughly explained these techniques in several articles throughout this blog. If you aren't sure where to start, you can reference these posts below:

How I Find Motivated Sellers – Step 1 , Step 2 , Step 3
How to Create a Buying Website
Million Dollar Postcard Templates That Work
How Much Should You Offer For That Property?
How To Write Offers That Get Accepted (With 3 Simple Pages)
Everything You Need To Know About Getting Your County's Delinquent Tax List
The Ultimate Negotiation Technique That Nobody Talks About
How to Avoid the Guilt Trip When Sending Low Offers
Understanding the Motivated Seller
Getting People To Say Yes

Explain Your Intent & Get the Contract Signed (IMPORTANT)

When you start making offers to motivated sellers, your offer must be accompanied by a thorough explanation of what you intend to do .

Assigning a contract is very different than buying a property outright with a traditional closing. The Seller needs to know what you plan to do (because by itself, your Purchase Agreement doesn't imply your intent to assign the contract, it just says that you CAN assign it… and that's not enough guidance for the seller).

If you don't explain your intentions to the Seller, any rational person will get confused (and probably upset) when they see what happens.

It doesn't need to be this way. All it takes is a clear explanation from you so they understand what to expect.

There are a few key points your Seller needs to be aware of:

You're not planning to buy their property yourself.
You plan to sell the contract to someone else, and then THEY will buy the property from the Seller.
You will communicate with the Seller throughout the process (they won't ever be left in the dark), so they know what's happening.
If you can't find an outside buyer for the property, the contract will expire, and the transaction won't happen .

Given that a wholesale transaction involves a couple of additional steps, it might be tempting to over-complicate this explanation as you're trying to explain things to the Seller. I had this problem when I started wholesaling with assignments.

Avoid Information Overload

It's important to explain all the basics to the seller, but you don't want to bombard them with the information they don't need to know.

Nobody likes to feel confused. Rather than being made to feel stupid, most confused people will just say “No” to save their pride ( even if this arrangement is in their best interests ).

When I explain the process to a potential Seller, it looks something like this:

“Thanks for contacting us! A fter reviewing the details of your property, we would be interested in marketing your property to our nationwide network of real estate investors. For the next 180 days, we would be willing to invest our time and resources to find a cash buyer at no cost to you. If we are able to find a buyer, we will coordinate with you and the buyer to schedule a closing and ensure you are paid the full amount listed in this purchase agreement. You will not incur any costs in this process . We will be compensated by the buyer (which we will find) and when the transaction is closed, you will receive the full sale price stated in the attached purchase agreement. In order to start the process, we will need a signed copy of the attached purchase agreement. In this contract, our company will be listed as the Buyer and our intent will be to assign this contract to another cash buyer in our network.”

To assign your purchase agreement (as explained above), you need to ensure your contract contains an “Assignment” clause, allowing you the right to assign the contract to a third party. Without this clause, you will be the only one allowed to close on the purchase, and the rest of this process won't work.

There are many different ways to state this in your contract, but if you need an example, this is what my Assignment clause looks like:

ASSIGNMENT : Buyer has an unqualified right to assign its rights under this contract to a third party. No notice to the Seller of an assignment is necessary. Such an assignment will create a novation and release the original Buyer from this contract and substitute the assignee in its place.

Reminder: Whatever documentation or language you use, you'll want to make sure you run it by an attorney in your area to ensure it's valid and abides by your local, state, and federal laws.

Due Diligence & Property Prospectus Report

Since you're not the actual end-buyer, you don't need to learn every intricate detail about the property you have under contract.

However, you need to know the basic, relevant details about it because you're going to market this thing to the public, to your buyers list (if you have one), and to anyone else who may be a potential cash buyer.

So how much do you need to know?

As a general rule, I try to uncover any potential disasters that would kill a deal if I were buying it outright ( i.e. – what kinds of things would make ME turn and run the other direction? ). I also try to gather enough information to complete a property prospectus report .

What is a property prospectus report? Mine looks something like this…

It's just a single page that lists all of the basic details about the property:

Listing Price
Property Address
Parcel Number
Legal Description
Property Size
Terrain & Surroundings
Road & Utility Access
On-Site Photo(s)
Breakdown of Costs
Comparable Listings (to give a basis for my asking price)

…and that's pretty much it. Here's a video overview of how I fill it out:

Also see: One Weird Trick to Find the Size, Shape, Location & Dimensions of Your Property and The Fastest Way to Research Any Property in the United States

The goal of this document isn't to inform my cash buyers of every last detail about the property. The point is to give them just enough information to make it obvious that the deal has great potential and huge value (if it's a good deal, this shouldn't be difficult).

That being said, if I do find any big problems in my due diligence process, I'll either walk away from the deal (if I don't think I'll be able to sell it for a profit) or at the very least, I'll be sure to disclose any “Other Issues” that I'm aware of at the bottom of the report.

(Note: If you want a copy of my Prospectus Report template, you can get it at the bottom of this blog post.)

Find the Buyer, Assign the Contract, Collect the Deposit

When you start getting calls and emails from interested buyers, you'll likely find that there are A LOT of tire-kickers out there. People will get your hopes up, only to go AWOL when it's time to sign on the dotted line.

People are extremely flakey , so if someone wants you to take their offer seriously, they'll have to agree to it in writing AND put their money where their mouth is.

When I find an interested buyer, this is how I would communicate the next steps to them:

“ Thanks for your interest in this property! If you'd like to move forward with this purchase, I'll need two things from you: 1. Please sign the attached Assignment Agreement and fax, email, or text it back by 5:00pm today . 2. Please send us a $______ deposit by 5:00pm today via wire transfer. Note: This property will not be reserved until both items are received. Once both items are received, the property will be reserved in your name and we will contact <<Title Company Name & Location>> to begin the closing process. They will contact you in the next few days and will send you the closing documents and preliminary title report for your review and approval. Our tentative goal is to close this transaction by <<30 days later>>. This means you will need to submit your funds and all the required paperwork to <<Title Company Name>> by (or before) that time. “

When it comes to the earnest deposit , when the total purchase price is $10K – $30K, I'll usually ask for approximately 10% of the total purchase price, and I round it to the nearest $1,000. If the sale price is less than $10K, then $500 is usually sufficient. The idea is just to collect something to show that the buyer is serious and not blowing smoke.

If you're closing with a title company or attorney, this money should be sent to your closing agent, who will disperse it appropriately when the deal closes (or if it falls apart). Your end buyer can either send the funds directly to your closing agent, or they can send the funds to you, and YOU can give it to your closing agent.

Unfortunately, all kinds of obstacles can get in the way of closing ( clouds on title , funding issues, inspection issues, you name it), so you don't want to get too excited about this money until the deal is closed.

Note Regarding the Assignment Agreement

You might find that some people (buyers, sellers, closing agents, etc.) tend to overthink this document simply because they don't have experience with assignments and aren't familiar with how they work.

As I explained above, this is a relatively simple document that takes your rights as the original “Buyer” of the property and transfers them to a third-party (i.e., the new person or entity that has the cash and desire to jump into your shoes and become the actual end buyer of the property).

This video offers a straightforward explanation if you ever encounter an individual who just doesn't get it.

Deliver Documentation to Title Company, Close, Get Paid

Once you have both the Assignment Agreement and the funds required for your deposit, you'll need to deliver the following documentation to your Closing Agent (i.e., Title Company or Closing Attorney):

A copy of the fully executed Purchase Agreement.
A copy of the fully executed Assignment Agreement.
The funds from the end buyer's earnest deposit.

This should be everything they need to prepare the necessary paperwork for all parties to sign and move forward with closing the transaction.

Given that this is a cash deal (with no mortgages or outside financing involved), this shouldn't be a complicated transaction for your closing agent to pull off. That said, I should warn you that not all closing agents are created equal .

When I started trying to assign contracts, I found that some title companies had no idea what they were doing. They acted like I was asking them to move heaven and earth or do something illegal. I found that MANY title companies were particularly incompetent with assigning contracts, which threw a huge wrench in my progress for a long time.

If you run into this dilemma, keep calling around to various title companies or closing attorneys in your area until you find someone who understands what you're talking about. Don't let their ignorance act as an obstacle to your business.

Advantages to Assigning Contracts

When I look back on all the properties I've listed and sold on my behalf, most sold in 6 months or less (assuming they were desirable, usable , priced right , and I was marketing them consistently ).

Whenever a property took longer than six months to sell, it was usually because of one or two issues:

My assumption about the property's market value was WAY off (and I didn't have the profit margin I thought I would).
Something was fundamentally wrong with the property (e.g., it didn't perc , it wasn't buildable, the location was terrible, etc.).

As you can imagine – neither of these issues is fun to realize, but whatever the case may have been, I found that when a property sat on the market for more than six months and the sale still hadn't occurred , something big needed to change .

This is one of the huge benefits of assigning a contract. By the time I realized I had made a pricing or due diligence mistake with one of my properties, it was clear that if I could do it all over again, I wouldn't have bought this property at the price I paid for it .

It would have been far better for me to get it under contract and then assign the purchase agreement (if I even could) rather than buy it outright.

As you can imagine, if there's ever something wrong with a property, this problem should stay in the seller's lap instead of mine.

Here are some issues that make me consider wholesaling through an assignment rather than buying a property outright:

When I'm not very confident about the property's true market value.
When there are potential problems with the property that I can't get resolved.
If I don't have the money to invest and buy the property outright.
The seller isn't willing to lower their asking price to my liking (but it's still a good deal, with enough profit margin to be a good deal for someone else).
The property isn't local, and I don't want to take on the liability of ownership.

It's important to remember that even when you have money to buy a property, it doesn't necessarily mean you should.

All kinds of menacing issues can come up with any property – and in some cases, these issues can become MAJOR obstacles to selling it.

For many investors, this uncertainty is more than enough reason to stick to wholesaling them with an assignment exclusively.

Drawbacks to Assigning Contracts

While there are a lot of benefits that can come with assigning contracts, there are a few drawbacks you should be aware of as well.

When you intend to assign a contract, you'll have to deal with a few limitations (which may or may not be a problem – depending on what you're trying to do). For example:

You won't be able to improve the property (because you don't own it, and it's not yours to improve).
You won't be able to offer seller financing (because you're not the owner, and it's not yours to finance).
You'll have a shorter window of time to finish the deal (because your contract won't last forever).
The closing process will require more attention to detail than the simplicity of a cash closing.
Your buyer MUST be able to pay all cash (because most mortgage lenders aren't willing to deal with the complexities of an assigned contract).

It's also worth noting that some states (like Ohio , for instance) have laws and statutes that essentially make it illegal to market a property you don't own in your name. It's considered the “brokering of real estate,” if you don't have a real estate license in that state, you could get fined and/or charged with a misdemeanor for working outside of this box.

Even in states where the legality of assigning contracts isn't an issue, it's still a good practice to make it abundantly clear in your listing that you are selling a CONTRACT to purchase the property, not the property itself .

For example, you could include a short paragraph in your listing that reads something like this…

“ This property is available via our Assignment Program. We have entered into a purchase contract with the current owner to buy the property for $________ (this price includes payment to the owner and all associated fees and estimated closing costs) and for an assignment fee of $_______, we will sell our rights in this contract to a third party. A reputable title company and/or attorney will be enlisted to handle the closing and transfer of title.”

With this kind of statement included in your listing, it should be clear to interested parties that you are not the current owner . You are simply selling a piece of paper that gives you (and, ultimately, your end buyer) the right to purchase the property for a certain price.

When you decide to buy a property outright and flip it (i.e., the old-fashioned way), there are a lot of freedoms you'll have that simply aren't available when you choose to assign the contract.

So, before you swear off buying properties outright, remember that every deal has different considerations you need to think about. Depending on your end goals, these issues may or may not make the property an ideal fit for wholesaling with an assignment.

It's An Ongoing Education

I'll be completely honest; I still don't consider myself an “expert” in wholesaling via assigning contracts because it isn't been my primary strategy.

On the same coin, I can say that I've been through enough wholesale assignment transactions to know that this process works .

Wholesaling is a great way to make money in real estate, but assigning contracts isn't my primary technique for handling most deals.

That being said, wholesaling is an extremely helpful sidearm at my disposal when I come across deals that don't fit perfectly inside the “cookie-cutter mold” that I like to see (and as you can probably imagine, this happens pretty frequently).

I think it's great for any real estate investor to be familiar and comfortable with this strategy because there are PLENTY of scenarios where assigning the contract is a much better fit than buying a property outright.

Want Access to My Wholesaling Toolbox?

As I mentioned earlier, I spent YEARS of my life trying to nail down the right process and documentation for wholesaling real estate. The ability to pull some huge profits out of properties I didn't even own was a major revelation, and it could be a big deal for you too.

If you want to try your hand at assigning contracts… I've got something I think will help:

A copy of my Assignment Agreement template
A copy of my Purchase Agreement (which is fully assignable)
A copy of my Property Prospectus Report template
A copy of my Wholesaling Checklist (to walk you through each step of the process)
Detailed Video Tutorials explaining how to use each document

Again, there's no “magic” to the documents I use. You can easily call up your local attorney, and I'm sure they'd be happy to charge you $600/hour to give you a similar set of documents and instructions.

Go ahead and call them… I'll wait.

It took me a long time and a lot of tedious conversations with various legal pros to fine-tune this product. These docs were designed to be both simple and user-friendly, all while including all of the pertinent details I needed to see in my wholesale deals.

My goal was to AVOID confusing Buyers, Sellers, and Closing Agents about how this process works and to give myself the freedom I needed to feel comfortable doing these types of transactions. Over time, I've found that these attributes went a long way in getting these deals done. If you’re serious about adding wholesaling to your growing repertoire of real estate investing strategies – the opportunity is sitting right in front of you.

When you consider how many more deals you'll be able to do, the risk you'll be able to avoid, and the amount of money you'll be able to make here (all while investing none of your cash), this information is easily worth 50x than the price tag I'm putting on it – I'm not exaggerating .

Note: When you sign up as an REtipster Email Subscriber , I’ll send you an instant $20 off “Discount Code” for this item, and if you enroll in the Land Investing Masterclass , you'll get access to this item for FREE. There's no pressure – I just want to make sure you're aware.

About the author

Seth Williams

Seth Williams is the Founder of REtipster.com - an online community that offers real-world guidance for real estate investors.

015: maggie found early success with house wholesaling – how did she do it, 098: how luis mastered assignments and double closings on land deals, 085: how the modern rules of house wholesaling have changed, 054: karl made six figures last year as a land investor assigning contracts. here’s how he did it…, discover the retipster club.

Learn what successful investors aren’t telling you. Become a member, achieve financial freedom and make your dream a reality!

Join our growing community

subscribers

Welcome to REtipster.com

We noticed you are using an ad blocker.

We get it, too much advertising can be annoying.

Our few advertisers help us continue bringing lots of great content to you for FREE.

Please add REtipster.com to your Ad Blocker white list, to receive full access to website functionality.

Thank you for supporting. We promise you will find ample value from our website.

Thanks for contacting us! We will get in touch with you shortly.

Greater Toronto Area Real Estate

Toronto | Mississauga | Hamilton | Durham

Call Us Anytime: 416-274-2068

Prefer Text? 416-568-0427

Looking for Bspoke Realty?

10 Essential Things to Know About Real Estate Assignment Sales (for Sellers)

— We take our content seriously. This article was written by a real person at BREL.

What’s an assignment?

An assignment is when a Seller sells their interest in a property before they take possession – in other words, they sell the contract they have with the Builder to a new purchaser. When a Seller assigns a property, they aren’t actually selling the property (because they don’t own it yet) – they are selling their promise to purchase it, along with the rights and obligations of their Agreement of Purchase and Sale contract. The Buyer of an assignment is essentially stepping into the shoes of the original purchaser.

The original purchaser is considered to be the Assignor; the new Buyer is the Assignee. The Assignee is the one who will complete the final sale with the Builder.

Do assignments only happen with pre-construction condos?

It’s possible to assign any type of property, pre-construction or resale, provided there aren’t restrictions against assignment in the original contract. An assignment allows a Buyer of a any kind of home to sell their interest in that property before they take possession of it.

Why would someone want to assign a condo?

Often with pre-construction sales, there’s a long time lag between when the original contract is entered into, when the Buyer can move in (the interim occupancy period) and the final closing. It’s not uncommon for a Buyer’s circumstances to change during that time…new job out of the city, new husband or wife, new set of twins, etc. What worked for a Buyer’s lifestyle 4 years ago doesn’t always work come closing time.

Another common reason why people want to assign a contract is financial. Sometimes, the original purchaser doesn’t have the funds or can’t get the financing to complete the sale, and it’s cheaper to assign the contract to a new purchaser, than it is to renege on the sale.

Lastly, assignment sales are also common with speculative investors who buy pre-construction properties with no intention of closing on them. In these cases, the investors are banking on quick price appreciation and are eager to lock in a profit now, vs. waiting for the original closing date.

What can be negotiated in an assignment sale?

Because the Assignee is taking over the original purchaser’s contract, they can’t renegotiate the price or terms of the contract with the Builder – they are simply taking over the contract as it already exists, and as you negotiated it.

In most cases, the Assignee will mirror the deposit that you made to the Builder…so if you made a 20% deposit, you can expect the new purchaser to do the same.

Most Sellers of assignments are looking to make a profit, and part of an assignment sale negotiation is agreeing on price. Your real estate agent can guide you on price, which will determine your profit (or loss).

Builder Approval and Fees

Remember that huge legal document you signed when you made an offer to buy a pre-construction condo? It’s time to take it out and actually read it.

Your Agreement of Purchase & Sale stipulated your rights to assign the contract. While most builders allow assignments, there is usually an assignment fee that must be paid to the Builder (we’ve seen everything from $750 to $7,000).

There may be additional requirements as well, the most common being that the Builder has to approve the assignment.

Marketing Restrictions

Most pre-construction Agreements of Purchase & Sale from Toronto Builders do not allow the marketing of an assignment…so while the Builder may give you the right to assign your contract, they restrict you from posting it to the MLS or advertising it online. This makes selling an assignment extremely difficult…if people don’t know it’s available for sale, how they can possibly buy it?

While it may be very tempting to flout the no-marketing rule, BE VERY CAREFUL. Buyers guilty of marketing an assignment against the rules can be considered to have breached the Agreement, and the Builder can cancel your contract and keep your deposit.

We don’t recommend advertising an assignment for sale if it’s against the rules in your contract.

So how the heck can I find a Buyer?

There are REALTORS who specialize in assignment sales and have a database of potential Buyers and investors looking for assignments. If you want to be connected with an agent who knows the ins and outs of assignment sales, get in touch…we know some of the best assignment agents in Toronto.

What are the tax implications of real estate assignment?

Always get tax advice from a certified accountant, not from the internet (lol).

But in general, any profit made from an assignment is taxable (and any loss can be written off). The new Buyer or Assignee will be responsible for paying land transfer taxes and any HST that might be due.

How much does it cost to assign a pre-construction condo?

In addition to the Builder assignment fees, you will likely have to pay a real estate commission (unless you find the Buyer yourself) and legal fees. Because assignments are more complicated, you can expect to pay higher legal fees than you would for a resale property.

How does the closing of an assignment work?

With assignment sales, there are essentially 2 closings: the closing between the Assignor and the Assignee, and the closing between the Assignee and the Builder. With the first closing (the assignment closing) the original purchaser receives their deposit + any profit (or their deposit less any loss) from the Assignee. On the second closing (between the Builder and the Assignee), the Assignee pays the remaining amount to the Builder (usually with the help of a mortgage), and pays land transfer taxes. Title of the property transfers from the Builder to the Assignee at this point.

I suppose it could be said that there is a third closing too, when the Buyer takes possession of the property but doesn’t yet own it…this is known as the interim occupancy period. The interim occupancy occurs when the unit is ready to be occupied, but not ready to be registered with the city. Interim occupancy periods in Toronto range from a few months to a few years. During the interim occupancy period, the Buyer occupies the unit and pays the Builder an amount roughly equal to what their mortgage payment + condo fees + taxes would be. The timing of the assignment will dictate who completes the interim occupancy.

Assignments vs. Resale: Which is Better?

We often get calls from people who are debating whether they should assign a condo they bought, or wait for the building to register and then sell it as a typical resale condo.

Pros of Assigning vs. Waiting

Get your deposit back and lock in your profit sooner
Avoid paying land transfer taxes
Avoid paying HST
Maximize your return if prices are declining and you expect them to continue to decline
Lifestyle – sometimes it just makes sense to move on

Cons of Assigning vs Waiting

The pool of Buyers for assignment sales is much smaller than the pool of Buyers for resale properties, which could result in the sale taking a long time, getting a lower price than you would if you waited, or both.
Marketing restrictions are annoying and reduce the chances of finding a Buyer
Price – What is market value? If the condo building hasn’t registered and there haven’t been any resales yet, it can be difficult to determine how much the property is now worth. Assignment sales tend to sell for less than resale.
Assignment sales can be complicated, so you want to make sure that you’re working with an agent who is experienced with assignment sales, and a good lawyer.

Still thinking of assignment your condo or house ? Get in touch and we’ll connect you with someone who specializes in assignment sales and can take you through the process.

Search by keyword or select a category below.

Market Updates
First Time Buyers
65+ Real Estate
Aging in Place
Mississauga
Real Estate Crushes
For Realtors

Raj Singh says:

What can be things to look for, especially determining market value for an assigned condo? I’m the assignee.

Sydonia Moton says:

Y would u need a lawyer when u buy a assignment property

Gideon Gyohannes says:

Good clear information!

Who pays the assignment fee to the developer? Assignor or Assignee?

Thanks Gideon 416 4591919

Melanie Piche says:

It’s almost always the Seller (though I suppose could be a point of negotiation).

Fiona Rourke says:

If there are 2 names on the agreement and 1 wants to leave and the other wants to remain… does the removing of 1 purchaser constitute an assignment

Brendan Powell says:

An assignment is one way to add or remove people from a contract, but not the only way…and not the simplest. Speak to your lawyer for advice on what makes the most sense for your specific situation. For a straightforward resale purchase you could probably just do an amendment signed by all parties. If it’s a preconstruction purchase with various deposits paid, etc it could be more complicated.

Katerina says:

Depends on the Developer. Some of them remove names via assignments only.

Haroon says:

Is there any difference in transaction process If assigner or seller of a pre constructio condo is a non resident ? Is seller required to get a clearance certificate from cRA to complete the transaction ?

Nathalie says:

Hello , i would like to know the exact steps for reassignment property please.

Amazing info. Thanks team. I may just touch base with you when my property in Stoney Creek is completed in. 2020. I may need to reassign it to someone Thanks

Victoria Bachlowa says:

If an assignor renegs on the deal and refuses to close because they figured out they could get more money and the assignment was already approved by the builder and all conditions fulfilled what can the Assignee do. I have $33,000 dollars in trust in the real estate’s trust fund. They sent me a mutual release which I have not signed. The interim occupancy is Feb. 1 and the closing is schedule for Mar. 1, 2019. I have financing in place, was ready to move in Feb. 1 and I have no where to live.

Definitely talk to your lawyer right away. They’ll want to look at your agreement of purchase and sale and will be able to advise you.

With assignment sales, there are essentially 2 closings: the closing between the Assignor and the Assignee, and the closing between the Assignee and the Builder. With the first closing (the assignment closing) the original purchaser receives their deposit + any profit (or their deposit less any loss) from the Assignee. Can I assume that these closing happen at the same time? I’m not sure how and when I would be paid as the Assignor.

What happens to the deposits or any profits already paid if the developer cancels the project after an assignment?

Hi, Did you get answer to this? I did an assignment sale last year and now the builder is not completing apparently and they are asking for their money back. Can they do that? After legal transactions, the lawyer simply said “the deal didn’t go through”. Apparently builder and the person who assumed the assignment agreed on taking out the deal. What do I have to pay back after it was done a year ago

This is definitely a question for your lawyer – as realtors we are not involved in that part of the transaction. I would expect that just as the builder would have to refund your deposits, you would likely need to do the same…but talk to your lawyer. As to whether the builder can cancel a project, yes they always reserve that right (but the details of how and under what circumstances would be in your original purchase agreement). It’s one of the annoying risks in buying preconstruction!

I completed the sale of my assignment in Dec 2015 however the CRA says I should be reporting the capital income in 2016 when the assignee closed his deal with the developer in July 2016. That makes no sense to me since I got all my money in Dec 2015. Can you supply any clarification on that CRA policy please?

You’d have to talk to the CRA or an accountant – we’re real estate agents,so we can’t give tax advice.

Hassan says:

Hello, You said that there are two closings. The first one between the assignor and the assignee and the second one between the builder and the new buyer (assignee). My question is that in the first closing does the assignee have to pay the assignor the deposit they have paid and any profit in cash or will the bank add this to the assignee’s mortgage?

The person doing the assigning usually gets their money at the first closing.

Kathy says:

What is the typical real estate free to assign your contract with the builder ?

Hi Kathy While we do few assignments (as they are rarely successful, and builders do not make it easy), in past we have charged more or less the same as we do for a typical resale listing. While there are elements to assignments that should be easier than a resale (eg staging), many other aspects of assignments are much MORE time-consuming, and the risk much higher since attempts to find a buyer for assignments are often unsuccessful. It’s also important to note that due to the extra complication, lawyer’s fees to assign are typically higher than resale as well–although more $ for the purchase side vs the sale side.

Mitul Patel says:

If assignee has paid small amount of deposit plus the original 25% deposit that the assignor has paid to the builder and gets the Keys to the unit since interim possession has been completed, when the condo registration is done and assignee is getting mortgage from the Bank or Pays the remaining balance to the Builder using his savings and decides not to pay the Balance of the Profit amount to Assignor, what are the possibilities in this kind of scenario?

You’d need to talk to a lawyer to find out the options.

David says:

How much exactly do brokers get paid at sale of Assignment? i.e. Would the broker’s fee be a % of your assignment selling price or your home’s selling price? I’m really looking for a clear answer.

I am using this website’s calculator associated with selling your home in Ontario. But there is no information on selling assignments. https://wowa.ca/calculators/commission-calculator-ontario

Realtors set their own commission, so there is no set fee- that website is likely the commission that that agent offers. We often see commissions of 4-5% for assignments. The fee is a % of the price of the assignment – for example, you originally bought for $500K; you’re now assigning for $600K – commission would be payable on the $600K.

Candace says:

Question: if i bought a pre construction condo, can i sell it as soon as it closes or do i have to live in it for 1 year after closing in order to avoid capital gains taxes?

Or does the 1 year start as soon as you move in?

I would suggest you talk to your accountant re: HST credit implications and capital gains, but if you sell it for more than you paid for it, capital gains usually apply.

You mention avoid paying HST when you assign your property. What is the HST based on? It’s not a commercial property that you would pay HST. Explain. Thanks.

HST and assignments are complex and this question is best answered specific to your situation by your accountant and real estate lawyer. In some cases HST is applicable on assignment profits – more details can be found on the CRA website here:

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/gi-120/assignment-a-purchase-sale-agreement-a-new-house-condominium-unit.html

If you are a podcast listener, the true condos podcast is also a great resource.

https://truecondos.com/cra-cracking-down-on-assignments/

heres one for your comment, purchase pre construction from builder beginning of 2021, to be finished end of 2021, (semi detached) here we are end of 2022, both units are now ready. Had one assigned but because builder didnt accept within certain time frame(they also had a 90 day clause wherein we couldnt assign prior to 90 less firm closing date (WHICH MOVED 4 TIMES). Anyrate now we have a new assinor but the builder says we are in default from the first one and wants 50k to do the assignment (the agreement lists the possibility of assigning for 12k) Also this deal would include us loosing our whole deposit and paying the 12k(plus fees) would be in addition too the 130k we are already loosing. The second property we are trying to close but interest rates are riducous, together with closing costs(currently mortgage company is asking that my wife be added to that one, afraid to even ask this builder. Any advice on how to deal with this asshole greedy builder? We are simply asking for assignment as per contract and a small extension for the new buyer(week or two) Appreciate any advice. Thank you

Dealing with builders/developers can be extremely painful, much worse than resale transactions in our experience. Their contracts are written to protect THEM. Unfortunately all I can say is follow the advice of your lawyer.

Like What You're Reading?

Phone This field is for validation purposes and should be left unchanged.

Coaching Team
Investor Tools
Student Success

Real Estate Investing Strategies

Real Estate Business
Real Estate Markets
Real Estate Financing
REITs & Stock Investing

How To Navigate The Real Estate Assignment Contract

What is assignment of contract?

Assignment of contract vs double close

How to assign a contract

Assignment of contract pros and cons

Even the most left-brained, technical real estate practitioners may find themselves overwhelmed by the legal forms that have become synonymous with the investing industry. The assignment of contract strategy, in particular, has developed a confusing reputation for those unfamiliar with the concept of wholesaling. At the very least, there’s a good chance the “assignment of contract real estate” exit strategy sounds more like a foreign language to new investors than a viable means to an end.

A real estate assignment contract isn’t as complicated as many make it out to be, nor is it something to shy away from because of a lack of understanding. Instead, new investors need to learn how to assign a real estate contract as this particular exit strategy represents one of the best ways to break into the industry.

In this article, we will break down the elements of a real estate assignment contract, or a real estate wholesale contract, and provide strategies for how it can help investors further their careers. [ Thinking about investing in real estate? Register to attend a FREE online real estate class and learn how to get started investing in real estate. ]

What Is A Real Estate Assignment Contract?

A real estate assignment contract is a wholesale strategy used by real estate investors to facilitate the sale of a property between an owner and an end buyer. As its name suggests, contract assignment strategies will witness a subject property owner sign a contract with an investor that gives them the rights to buy the home. That’s an important distinction to make, as the contract only gives the investor the right to buy the home; they don’t actually follow through on a purchase. Once under contract, however, the investor retains the sole right to buy the home. That means they may then sell their rights to buy the house to another buyer. Therefore, when a wholesaler executes a contact assignment, they aren’t selling a house but rather their rights to buy a house. The end buyer will pay the wholesale a small assignment fee and buy the house from the original buyer.

The real estate assignment contract strategy is only as strong as the contracts used in the agreement. The language used in the respective contract is of the utmost importance and should clearly define what the investors and sellers expect out of the deal.

There are a couple of caveats to keep in mind when considering using sales contracts for real estate:

Contract prohibitions: Make sure the contract you have with the property seller does not have prohibitions for future assignments. This can create serious issues down the road. Make sure the contract is drafted by a lawyer that specializes in real estate assignment contract law.

Property-specific prohibitions: HUD homes (property obtained by the Department of Housing and Urban Development), real estate owned or REOs (foreclosed-upon property), and listed properties are not open to assignment contracts. REO properties, for example, have a 90-day period before being allowed to be resold.

What Is An Assignment Fee In Real Estate?

An assignment fee in real estate is the money a wholesaler can expect to receive from an end buyer when they sell them their rights to buy the subject property. In other words, the assignment fee serves as the monetary compensation awarded to the wholesaler for connecting the original seller with the end buyer.

Again, any contract used to disclose a wholesale deal should be completely transparent, and including the assignment fee is no exception. The terms of how an investor will be paid upon assigning a contract should, nonetheless, be spelled out in the contract itself.

The standard assignment fee is $5,000. However, every deal is different. Buyers differ on their needs and criteria for spending their money (e.g., rehabbing vs. buy-and-hold buyers). As with any negotiations , proper information is vital. Take the time to find out how much the property would realistically cost before and after repairs. Then, add your preferred assignment fee on top of it.

Traditionally, investors will receive a deposit when they sign the Assignment of Real Estate Purchase and Sale Agreement . The rest of the assignment fee will be paid out upon the deal closing.

Assignment Contract Vs Double Close

The real estate assignment contract strategy is just one of the two methods investors may use to wholesale a deal. In addition to assigning contracts, investors may also choose to double close. While both strategies are essentially variations of a wholesale deal, several differences must be noted.

A double closing, otherwise known as a back-to-back closing, will have investors actually purchase the home. However, instead of holding onto it, they will immediately sell the asset without rehabbing it. Double closings aren’t as traditional as fast as contract assignment, but they can be in the right situation. Double closings can also take as long as a few weeks. In the end, double closings aren’t all that different from a traditional buy and sell; they transpire over a meeter of weeks instead of months.

Assignment real estate strategies are usually the first option investors will want to consider, as they are slightly easier and less involved. That said, real estate assignment contract methods aren’t necessarily better; they are just different. The wholesale strategy an investor chooses is entirely dependent on their situation. For example, if a buyer cannot line up funding fast enough, they may need to initiate a double closing because they don’t have the capital to pay the acquisition costs and assignment fee. Meanwhile, select institutional lenders incorporate language against lending money in an assignment of contract scenario. Therefore, any subsequent wholesale will need to be an assignment of contract.

Double closings and contract assignments are simply two means of obtaining the same end. Neither is better than the other; they are meant to be used in different scenarios.

Flipping Real Estate Contracts

Those unfamiliar with the real estate contract assignment concept may know it as something else: flipping real estate contracts; if for nothing else, the two are one-in-the-same. Flipping real estate contracts is simply another way to refer to assigning a contract.

Is An Assignment Of Contract Legal?

Yes, an assignment of contract is legal when executed correctly. Wholesalers must follow local laws regulating the language of contracts, as some jurisdictions have more regulations than others. It is also becoming increasingly common to assign contracts to a legal entity or LLC rather than an individual, to prevent objections from the bank. Note that you will need written consent from all parties listed on the contract, and there cannot be any clauses present that violate the law. If you have any questions about the specific language to include in a contract, it’s always a good idea to consult a qualified real estate attorney.

When Will Assignments Not Be Enforced?

In certain cases, an assignment of contract will not be enforced. Most notably, if the contract violates the law or any local regulations it cannot be enforced. This is why it is always encouraged to understand real estate laws and policy as soon as you enter the industry. Further, working with a qualified attorney when crafting contracts can be beneficial.

It may seem obvious, but assignment contracts will not be enforced if the language is used incorrectly. If the language in a contract contradicts itself, or if the contract is not legally binding it cannot be enforced. Essentially if there is any anti-assignment language, this can void the contract. Finally, if the assignment violates what is included under the contract, for example by devaluing the item, the contract will likely not be enforced.

How To Assign A Real Estate Contract

A wholesaling investment strategy that utilizes assignment contracts has many advantages, one of them being a low barrier-to-entry for investors. However, despite its inherent profitability, there are a lot of investors that underestimate the process. While probably the easiest exit strategy in all of real estate investing, there are a number of steps that must be taken to ensure a timely and profitable contract assignment, not the least of which include:

Find the right property

Acquire a real estate contract template

Submit the contract

Assign the contract

Collect the fee

1. Find The Right Property

You need to prune your leads, whether from newspaper ads, online marketing, or direct mail marketing. Remember, you aren’t just looking for any seller: you need a motivated seller who will sell their property at a price that works with your investing strategy.

The difference between a regular seller and a motivated seller is the latter’s sense of urgency. A motivated seller wants their property sold now. Pick a seller who wants to be rid of their property in the quickest time possible. It could be because they’re moving out of state, or they want to buy another house in a different area ASAP. Or, they don’t want to live in that house anymore for personal reasons. The key is to know their motivation for selling and determine if that intent is enough to sell immediately.

With a better idea of who to buy from, wholesalers will have an easier time exercising one of several marketing strategies:

Direct Mail

Real Estate Meetings

Local Marketing

2. Acquire A Real Estate Contract Template

Real estate assignment contract templates are readily available online. Although it’s tempting to go the DIY route, it’s generally advisable to let a lawyer see it first. This way, you will have the comfort of knowing you are doing it right, and that you have counsel in case of any legal problems along the way.

One of the things proper wholesale real estate contracts add is the phrase “and/or assigns” next to your name. This clause will give you the authority to sell the property or assign the property to another buyer.

You do need to disclose this to the seller and explain the clause if needed. Assure them that they will still get the amount you both agreed upon, but it gives you deal flexibility down the road.

3. Submit The Contract

Depending on your state’s laws, you need to submit your real estate assignment contract to a title company, or a closing attorney, for a title search. These are independent parties that look into the history of a property, seeing that there are no liens attached to the title. They then sign off on the validity of the contract.

4. Assign The Contract

Finding your buyer, similar to finding a seller, requires proper segmentation. When searching for buyers, investors should exercise several avenues, including online marketing, listing websites, or networking groups. In the real estate industry, this process is called building a buyer’s list, and it is a crucial step to finding success in assigning contracts.

Once you have found a buyer (hopefully from your ever-growing buyer’s list), ensure your contract includes language that covers earnest money to be paid upfront. This grants you protection against a possible breach of contract. This also assures you that you will profit, whether the transaction closes or not, as earnest money is non-refundable. How much it is depends on you, as long as it is properly justified.

5. Collect The Fee

Your profit from a deal of this kind comes from both your assignment fee, as well as the difference between the agreed-upon value and how much you sell it to the buyer. If you and the seller decide you will buy the property for $75,000 and sell it for $80,000 to the buyer, you profit $5,000. The deal is closed once the buyer pays the full $80,000.

Assignment of Contract Pros

For many investors, the most attractive benefit of an assignment of contract is the ability to profit without ever purchasing a property. This is often what attracts people to start wholesaling, as it allows many to learn the ropes of real estate with relatively low stakes. An assignment fee can either be determined as a percentage of the purchase price or as a set amount determined by the wholesaler. A standard fee is around $5,000 per contract.

The profit potential is not the only positive associated with an assignment of contract. Investors also benefit from not being added to the title chain, which can greatly reduce the costs and timeline associated with a deal. This benefit can even transfer to the seller and end buyer, as they get to avoid paying a real estate agent fee by opting for an assignment of contract. Compared to a double close (another popular wholesaling strategy), investors can avoid two sets of closing costs. All of these pros can positively impact an investor’s bottom line, making this a highly desirable exit strategy.

Assignment of Contract Cons

Although there are numerous perks to an assignment of contract, there are a few downsides to be aware of before searching for your first wholesale deal. Namely, working with buyers and sellers who may not be familiar with wholesaling can be challenging. Investors need to be prepared to familiarize newcomers with the process and be ready to answer any questions. Occasionally, sellers will purposely not accept an assignment of contract situation. Investors should occasionally expect this, as to not get discouraged.

Another obstacle wholesalers may face when working with an assignment of contract is in cases where the end buyer wants to back out. This can happen if the buyer is not comfortable paying the assignment fee, or if they don’t have owner’s rights until the contract is fully assigned. The best way to protect yourself from situations like this is to form a reliable buyer’s list and be upfront with all of the information. It is always recommended to develop a solid contract as well.

Know that not all properties can be wholesaled, for example HUD houses. In these cases, there are often anti-assigned clauses preventing wholesalers from getting involved. Make sure you know how to identify these properties so you don’t waste your time. Keep in mind that while there are cons to this real estate exit strategy, the right preparation can help investors avoid any big challenges.

Assignment of Contract Template

If you decide to pursue a career wholesaling real estate, then you’ll want the tools that will make your life as easy as possible. The good news is that there are plenty of real estate tools and templates at your disposal so that you don’t have to reinvent the wheel! For instance, here is an assignment of contract template that you can use when you strike your first deal.

As with any part of the real estate investing trade, no single aspect will lead to success. However, understanding how a real estate assignment of contract works is vital for this business. When you comprehend the many layers of how contracts are assigned—and how wholesaling works from beginning to end—you’ll be a more informed, educated, and successful investor.

Click the banner below to take a 90-minute online training class and get started learning how to invest in today’s real estate market!

What is an STR in Real Estate?

Wholetailing: a guide for real estate investors, what is chain of title in real estate investing, what is a real estate fund of funds (fof), reits vs real estate: which is the better investment, multi-family vs. single-family property investments: a comprehensive guide.

Sell your Home
List your Rental
Blog & Research
Agent Experience
Local Guides

Assignment Sales Explained

If you live in Downtown Toronto, you can attest to the fact that its skyline is scattered with cranes, its soundscape is mainly comprised of digging and drilling, and its road closures are abundant. Now that we've set the tone, the premise of this article is a byproduct of the emotion-inducing, 12-letter word: construction. In this article, we'll be diving deep into assignment sales; what they are, what makes them different, and the tips you need to know in order to smooth sail your way through the assignment sale process.

What is an assignment sale?

In order to understand what an assignment sale is, we'll need to touch on pre-construction properties. Buying a pre-construction property means that you purchase a property before it's ready, sometimes even before its construction has even begun. Building developers usually start pre-construction sales early on, meaning you can buy a condo in a coveted building and desirable area for a fairly reasonable price (sounds impossible, right?) - but here's the catch, it won't be ready for a couple of years. The upside is that it will most likely have appreciated in value by the time you receive it, making it a smart investment. As soon as you buy a pre-construction property, you are entering an agreement with the builder until the property is ready.

Now an assignment sale is when the original buyer of a pre-construction property sells their contractual interest in the property to a new buyer, meaning that they resell the pre-construction property before taking possession of it. The sale must be done before the original buyer takes registered possession of the home for it to be considered an assignment sale. As such, the second buyer (the purchaser of the assignment sale) is the one who completes the transaction with the original seller (the builder). To put it simply, it's basically a purchase of the agreement between the builder & the original buyer, so that the new buyer automatically becomes the new owner of the property once it's completed.

How do assignment sales work?

Since we've covered the assignment sale basics, let's get more technical - the property being sold is still not registered with the land registry office and is probably still under construction. This makes it quite different from a regular sale, in more than one way. Let's get into the main attributes that make this type of purchase unique.

A Larger Deposit

When purchasing a property via assignment sale, there is usually a larger than normal deposit. The deposit in an assignment sale takes into consideration the deposit paid by the original buyer to the builder (usually 20%), plus additional profit that the seller is hoping to gain. Since the original buyer (now the seller of the agreement) is making a profit on the property above the downpayment already paid, these assignment sales can be very cash intensive - this is the single biggest deterrent for most buyers.

For instance, Buyer A purchases a pre-construction property from the developer of the project (the builder) for $500,000. Buyer A pays a 20% deposit ($100,000) over a two year span to the builder. Before the project is completed, Buyer A decides that they are no longer interested in going through with the purchase and would like to sell the unit, at this point (two years later) the market price of the property has now reached $550,000. Buyer A lists the unit for sale for $550,000, and the new buyer (Buyer B) would have to pay Buyer A their original deposit of $100,000 (20%), plus the property's appreciation of $50,000. The total deposit that Buyer B will have to pay is $150,000 which, at this point, would be higher than the 20% usually required to obtain a mortgage on an investment property.

Builder's Requirements & Consent

Another factor to keep in mind is that the assignment sale cannot take place without the builder's consent. If you're thinking of buying a pre-construction property only to then re-sell it as an assignment sale and turn a profit, this is definitely a factor worth considering. The builder reserves their right to hold back on consent for assignment sales and most only allow one assignment to be completed prior to final closing.

Therefore, as the buyer in an assignment sale, you'll only be able to take over the original purchase agreement between the builder and Buyer A with the consent from the builder. This usually entails the builder requiring mortgage approval documents, ID, and additional information from the new buyer. Then there would be an assignment agreement executed between the builder, original buyer, and you (the new buyer). Needless to say, this is not the case with a regular sale - in a regular sale, the only consent you will need is that of your own and the seller.

No Showings

Adding to the growing list of factors that make the assignment sale process different, showings do not exist here. Since, in most cases, an assignment sale is done before the building is even ready, the buyer is unable to physically see the property before purchasing it. As the buyer in an assignment sale, you'd be able to see floor plans, mock-ups, and images. In some cases, you'd also be able to head to the builder's sales center and see/touch the finishes (eg. kitchen cabinets, countertops, tiles, appliances, etc.). You may also see the status of construction of the building by visiting the development site, to get an idea regarding the stage of project.

Since this requires a lot of trust, we recommend doing your research on the city's reputable builders & the neighbourhood of the development to make sure its the right for you. It's worth noting, however, that if the assignment sale is taking place during occupancy - when the original buyer has occupied the unit but is not yet in full possession of it - you might be able to see the unit in person.

Increased legal fees

Within the process of an assignment sale, you'll find that there is additional paperwork (Builder's consent, assignment agreement, etc.) and stages (occupancy closing, final closing, etc), which in turn leads to more legal hours. Lawyer fees for these types of sales are usually higher than a traditional sale because there are more contractual technicalities involving more than one party (Buyer A, the builder and Buyer B). Our advice would be to discuss these fees with your lawyer, in order to paint a more accurate picture of the what you can expect.

Occupancy Fees

When buying a property via assignment sale, you are essentially buying a pre-construction property through a third party (Buyer A). With pre-construction properties, you get physical possession of the home (known as occupancy) before you get full possession of the home on paper (known as final closing). Therefore, occupancy fees are fees that you have to pay from the time you get possession of the home (occupancy phase) until the time you take official title of the property (final closing). Final closing usually occurs after the building is completed and has reached a certain percent of total occupancy. At final closing is when you would your mortgage would kick in. During the occupancy phase, you can expect the occupancy fees to be roughly the same amount as your mortgage payments would be with 20% down.

Additional Closing Costs (Levies)

To add to what seems like the never-ending fine print, you might come across a number of additional fees when it comes time for final closing. Most contracts with a builder state that the buyer might incur additional costs that will only be specified upon final closing. The main additional fees are levies charges, also known as development costs; these are costs that the builder incurred while constructing the building, which they pass on to you as the buyer.

The size of these fees really depends on more than one factor: the builder, the city, and the project are a few to list. However, in most cases, you may have the builder set an upper cap limit on these fees - also known as Capped Levies. That way you know that the additional charges will be have a maximum upper limit that they wont exceed. Typically in Toronto, most developers cap development charges for one bedrooms to $7,500, $15,000 for two bedrooms, and over $20,000 for three bedrooms but please keep in mind that these are just ballpark numbers and the exact capped amount varies.

It's essential to look at the original agreement between the assignment seller and the builder to see if levies are capped and at what amount. If the levies are not capped, you will have to assume the risk of higher-than-anticipated closing costs at the time of taking title to the property. Of course, there are also the common costs associated with homeownership which include land transfer taxes, legal fees, and possible mortgage fees.

HST on Pre-construction

Last but not least, it's critical to consider HST (Harmonized Sales Tax) when buying via assignment sale, which essentially means you're purchasing a pre-construction property. As a buyer, the HST of 13% in most cases is actually already included in the purchase price of the pre-construction property and the builder then applies for their rebate. However, it's important to touch on the fact that buying a pre-construction property solely for investment may alter this structure.

If you are purchasing the property solely as an investor, and neither you or a direct family member will be occupying the unit, then you would have to pay the HST at final closing and apply for the New Residential Rental Property Rebate (NRRPR) after leasing the unit for one year. For more information regarding qualifications and the amount of the rebate, visit this publication from the CRA.

If you're purchasing the assignment for yourself and it will be used as a primary resident then you'll have to confirm that the HST is included in the purchase price of the assignment. For more information you may also visit the CRA's info sheet here .

When it comes to HST and the status of your occupancy, you should always consult with your accountants and lawyers as each circumstance is unique.

Why do people purchase/sell on assignment?

Well, after much unbiased consideration, it's safe to say that purchasing/selling on assignment can be a win-win scenario for both parties - the assignment seller gets a price above purchase price and the buyer, in most cases, snags a property below market price. Since assignment sales tend to occur well into the construction phase, there's also less risk imposed on the buyer in an assignment sale. That being said, there are a number of reasons why a person might want or need to sell/buy a property on assignment:

Selling Reasons:

Change of plans: since pre-construction homes can take years to be completed, the original buyer situation could have changed within that time. For example, the original buyer may have started a family and is now looking for a larger, more suitable home.
Financial trouble: the financial situation of the original buyer may have changed over the years, and they're now put in a position to have to sell the property. For example, the original buyer may have lost their job, meaning they can't get qualified for a mortgage and are now unable to complete the purchase.
Profit: it's very common for investors to buy pre-construction homes with the aim of re-selling them to turn a profit. This is usually a common scenario for assignment sales in the Toronto real estate market.

Buyer Reasons:

Brand new building/area: it can simply be that the purchaser is looking for a property that has never been occupied, or is in a newly developed neighbourhood, or just wants to secure a property in a new, buzz-worthy development. An example of this is Nobu Toronto.
Below market price and less competition: since these purchases require at least 20% down-payment, in most cases it could be that these units have less competition and can be purchased at somewhat of a bargain.
Profit: again, investors also look to buy properties via assignment sale because they believe that the building or neighbourhood will continue to appreciate in value, and come time of total completion or a few years later they would be able to sell for higher.

Looking to buy a home in Toronto or the Greater Toronto Area (GTA)? Message us via the live chat on Dwelly.ca and start the conversation.

Subscribe to Dwelly Blog - Tips, trends & insights for home buyers, renters and sellers

Get the latest posts delivered right to your inbox

Stay up to date! Get all the latest & greatest posts delivered straight to your inbox

How Wholesalers Use Assignment of Contract

Lex levinrad.

Assigning a contract is a very useful tool for wholesalers that would like to assign their rights to a property for a small profit. An assignment of contract form is used to transfer beneficial interest in the property to the new buyers (assignee) from the existing buyer (assignor).

How Does The Assignment Of Contract Work?

Assume your name is Jack Smith and you have signed a contract to purchase a property located at 123 Main St in Fort Lauderdale Florida. Your purchase price on your contract is $40,000 but you would like to make a quick $5,000 profit and sell this contract (or assign it) to another buyer. Let's say that you are successful in locating a buyer for this property that is willing to purchase the property for $45,000 which is $5,000 more than what your purchase contract states.

You tell this buyer that you have a contract to purchase this property for $40,000 and you will assign all rights to purchase this property for a fee of $5,000 to him/her. This fee is called an assignment fee.

The buyer agrees to the assignment fee and you have a one page form called an assignment of beneficial interest form or assignment of contract form (use an attorney to draw up this form) , which states that you are giving up all rights to purchase this property and assigning it to the new buyer in exchange for an assignment fee of $5,000.

What Are The Benefits Of Doing This?

Well, firstly you are essentially flipping a property without ever closing on it or really owning it which means that you do not have to come up with any cash or pay any closing costs or incur any liability or expense. You are not really flipping the property you are actually flipping the contract that gives you the right to purchase the property. This is what wholesalers do and it can be extremely lucrative.

The only money that you will actually need to put down will be the deposit that you give to the seller or put on the contract as a deposit held in escrow (escrow is preferred). A true wholesaler would never put more than $10 or $100 down in order to reduce their risk.

What Is The Risk To The Wholesaler?

If the Wholesaler cannot find a buyer to purchase the house at a higher price, they will need to cancel the contract. When they do cancel the contract their deposit can be forfeited. Purchase contracts have an inspection period which is the time period that the buyer is allowed to inspect the property. Regular buyers use this inspection period to bring in their general contractor or inspector to complete an inspection of the property. However, wholesalers use this inspection period to try and market the property and find a buyer.

If the wholesaler cannot find a buyer for this property then they can simply cancel the contract within the inspection period and get their deposit back. If there is a problem or delay in getting the deposit returned (like the seller won't give it back), or if the buyer has cancelled after the expiration of the inspection period then the deposit will not be returned and will be forfeited. It is for this reason that you should use the least amount possible when placing a deposit on a property that you plan on assigning. A deposit of $10 or $100 is the most you should use for deposit on an assignable contract.

There is one key point for you to keep in mind if you are going to be assigning a contract. You must use the words “and or assigns” after your name. This means that on the purchase contract the buyers name should be Jack Smith and or assigns not just Jack Smith. If you don't use those words “and or assigns” then your contract will not be assignable. You should also check off the clause that says that the contract is assignable, which is a separate item that is further down in the purchase contract.

Another important point is that you will not be able to use the assignment method with bank owned properties and short sales. Banks do not want assignable contracts because they don't want wholesalers tying up their bank owned properties and trying to flip them. If you are making an offer on an REO or short sale or any property where the bank is the seller then you will have to use the double closing method for these properties.

A disadvantage to the assignment of contract method is that your buyer will see how much profit you make so, if your profit is really huge it could potentially create a problem with your buyer trying to reduce the purchase price. For example, if you purchased the property for $15,000 and tried to sell it for $45,000 with a $30,000 assignment fee then you might encounter a lot of resistance from the buyer who thinks you are marking up the property excessively. This could be avoided by using the double closing method where the buyer does not see how much you paid until after the transaction has closed (public records).

I find that it is often preferable to double close on all transactions regardless of who the seller is and I use as low a deposit as possible depending on whether the seller is a private party or a bank (banks require at least $1,000 deposit). This way you will have many more options available to you when you are flipping the property.

If the property is owned by an individual (not a bank), then an assignment of contract can be a really low cost entry into wholesaling for beginners. All you need to get started is a purchase contract, $10 and a distressed seller.

We love your feedback and welcome your comments. Please post below:

Claim your free account.

Enter Your Name and Email Below to Receive Weekly Videos and Articles.

Full Name * First Last
Email Address *
Hidden LeadSource
Hidden UTM Source
Hidden UTM Medium
Hidden UTM Campaign
Hidden RedirectTo
Comments This field is for validation purposes and should be left unchanged.

We do not sell, rent or share your information.

If you have any issues, please contact us at support@reiclub.com .

Latest Articles

How Will the Silver Tsunami Transform Our World?

Why financial literacy education is the key to generational wealth

The Growing Need for Financial Literacy in the Face of Recession and Inflation

The Impact of Elder Care on the Real Estate Industry

Realtors: 4 Types of Real Estate Investors and How to Work Best with Them

Latest Videos

Beginner Wholesaler Blues – Michael McDonald

Join Our REI Tribe

Our Facebook group is called the "Unemployables". Please join us.

REIClub LLC 701 E Front Ave, Suite 301 Coeur d’Alene, ID 83814 800-734-2899

Privacy | Terms | Compensation | Earnings Disclaimer

Get ahead of your competition with an REIClub account. Real estate market updates, access to deal analysis tools and exclusive training videos.

" * " indicates required fields

We don’t sell, rent or share your information.

Are you sure you want to log out?

What is a Condo Assignment Sale? — Everything You Need to Know

What is a condo assignment sale, when does it occur.

Condo assignment sales occur before the final occupancy or closing date of a new construction property. An assignment sale occurs before the final closing of the property between the original purchaser (Assignor) and the builder.

As a new purchaser of an agreement, you are going to assume everything that the original purchaser agreed to in their original contract. For this reason, it is important to appoint a lawyer by your side to go over two important set of agreements. The first one is the agreement between the original purchaser and the builder. Lawyer will walk you over red flags or things like closing costs associated to the unit – remember you have to assume these terms. The second piece of agreement the lawyer will look at is the new agreement between the original purchaser (Assignor) and the new purchaser (Assignee)

Reason for a Condo Assignment Sale

Assignment sales take place with all sort of new construction product such as townhomes, detached homes, condos, stacked townhomes & more. Why do these kinds of sales happen? The most common reason is the original buyer’s circumstances might change and present a reason to list their condo for assignment sale transactions.

There are many reasons why one would decide to sell their unit on assignment since the gap of purchase time to occupancy is wide and can take 2-7 years depending on what type of property it is. Perhaps they will welcome a new member of their family soon and the condo just isn’t big enough for everyone. Whatever the reason, it isn’t always negative. It is important to work with professionals that can guide you throughout the process of an assignment sale.

Costs of Condo Assignment Sales

Is selling an assignment better than a regular real estate transaction? Yes. Being the seller (assignor) is known to contain more tax fees than a unit that is already built and you’ve taken title of. As a buyer of an assignment, you do not need to observe such fees and a professional can walk you over your closing costs associated to the transaction.

Now that you know what is a condo assignment sale, you can therefore make an informed decision. We get a lot of questions about new condos and whether it’s better to wait or to list them for assignments right away.

An assignment is better if you’re looking to get your money back sooner rather than later. Assignments will also see that the assignee pays the land transfer taxes and other taxes. Sometimes you can even make a profit on the market value if condo assignments are listed during a real estate boom.

It all sounds great, but selling condo assignments also has its drawbacks. For example, experienced real estate agents know it’s more difficult to sell an assignment property due to a much smaller buyer pool. Most assignment sales cannot be advertised online on platforms such as MLS.

In most cases,, there are marketing limitations when it comes to selling an assignment which can hurt your chances of finding a potential buyer

If you are looking for a new home sooner rather than later, an assignment sale offers closer occupancy dates, unlike purchasing something new that will only be ready in 5 years. In some cases, you may still have a chance to choose your own colours and finishes of the unit

Pros and Cons of Condo Assignment Sales for Buyers

As a buyers, you can expect to see advantages such as more options when choices are low. Since assignments are more complex, you typically face less competition on deals whereas in a hot market you may be in a bidding war scenario.

Pros and Cons of Condo Assignment Sales for Sellers

The pros for assignment sellers are a shorter list compared to the ones for buyers. First of all, sellers can get their money faster and put that amount to good use such as reinvestment. Sellers will not be responsible for carrying costs such as occupancy fees or go ahead with the mortgage payments or other closing fees.

At times, the seller can also play the market and list the unit for higher than the original purchase price and make a profit. However, more often than not, sellers will have a harder time seeing offers due to marketing restrictions and a smaller buyer pool.

Since the process for assignments is also much more intricate, it will be difficult to find a real estate professional out there that is familiar with this type of sale. For this reason, an assignment transaction can come with more complexity and would require additional knowledge.

Now that you know what is a condo assignment sale, you can decide if it’s the route you want to take as a buyer or seller. There are more advantages from a buyer’s standpoint, but there are undeniable pros for sellers such as getting your money back faster and avoiding closing costs.

Looking for assignment sales? Here are some top options on the market:

Stockyards District Residences
Whitehaus Condos
St. Lawrence Condos
Westwood Gardens
One Burrard Place
Cascade City
ALPHA at LUMINA Brentwood
University District
Sun Towers 1
Blue Diamond Condos
Theatre District Tower
Go2 Condominiums
8 Cumberland Condos
Artworks Tower
859 West Condos
Park Boulevard
567 Clarke + Como
The Maverick
Etoile Condos
Concord Brentwood Hillside West Tower 1
Canvas Condos
Mississauga Square Condos
Mirabella Luxury Condos
Wesley Tower
Home (Power + Adelaide)
Oro at the Edge
5 North Condos
Gore Park Lofts
Casa Di Torre
in.DE Condos
Mobilio Condos
One Crosstown
Cypress at Pinnacle
The Cardiff
Social Condos
Millhouse Condos
Cedar Creek
King George Hub at the Stations
Sussex Metrotown
Sweetlife Condos
7 on the Park
Saturday in Downsview Park
Oakvillage Condos
Sugar Wharf Condos
Verdé Condo
Liberty Central by the Lake
Lighthouse Tower
Scala Condos
AVRO Condos
Perla Towers
DuEast Condos
Vita on the Lake
Playground Condo
Junction House Condos
Downsview Park
Peter & Adelaide Condos
75 on the Esplanade
Panda Condo
Wish Condos
Park Avenue Place
159SW condos
Riverview Condos
Distrikt Trailside Condos
Lake & Town
B-Line Condos
Lumina Condos
Nobu Residences Toronto
Yonge + Rich
The West at Stationwest
Transit City 4 Condos
1 Yorkville
Oak and Co. Condos
Four Sixteen Condos
Evermore Condos
Transit City Condos
Gallery Square Condos
Auberge on the Park
M City Condos 2
Empire Phoenix Condos
Mirabella Condos

Pages are worth reading:

The boom of condos in Toronto
The assignment sale when buying condos
The assignment sale in Toronto
The great apps for real estate agents

Get Updated With The Hottest Launches

Assignment Listings

Near Urban Growth Centres
Near Rapid Transit
Near Major Intersections
Richmond Hill
King Township
Scarborough
Bowmanville
Mississauga
Halton Hills
Springwater
Wasaga Beach
Collingwood
All Locations
Move In 2029

Important Update: Our Investment Presentation Seminar is now available twice a week. Learn More

GTA-Homes » Real Estate Info » Assignments

Assignments

An Assignment Sale in the Pre-Construction Market

Simply put, an assignment sale is the sale - or an "assignment" of a contract to purchase a pre-construction condominium suite. An assignment sale is usually applied to the pre-construction condominium that has not been registered yet, so no one can take ownership of the unit itself. Only the contract can be sold.

When you purchase a pre-construction condominium unit, you may be given an assignment clause in your original Agreement of Purchase and Sale (APS). This is key. This clause gives you the ability to sell the rights to your unit before the condominium is even registered.

Assignee/Buyer is not buying a property from Assignor – Assignee is buying the “right” to acquire property from a 3rd party (usually a builder)
Assignor assigns its interest and rights in the Original Agreement with the Builder (or original seller)
Assignor assigns to the Assignee its interest in the original “deposit”
Assignee “assumes” and agrees to perform all of the Assignor’s obligations under the Original Agreement

Once the building has been constructed and registered by the city, the ownership will be transferred to the buyer. Until then, it’s just the sale of a contract, but as you will see, there are many advantages to these kinds of sales for both the buyer and seller.

In this article, you will learn more about assignment sales, why they are used, and how you can benefit from this unique transaction as an investor. This way, you will be able to determine if an assignment sale is right for you.

We at GTA-Homes strive to provide our clients with the knowledge of the pre-construction market so that they can make a more informed choice when it comes to investing in their future.

An assignment sale can be mutually beneficial for both the buyer and the seller.

See all assignment listings, what you'll learn..., what is an assignment sale, an example of an assignment sale, is it worth it to buy an assignment.

Is it a Good Idea to Sell An Assignment

Assignments FAQ

The Details of an Assignment Sale

Assignment sales is not a new strategy in Canada, particularly assignment sales in Toronto. However, compared with other countries where condos have been around much longer, the process of assigning a condo in Ontario is not always well understood by sellers, buyers, agents, lawyers, and even lenders. Sellers who have been taking the time to learn about assignments have been reaping the rewards by maximizing their profits.

Why do pre-construction assignment sales happen?

There are many reasons why someone might want to sell the rights to their unit before it’s been built. For example, someone may have bought a suite that’s three years away from being completed, but recently had to relocate for a job. This buyer may need to sell their agreement to afford a property in their new city.

Another common reason is that a buyer began the purchase process when they were single but during the pre-construction process they married or are now expecting a child. Suddenly they’ve discovered that the pre-construction one-bedroom suite they bought is not big enough for a growing family.

The “ assignment clause ” in the purchase agreement comes in handy when these things happen. It allows the original buyer to pass the contract onto somebody else without accruing financial penalties.

These types of transactions are common and fully legal, but whether you are the buyer or the seller, it’s important to work with both an experienced realtor and lawyer who know how to protect your interests.

These deals are more complex than a conventional resale and involve three parties: the developer, the assignor and the assignee. It’s a two-stage process that involves both interim occupancy and the final closing.

This is just the basics of an assignment deal. There are more details regarding mortgage rules, and other contract details. Keep reading to learn more! Or you can always reach out to talk with one of our agents. We love to talk condos! This is just a general overview, but each arrangement is unique with its own rules, terms, and conditions.

We advise everybody who is thinking of buying or selling a pre-construction assignment to seek advice from a real estate agent, lawyer and tax accountant. Contacting an agent is important because assignors may have to pay a fair amount of tax on any profits they received from the completed sale.

Most builders allow assignment sales and you will often see these listings on REALTOR.ca. However, there are some rules in the original purchase agreement that must be followed. They are also more complicated than a regular sale because a mortgage cannot be obtained on the closing of the transaction, only once the building has been registered. Other issues such as occupancy, reimbursement of the seller’s deposits and more must be taken into account.

Pre-Construction Purchase

In 2017, John Smith bought a pre-construction condominium unit from ABC Developments for $400,000 with a total down payment of 20%, equalling $80,000. He signed the original Agreement of Purchase and Sale (APS), and the project is set to be completed in 2024.

Original Buyer Needs to Relocate

In 2023, John discovers he will be relocated to a new city for his job. He can't afford to buy a new home while holding onto his pre-construction condo unit.

Original Buyer Becomes an Assignor

Fortunately for John, the assignment clause allows him to sell the contract for his unit before the building is completed and registered! John becomes an assignor.

Assignee Buys the Rights to the Unit

John contacts an experienced pre-construction sales agent who networks on his behalf to find an interested buyer (an assignee). His agent finds Jane Doe, who wants a great deal on a new condo and decides to buy the rights to John's unit. As the assignee, Jane decides to make the purchase and agrees to perform all of the assignor's obligations outlined in the original APS. John has decided to sell the contract to his unit to Jane Doe. Due to the changes in the market, he was able to sell the contract for $500,000.

Assignment Purchase:
Assignment Agreement: $500,000
Original Purchaser (Assignor) = John Smith
New Purchaser (Assignee) = Jane Doe
Vendor (Builder) = ABC Developments

Assignment Purchase Price by John Smith to Jane Doe = $180,000, due immediately. This includes a deposit of $80,000 + profit $100,000. The amount and timeframe for this payment can also be negotiated.

Assignee Moves In

In 2024 when the building is complete and ready for interim occupancy, Jane Doe will move into the unit during the occupancy period. At this point she will begin paying occupancy fees to the developer. These fees take the place of mortgage payments and condo fees until the building can be registered.

Interim occupancy happens when the city has designated the property as safe to live in. The building will be officially registered once the municipality does a final inspection. Jane Doe can occupy her suite in the meantime until the building is officially registered.

The advantages for buying Assignment Sale

Assignment Details

When the building is officially registered by the city, the official title transfer takes place between the developer and the new purchaser. Jane Doe can finally register a mortgage and start paying her mortgage payments and condominium fees. Funds required to complete the sale by Jane Doe to the builder = $320,000

Jane Doe now has all the rights to the property, just like any homeowner. Any future re-sale of the property will consist of a regular real estate transaction.

Assignment purchases can actually give you some of the best deals in the GTA condo market because fewer people typically seek out these types of sales. In addition to fewer buyers, many real estate agents aren’t familiar with the structure of an assignment sale and often won’t bother to advertise these listings. Even lawyers may not know the ins and outs of an assignment sale.

The high demand in the resale market can potentially force buyers into bidding wars, which can cause people to overpay for their suite. Buying a contract through assignment gives you the opportunity to avoid excessive competition and often means you pay much less than you would for a resale unit.

The assignment condo market can be mutually beneficial for both the buyer and the seller. The seller can list their unit without having to wait until the building is completed, and the buyer can save time and potentially thousands of dollars.

Another advantage to buying an assignment agreement is that you will get a brand-new unit that automatically comes with the seven-year Tarion Warranty Program. Let’s not forget that you’ll likely move into the unit sooner instead of waiting the usual 3 to 4 years for the building to be completed!

Let’s Recap Some of the Advantages for Buyers:

Options: More choices when there’s a shortage of listings in the market.
Less Competition: Fewer people look at these types of listings.
Peace of Mind: Fewer people looking at these sales means there’s less of a chance for a bidding war. You can avoid bidding wars and paying more than you can afford just to outbid another buyer.
You Become A VIP: You will likely inherit VIP incentives like the seven-year Tarion Warranty Program and other incentives from the builder such as credits, upgrades, capped developing charges and much more.
More Choices: Depending on how far along construction is, you may still be able to select your own finishes, colors and upgrades.
Negotiate: Sellers usually need to sell because they need to drop their equity. This can give you leverage for prices, deposits, and closing dates.
Brand New Suite: You will get your unit much faster instead of waiting 2-3 years like in a typical pre-construction contract. Oftentimes the occupancy date is just a couple of months away.
Taxes: You may also benefit from saving on taxes like GST and HST.

We love to chat about the assignment sale market, so don’t wait, give us a call and let’s find you a great deal.

Is It a Good Idea to Sell An Assignment?

Traditionally, owners who wanted to sell their pre-construction units had to wait months or years for the final closing date to officially put their suite up for sale. By this time, they could have already put significant funds into occupancy fees and closing costs. If you find you want to sell your unit before its closing date, assigning it can be a great choice. This can help you save money and avoid paying occupancy fees and closing costs.

Assignments sales is not a new strategy in Canada, but compared to other countries where condos have been around much longer, the process is not always well understood by sellers, buyers, agents, lawyers, and even lenders. Sellers who have been taking the time to learn about assignments have been reaping the rewards by saving time and maximizing their profits.

These transactions are becoming increasingly popular. Think of it as a sort of condo flipping. Sellers can transfer their property rights during or before interim occupancy and avoid paying hefty carrying and closing costs, which helps them get their deposits back.

Most builders allow assignment sales, although they often have certain rules that must be followed. Even with strict rules in place, however, there are options available for you.

Let’s Take a Look at the Advantages for Sellers:

Insurance Policy: In the event that your situation changes and you no longer need your unit, you are able to sell your assignment and pull out your equity.
Gain a Profit: In a seller's market, you may be able to sell the rights to your unit at a higher price than you bought it, gaining a profit. This is like 'condo flipping'. In the right real estate environment, assigning your unit can be a lucrative financial move.
No Carrying Costs: By passing the right to your unit to someone else, you can avoid paying monthly occupancy fees to the developer that can sometimes last up to two years.
No Closing Costs: You don’t need to take out a mortgage or incur any other closing costs.

Register With GTA-Homes to Learn More

Our team of Platinum Agents is very well-versed in assignment sales and can help you make the most of your investment. Whether you are interested in buying or selling an assignment, we can help you follow the right track for the best possible outcome. There are excellent opportunities to be had now in the GTA. With a Platinum Agent, you can find 'hidden deals' that may not be advertised elsewhere. You can also gain access to eager buyers as a seller and get ahead. Register below and let us connect you with the best advice.

What is an Assignment Sale?

It is the sale of a contract to purchase a pre-construction unit. This means, instead of selling an already built unit, what’s being sold is the contract or right to acquire the property upon completion. The original purchaser (the "assignor") of a property sells their obligations under the original contract to a new purchaser (the "assignee").

The assignee will generally assume all of the assignor's duties and obligations, such as interest payments, taxes, and maintenance fees during interim occupancy. Upon completion, the assignee is granted the title to the real property and will incur all final closing costs.

Can any kind of purchase agreement involving a real estate transaction be assigned?

Under normal circumstances, any purchase agreement can be assigned, providing the agreement doesn’t prohibit it.

Is an Assignment legal?

It is legally permitted unless prohibited in writing in the original agreement of purchase and sale. In some cases, the developer may charge the assignor a fee for this kind of sale.

Is it necessary to get permission from the developer to assign the contract?

That depends. You need to consult your purchase agreement to get the specifics. Generally developers will not permit an assignment sale without their consent, which means you’ll need to consult with them and a legal representative. There have been incidents where an unauthorized assignment sale has resulted in the original agreement being terminated, and the deposit withheld!

Is there a standard legal form for these types of sales?

Yes, there are two: OREA Form 150 Assignment of Agreement of Purchase and Sale Condominium and OREA Form 145 Assignment of Agreement of Purchase and Sale (including applicable schedules.) In most cases, the developer will have their own form as well.

Will either the assignor or assignee’s lawyer services be adequate?

It is essential that the assignor and assignee each retain a lawyer with expertise in this area of real estate.

Can the assignor’s realtor market the assignment listing on MLS or REALTOR.ca?

Sometimes. Double check with your builder, as it depends on whether they permit advertising.

What happens if the construction, occupancy, closing, or unit transfer date is delayed?

In the event of a delay, the agreement is still valid. This means the assignee has agreed to take on the agreement and all responsibilities associated with it, including delayed construction or occupancy.

What if the assignee doesn't close?

This is no different than any other property sale, meaning the assignor, in most cases, is not released from the obligations under their original purchase agreement. In this situation, both the assignor and assignee will be liable.

What is the cost of assigning an Agreement of Purchase and Sale?

If the developer consents to the arrangement, there will generally be an administration fee and legal fees. These fees will vary. Consult the original purchase agreement and the developer for specific information.

When does the assignor get their money?

This generally depends on the closing date and the terms of the agreement that the assignor and assignee agreed on. Usually the assignor is paid when:

the assignee takes possession or,
when the developer approves the process, if applicable or,
when the assignee obtains legal title

Who gets the interest, if any, payable by the builder on the original deposits?

Unless otherwise specified, the interest is likely to be paid to the assignor.

Who pays the interim occupancy costs?

Once the assignment is finalized, the assignee will typically pay occupancy costs.

What closing fees are payable?

After the condominium is registered, the builder transfers the ownership title to the assignee. The assignee pays the balance to the builder and any amount still owed to the assignor. Some of the costs the assignor may pay include:

Estimated property taxes for up to 2 years
Hydro/water/gas meter installation and connection charges (approx. $500–$700 per meter)
Development charges/levies (potentially thousands of dollars)
Tarion New Home Warranty (ranging from $600–$1,900. See Tarion website for fee structure)
Discharge of builder’s mortgages (approx. $200–$300 per mortgage)
Builder’s lawyer’s Law Society charge (approx. $70)
Two months of occupancy fees for reserve fund
Other amounts set out in the Agreement of Purchase and Sale

These costs are typically not financed with a mortgage. The assignee is responsible for the following additional fees:

Legal fees and disbursements
Land transfer tax (provincial and municipal)
GST/HST rebate
Municipal levies

If you are interested in either buying or selling a pre-construction condo assignment, working with a realtor who is experienced in finding, negotiating and drawing up an offer for these types of sales can be invaluable. You’ve come to the right place! At GTA-Homes, we have a wealth of expertise, knowledge and resources when it comes to assignment sales. We would be more than happy to assist you in finding an excellent opportunity in the GTA for a prosperous future. Register now to connect with our award-winning team.

Need More Information? That’s What We’re Here For.

Check Out These Helpful Buying / Investing Articles…

Why Pre-Construction Condos Are the Best Investment
Most Frequently Asked Questions
Why Buy With a Platinum Agent
Interim Occupancy and Final Closing
Steps to Buying a Pre-Construction Condo
Renting vs Buying
Condo Investments
Pre-Construction Condo Closing Costs
Pre-Delivery Inspection
Statement of Critical Dates
Condo Project Cancellations
First Time Home Buyer Incentive
Community Benefits Charges
Glossary of Real Estate Terms and Definitions
How Condo Developers Determine Price Per Square Foot
Section 37 Levies
10 Day Cooling Off Period
Development Charges and Levies
Important Documents to Review When Purchasing a Pre-Construction Condo
Land Transfer Tax
Condominium Registration
Condominium Corporations
Condo Reserve Fund
Inclusionary Zoning
Common Elements
Raising Issues With The Condo Board
Condominium Management
Requesting Condominium Records
Meetings and Voting In A Condo Corporation
Condominium Insurance
Renting Your Condo Unit
GST/HST New Housing Rebate
What Are Interest Rates?
Everything You Need to Know about Mortgages
What Is the Ontario New Home Warranty Program?
Deposit Structures for Pre-Construction Condos
What Are Condo Maintenance Fees?
Do I Need a Property Manager?
How to Find Qualified Tenants for Your Rental Property
What Are Buyer Incentives?
What Are The Motives For Investing in Real Estate?
What is Title Insurance?
What is Delayed Occupancy?
How to Pay Off Your Mortgage Faster
First Home Savings Account (FHSA
Landlord and Tenant Rights and Responsibilities
The Best Building Amenities for Your Condo Investment
How to Read Condo Floor Plans
How Real Estate Pricing Has Changed In the Last Four Decades
Local Area Amenities That will Increase Your Condo Investment Value
Invest in Real Estate for Wealth and Retirement
The Home Construction Regulatory Authority (HCRA)
What to Consider When Selecting the Ideal Condo
Residential vs Commercial Mortgages
How To Choose the Right Condos Floor Plans
What to Look For in a Condo Developer
Renting to Student Tenants

Steps in the assignment process for early exercise

Decision to exercise Option holders may choose to exercise early when market conditions align, potentially fearing a reversal in stock prices that could erode profits, or wanting to capitalize on an upcoming dividend
Initial notification The Options Clearing Corporation is informed upon early exercise, randomly assigning a brokerage client who is short a matching option.
Assignment notification The short option holder is notified by their brokerage about being assigned and is now responsible for meeting the option contract's terms.
Fulfilling the obligation Option writers must deliver the underlying asset for call options or pay for the underlying asset for put options. This is typically an automated process carried out by brokerages.

Assignment at expiration

Risk of assignment, avoiding assignment, basic example, options resource center.

Success Stories

They Ask, You Answer Mastery

A coaching & training program that drives unmatched sales & marketing results.

Sales Performance Mastery

Improve the competencies and close rates of your sales organization.

Website Mastery

Web design, development & training for your team.

HubSpot Mastery

Everything you need to get the most from HubSpot.

AI Enablement Mastery

Unlock the power of AI in all aspects of your revenue operations.

More Services

Paid Search & Social
Request a Speaker
Join the Community

Learning Center

Free resources to help you improve the way you market, sell and grow your business.

Podcast Episodes
Tools & Assessments

Quick Links

What is They Ask, You Answer
Free Sales & Marketing Assessment
Certifications
The Endless Customers Podcast
Meet the Team
Certified Coaches

Free Assessment: How does your sales & marketing measure up?

Free Assessment:

By Tom DiScipio

Jan 1, 2024

Join 40,000+ sales and marketing pros who receive our weekly newsletter.

Get the most relevant, actionable digital sales and marketing insights you need to make smarter decisions faster... all in under five minutes.

5 Real-Life Sales Scenarios Where You Need Assignment Selling (w/ Templates)

For many, assignment selling is a game-changing solution to one of the biggest sales peeves: answering the same customer questions again and again.

Not only is it monotonous, but it eats up valuable time for both sales rep and buyer.

That's why it's valuable to use assignment selling — that is assign content to your prospects ahead of a sales call — to set yourself up for more productive conversations with better-fit prospects.

Putting content to work for sales

The more educated the prospect, the faster the sales process, and the higher the close rate.

With this in mind, salespeople ask (or assign ) prospective clients to read or view specific materials so that they can be prepared for a deeper sales conversation once they actually connect.

At IMPACT, we’re able to do this by leveraging our trove of content to educate our prospects and build trust with them. Assignments may include watching videos, reading articles or website pages, or even taking an assessment.

But how do you actually do assignment selling? What does "assigning" actually look like? And when should you do it?

Below, we'll share five common scenarios where assignment selling can be used and explain how our sales team typically handles them :

Qualifying a lead for fit and commitment
Ensuring prospects are educated
When a prospect doesn't complete the assignment
Aligning a new client's team
Assignment selling when sponsoring or exhibiting at an event

Scenario 1: Qualifying a lead for fit and commitment

If you're anything like IMPACT, there are likely several ways for a visitor to convert into a lead on your website.

This could be filling out a contact form, downloading an offer, or even booking time directly with your sales team.

In the last instance at IMPACT, the next step is a 30-minute conversation to understand two things:

How do our service offerings match with the prospect's needs?
How close are they to making a purchasing decision?

However, rather than jumping right into it, we'd use assignment selling prior to our first call to qualify the lead for fit and commitment.

What does this look like in practice?

Below is an example of an email template we’ll use to prepare prospects for our first call together:

Hi [prospect name], I'm looking forward to connecting with you. To be sure we use our time effectively, here are a few resources that will help you become more familiar with our agency and our approach so you can determine if we're the right fit for your organization. Please take the time to review these before our call. Why We Need to Rethink the Relationship Between Client and Agency What is They Ask, You Answer? Here is a link to my calendar. Please book a time that is convenient for you.

Before you even talk, you need to make sure you and your prospect share the same values.

At IMPACT, for instance, our process is unique, and in our email we make it clear we want our prospects to know as much as possible about this before we meet.

A prospect reading the first article may have some concerns bubble up based on how we work with clients. This might lead them to cancel our meeting, but that's a good thing!

The most precious commodity for businesses and consumers alike is time.

Your sales team's time is better spent speaking with qualified prospects instead of unqualified ones and your buyer's time is best spent with vendors that will actually fit their needs or budget.

However, should you and a prospect align, you can be sure future conversations will be more meaningful.

Notice that we also hold the prospect accountable to committing to the next stage of the sales process by having them book the meeting. A commitment here ensures follow-through later in the sales process.

Scenario 2: Educating prospects

After your first call, you can use assignment selling again.

Before a second call at IMPACT, we send resources that speak directly to the prospect's situation, which we learned more about in our first call.

This way, if one prospect's needs are mostly related to website redesign, while another prospect's needs center around HubSpot workflows, they will each require different content to move them forward.

Note, you might notice a theme here: You can use assignment selling to take advantage of the space between conversations, keeping prospects active and engaged.

This is not only a continual test of their commitment, but it allows them to self-educate along the way.

By this point, you've already established fit and need, using the information from your initial call.

Using that insight, you can use a template like the one below to send more need-specific focused content. In this case, it's HubSpot training:

Hi [prospect name], It was great speaking with you today! As promised, below are a few specific resources that will be important for you to read prior to our next conversation. How to get your money's worth with HubSpot This is our HubSpot training and implementation page . It dives into the different services we offer. These case studies represent the success other businesses like yours have achieved with IMPACT. Let me know if you have any questions!

Here, assignment selling helps us to address high-level questions we hear in every call before they're even asked. With these out of the way, each subsequent call with a prospect can be more efficient and productive.

Scenario 3: The prospect hasn’t completed the 'assignment'

As you might imagine, there are times when a prospect doesn’t complete the required "assignments" from your sales team.

When this happens, you have two options:

You can choose to move forward with the next sales conversation in hopes that the process will go forward as planned.
You can postpone the next sales conversation until the prospect can confirm they’ve completed the assignment.

The first option probably sounds like the natural path a sales rep would take, while the other sounds incredibly counterintuitive to closing more sales.

Saying to a prospect “it doesn’t sound like you’re ready to move forward,” might sound absurd — and to organizations with an inefficient sales process, it is.

However, in almost every instance, we’ve discovered that choosing to postpone maximizes a sales rep’s time and leads to more won opportunities .

The following is an actual email exchange between a prospect and myself regarding their "assignment" before a call:

Hi [prospect name], Confirming our 2:45pm EST call today. This is a reminder to make sure you take the time to review the resources below before we speak. If not, it may make sense to reschedule. I want to ensure we make the best use of our time together. Marcus Sheridan’s free course: They Ask, You Answer Fundamentals What Is a Learning Center and Why Does My Website Need One? If you haven't had time to peruse the above material, here is my calendar to book another time . Keep me posted!

Prospect's response:

Hi, I haven’t even started yet… Very sorry about that! I will reach out once I read through the articles. [prospect name]

One of the main purposes of assignment selling is to help sales reps spend time with the most qualified, committed, and engaged prospects — the ones most likely to become clients.

If a prospect hasn’t completed the assignment selling homework or taken the time to understand who you are, the conversation stays at a very elementary level. This isn’t the best use of anyone's time.

By pushing back the call and allowing the prospect to do much thinking, you save both parties an hour’s worth of unproductive conversation.

(It’s also worth noting that the prospect mentioned above did voluntarily book a new time to speak with us after completing the assignments.)

One might think that pushing the meeting would frustrate the prospect, but on the contrary, we’ve come to find that prospects appreciate the dedication.

Scenario 4: Onboarding a client team

Over the years, we've found the use cases of assignment selling have extended beyond just the sales process and into the new client onboarding process.

If you’re an agency or you’ve ever worked with one, you’ll know that there’s a lot that needs to be communicated as the relationship gets started. This can include expectations around what’s being done, strategic direction, or outcomes.

For that reason, we use assignment selling as a tool during our onboarding process to align clients, especially teams.

Below is an example email used to support one of our client’s CEOs in creating internal team alignment around our services within their organization. In it, we help set the stage for the rest of our relationship using both written and video content:

Hi [client name(s)], Great meeting with you all today! Please watch the 3-minute video recap of our meeting and, if necessary, share with the rest of your team. Below the video, you'll see some homework with corresponding links and resources that are referenced in the video. [INSERT VIDEO RECAP ] Homework: Course: Self-Selection and the Touchless Buying Experience Article: Virtual Selling: The Essential Video Sales Call Checklist We've got a couple of weeks until we meet again which should be ample time to complete the above homework. Remember that by completing the above, you’ll dramatically improve your internal team’s alignment AND have much more productive conversations with your IMPACT team. Thanks — and as always, let me know if you have any questions. Talk soon!

An email like this gives clients a shared doctrine and understanding that can be distributed beyond your point of influence to the rest of the organization, without risk of losing the impact of the original message.

Scenario 5: Event exhibition or sponsorship follow-up

Like many businesses, IMPACT generates new customers from event sponsorships.

Here’s a simplified version of our typical workflow on the exhibition floor:

A prospect comes to our booth.
They ask us a series of “So what do you do?” questions.
We ask them a series of “needs assessment” questions.
If we're aligned, we set up a sales appointment via our calendar links right away.
The prospect walks away and we move on to the next conversation.

We saw an opportunity to leverage assignment selling to improve the quality and effectiveness of those post-event follow-up conversations.

To do this, we inserted a couple of actions between steps four and five above.

Instead of allowing the prospect to leave the booth and hoping that they'd remember they'd be having a conversation with us in a week or so, we'd ask them to do something in the meantime.

Below is an email template we'd then send a few days later in advance of the follow-up sales conversation as a check-in to confirm that they didn't forget about the meeting or reading.

Hi [prospect name], Everyone at IMPACT enjoyed meeting you at [event name]! I recorded a quick 1 minute video for you below. [insert video ] As you know, we have a meeting scheduled on [meeting date] to continue to talk about They Ask, You Answer and how you can get started with it at [prospect company]. You also received a copy of the book. During our meeting, we'll discuss how They Ask, You Answer relates to your organization, so please come prepared. If you’re not able to get through the reading, please let me know now so we can find a better time to connect. Otherwise, I'd encourage anyone else in your organization (especially in leadership, marketing ,or sales) who shares your mindset of becoming the most trusted voice in your industry to also attend our meeting. Here are a few additional resources to get your team members up to speed quickly: What is They Ask, You Answer? The 'agency model' is broken, here's why. Real results from organizations who've embraced They Ask, You Answer Kind regards,

In this instance, assignment selling helped us turn an event conversation into a real, effective sales appointment.

Without it, we risk allowing our sales efforts at the event being wasted on no-shows or prospects who aren’t ready for the buying process.

If we go back to what the sales objective really is, it’s about booking the most qualified sales appointments, not the greatest number .

Assignment selling in action

Assignment selling, when done right, is a crucial tool in educating prospects and strengthening the sales process.

If you can educate our prospects about your company, your track record, and our offering, you can move more quickly through the sales process, knowing certain questions were already effectively answered by content.

In turn, your sales process will be shorter, your leads will be more qualified, and your sales reps will be more productive.

What’s more, your prospects will be able to see how committed you are to your central tenets, and this dedication builds trust and demonstrates transparency.

So, don't wait! At every stage of the process, have content specifically designed to assist your sales reps. If they find there’s something they need that doesn’t exist, ask your marketing team to produce it.

For us, assignment selling is a vital part of what we do, benefiting our team members and our prospects as they move along the path to becoming clients. It can be for your team as well.

To get started, check out our free course, "Assignment Selling: Content Is Your Greatest Sales Tool."

How to know when you’ve outgrown hubspot sales hub starter.

Sales and Marketing Friction is Hurting Your Bottom Line – Here’s What to Do About It

Build a winning sales culture: 6 steps for sales managers and reps, 4 smart ways to fix your sales presentations.

What is 'Assignment Selling'? Using Content to Close Deals Faster

The 7 Most Common Sales Problems — And How To Solve Them

The best sales enablement tools for your team in 2024, sales vs marketing in 2024: what’s the difference.

4 Common Assignment Selling Mistakes (and How to Fix Them)

A sales presentation is not what your buyers want.

HubSpot CRM Review — Pros and Cons

Your buyers want to control the sales process; here’s how to let them, the best sales training programs check these 4 boxes, my best sales reps haven’t hit their quotas all year: what do i do, how to run a revenue team meeting (+ example agendas), how to improve your sales process, how to create a sales process that closes more deals, 5 ways to get your sales team excited about creating content, the lazy sales technique your buyers hate scoping disguised as discovery, 4 tried-and-true tips for using video in sales prospecting, 4 videos that will streamline your sales process — and don’t require a videographer.

Here's Why You Keep Getting Garbage Inbound Marketing Leads

How Does They Ask, You Answer Benefit Sales?

What is a revenue team, join the 40,000+ sales and marketing pros who receive our weekly insights, tips, and best practices., thanks, stay tuned for our upcoming edition..

Watch CBS News

The federal government can do more about home costs than you think

By Kathryn Watson

Edited By Ellen Uchimiya

Updated on: May 8, 2024 / 2:08 PM EDT / CBS News

The cost to buy a home has reached historic highs in the U.S. — the median price of a home is $420,800, according to the Federal Reserve Bank of St. Louis — and housing and mortgage costs are increasingly turning into a November election issue.

Home shoppers today need to an annual income of $114,000 in order to comfortably afford a typical home in the U.S., according to Redfin, nearly double what was needed to afford a typical home in 2020. That figure is far above the 2022 median household income of $74,580, according to the Census Bureau.

Higher monthly payments are driven by higher home prices as well as significantly higher interest rates . Mortgage interest rates, which dipped to an historic low of 2.65% on a 30-year fixed mortgage in 2021, have soared beyond 7% , higher than they've been since 2001. Interest rates are set by the independent Federal Reserve, and President Joe Biden has insisted on the Fed's independence. The Federal Reserve has been raising interest rates since 2021 in order to combat stubborn inflation.

So what tools does the federal government have at its disposal to make home ownership more affordable? Here are things the Biden administration and Congress could consider, according to experts who study the issue.

Provide tax benefits for builders who produce entry-level homes

There should be an effort to increase the housing stock, particularly of smaller, entry-level homes , several experts agree.

Once interest rates are removed from the picture, "then you're left focusing mainly on the supply shortfall," said Jim Parrott, fellow at the Urban Institute and former Obama White House economic adviser.

The housing market has seen a severe shortage of smaller starter homes, Parrott said. Builders, he said, are incentivized to build large, often mansion-like homes, which more easily turn a profit.

"The cost of building larger homes tends to be quite high, and it's easier to recoup those costs if you're making big, expensive homes," Parrott said.

The federal government needs to "make the math for building homes at the bottom of the market more favorable" for developers, Parrott suggested. And Congress can do this with the tax code. One approach would be to give a tax cut to any builder who constructs a residence for a first-time home buyer at below the median home price, Parrott said.

"You need to provide some sort of tax benefit for building homes in the parts of the market where we need them the most," Parrott said.

But getting this divided Congress to work together on something like this would be challenging, Parrott said.

"I'm afraid that the legislative environment right now just isn't conducive to this sort of big, bipartisan effort," Parrott said. "Hopefully after the election we'll see a reboot that provides a more hopeful window."

Withhold funding from localities that don't change zoning laws

Most of the control over zoning lies with state and local governments. And states have been working to overhaul zoning to ease restrictions on denser residential construction. But the federal government isn't entirely powerless on zoning.

Parrott said the federal government has used a carrot approach to encourage localities to rezone in favor of denser housing, but now he thinks maybe it's time to use a stick. For instance, any federal funding for communities could be conditioned on how zoning decisions are made. Communities receive substantial financial support from the Department of Housing and Urban Development (HUD), the Transportation Department and other agencies for projects, Parrott noted.

"If federal policymakers were to condition even a little bit some of that funding on whether or not local decision-making is supportive of or prohibitive of more density,...then you could begin to change things at the local level in a way that would really matter," Parrott said.

Such a move would be almost certain to trigger strict opposition from localities and unions. But more states have already been enacting legislation to supersede local zoning rules, said Alex Horowitz, director of housing policy at The Pew Charitable Trusts. Horowitz said nine states have passed laws allowing accessible dwelling units or ADUs — like small, independent, mother-in-law suites — on homeowners' properties.

Hunting for your first home? Here are the best U.S. cities for first-time buyers.

Sell federal land to use for housing

"The federal government owns hundreds and hundreds of millions of acres, and we're not talking about the National Parks here," said Edward Pinto, co-director of the American Enterprise Institute's Housing Center.

But that's a proposal that Congress would need to authorize.

It has been tried. Sen. Mike Lee's HOUSES Act of 2022 would have approved the sale of federal land to states and localities for below-market rates for housing projects. The federal government owns two-thirds of the land in Lee's home state of Utah, and the gap between median household income and median home cost is largest in the West, according to HUD.

But his bill went nowhere. The Bureau of Land Management, which oversees federal land, said in written Senate testimony that it would be forced to "sell land without sufficient evaluation of the values to the public or to future generations, or sufficient compensation to the American taxpayer."

The sale of unused land could also attract opposition from environmentalist groups, though sometimes that can be overcome. In March, Washington Gov. Jay Inslee signed a law that will allow that state's Department of Natural Resources (DNR) to transfer some of its property to localities to build affordable housing.

Washington state GOP Rep. April Connors, who introduced the bill, noted that that the DNR had 7,000 acres of land that was unusable for timber harvesting because it was too close to developed land. Building housing on it could ease the shortage of homes in Washington, Connors noted in a statement, pointing out that the state has the "fewest housing units per household in the nation and nearly half of renters spend a third of their income on rent."

Improve consumer access to financing for manufactured housing

Manufactured homes are factory-built residences built after 1976 — formerly known as mobile homes — that can be placed on land. The average new manufactured home sold for $126,600 in November 2023, according to the Census Bureau.

But loans are harder for homebuyers to secure for manufactured homes than for traditional ones, Horowitz said. And since manufactured housing usually involves shipping over state lines, the federal government plays a big role. HUD controls access to financing for manufactured homes, and rules are stricter than they are for traditional homes.

Interest rates are typically also higher for manufactured home loans than for traditional home loans, in part because unlike traditional homes, which tend to appreciate in value over time, manufactured homes can depreciate. The structures are also viewed as riskier than conventional homes because they're usually harder to sell on the market. Horowitz suggests HUD could make it easier for borrowers to access loans.

Home sellers cut list prices amid higher mortgage rates as spring buying season begins

Eliminate tax breaks for second (and third) homes

Congress could increase the national housing stock over time by eliminating tax breaks for any homes that aren't a primary residence, said AEI's Pinto.

Getting rid of the mortgage interest rate deduction for non-primary residences would eventually encourage many homeowners to sell, Pinto said.

"Why should they be subsidized by the tax code," Pinto asked.

Without that tax break, hundreds of thousands of homes would come back onto the market as primary residences, Pinto said.

"It would cost the federal government basically nothing," Pinto said. "They'd actually save some money on the tax savings, and it would not increase demand at all."

This isn't likely to happen soon though. Such a measure would have to be passed by Congress — and many lawmakers own second and third residences. And a number of their constituents and donors own multiple homes. Realtor interest groups would oppose it, too, Pinto said.

The most Congress has done in recent years to address tax breaks for expensive residences was in 2017, when the GOP-controlled Congress capped the deduction limit for state and local income taxes, which hit coastal, heavily Democratic states like New York and California particularly hard.

Still, eliminating the tax break for secondary homes is "low-hanging fruit," and would increase supply and reduce demand simultaneously, Pinto said.

Lowering interest rates probably wouldn't lower housing costs

Economists mostly doubt that action by the Federal Reserve to significantly lower interest rates would help much.

"If the Fed were to cut rates in a way that allowed mortgage rates to fall to the 4% range, we would see both supply and demand increase in the housing market," said Chen Zhao, who leads the economics team at Redfin.

And whether home prices rise or fall would depend on what then happens to housing supply and demand.

"If demand increases more, then prices would grow at a faster rate than they are currently," Zhao said. "However, it's also possible that supply would increase more because sellers have been so locked in by low existing mortgage rates. If that's the case, then price growth could fall. I think it's unlikely in either case that prices would fall outright."

Would Biden or Trump's policies help or hurt housing costs?

Former President Donald Trump hasn't offered policy suggestions to address housing affordability yet, although he criticizes mortgage interest rates and home prices under President Biden.

The president has proposed giving a $10,000 tax credit to first-time middle class homebuyers, and up to $25,000 to first generation home buyers. He's also introducing a $20 billion fund that in addition to helping build affordable rental units, is meant to peel away local barriers to housing development and spur the construction of starter homes.

Down payment assistance may help home shoppers in the near term, although the tax credit probably falls short of the traditional 20% down payment on most homes. With monthly payments at record highs, this down payment assistance would not lower monthly costs. And down payment assistance could have unintended consequences, Pinto said: "It would increase the price of entry level homes."

The effect down payment assistance or a buyer tax credit would have on the housing market is complicated in a supply-constrained market, Horowitz said.

While Trump hasn't made specific proposals on housing, his proposals in other policy areas would likely drive home prices up, Parrott said. Mass deportations of undocumented migrants, for instance, could drive the cost of labor higher, and raising tariffs on China could drive up material costs, Parrott said.

"The things that Trump has said relevant to housing almost all cut the wrong way," Parrot said.

How home costs could affect the election

The cost of home ownership is a top concern for Democrats and Republicans, city dwellers and rural residents alike, said Parrott. Once an issue has broken through the barriers of red and blue, metro and rural, "then it changes the probability of something happening," Parrott said.

"Housing has found its way to the grownups table, in effect, for the first time," Parrott said.

And even though it's the Fed that controls interest rates, Mr. Biden could be held accountable by voters.

"President Biden's reelection is closely tied to the cost of homeownership and thus, the fixed mortgage rates," Mark Zandi, chief economist at Moody's Analytics predicted. "The fixed rate is currently just over 7%. If it rises above 8% for any length of time, his reelection odds will fade, and if it falls closer to 6% his odds will increase meaningfully, all else equal."

Affordable Housing

Kathryn Watson is a politics reporter for CBS News Digital based in Washington, D.C.

More from CBS News

3 reasons to use home equity before June

Nancy Pelosi asks for "very long" sentence for man who attacked her husband

4 ways to avoid mortgage rate lock extension fees

Looking to purchase a home? These U.S. cities are the most buyer-friendly.

Election 2024
Entertainment
Newsletters
Photography
Personal Finance
AP Investigations
AP Buyline Personal Finance
AP Buyline Shopping
Press Releases
Israel-Hamas War
Russia-Ukraine War
Global elections
Asia Pacific
Latin America
Middle East
Election Results
Delegate Tracker
AP & Elections
Auto Racing
2024 Paris Olympic Games
Movie reviews
Book reviews
Personal finance
Financial Markets
Business Highlights
Financial wellness
Artificial Intelligence
Social Media

Small, well-built Chinese EV called the Seagull poses a big threat to the US auto industry

A Seagull sells for around $11,000 in China, yet the electric vehicle made by conglomerate BYD drives well and is put together with craftsmanship that rivals U.S.-made EVs that cost quite a bit more. (AP video: Mike Householder)

A Seagull electric vehicle from Chinese automaker BYD for test driving is parked outside a showroom in Beijing, Wednesday, April 10, 2024. The tiny, low-priced electric vehicle called the Seagull has American automakers and politicians trembling. The car, launched last year by Chinese automaker BYD, sells for around $12,000 in China. But it drives well and is put together with craftsmanship that rivals U.S.-made electric vehicles that cost three times as much. Tariffs on imported Chinese vehicles probably will keep the Seagull away from America’s shores for now.(AP Photo/Ng Han Guan)

Copy Link copied

The Seagull electric vehicle from Chinese automaker BYD is displayed at a showroom in Beijing, Wednesday, April 10, 2024. The tiny, low-priced electric vehicle called the Seagull has American automakers and politicians trembling. The car, launched last year by Chinese automaker BYD, sells for around $12,000 in China. But it drives well and is put together with craftsmanship that rivals U.S.-made electric vehicles that cost three times as much. Tariffs on imported Chinese vehicles probably will keep the Seagull away from America’s shores for now.(AP Photo/Ng Han Guan)

Residents past by a Seagull electric vehicle from Chinese automaker BYD parked at a showroom in Beijing, Wednesday, April 10, 2024. The tiny, low-priced electric vehicle called the Seagull has American automakers and politicians trembling. The car, launched last year by Chinese automaker BYD, sells for around $12,000 in China. But it drives well and is put together with craftsmanship that rivals U.S.-made electric vehicles that cost three times as much. Tariffs on imported Chinese vehicles probably will keep the Seagull away from America’s shores for now.(AP Photo/Ng Han Guan)

Sales staff stand near the Seagull electric vehicle from Chinese automaker BYD at a showroom in Beijing, Wednesday, April 10, 2024. The tiny, low-priced electric vehicle called the Seagull has American automakers and politicians trembling. The car, launched last year by Chinese automaker BYD, sells for around $12,000 in China. But it drives well and is put together with craftsmanship that rivals U.S.-made electric vehicles that cost three times as much. Tariffs on imported Chinese vehicles probably will keep the Seagull away from America’s shores for now.(AP Photo/Ng Han Guan)

A BYD Seagull electric vehicle is displayed at the Caresoft Global facility Wednesday, April 3, 2024, in Livonia, Mich. Caresoft President Terry Woychowski, a former engineer at General Motors, said the Seagull represents a “clarion call” for the U.S. auto industry. (AP Photo/Mike Householder)

The battery of a BYD Seagull electric vehicle is shown under the hood of the car at the Caresoft Global facility Wednesday, April 3, 2024, in Livonia, Mich. Caresoft President Terry Woychowski, a former engineer at General Motors, said the Seagull represents a “clarion call” for the U.S. auto industry. (AP Photo/Mike Householder)

Caresoft Global President Terry Woychowski speaks to a reporter alongside a BYD Seagull electric vehicle at the Caresoft facility Wednesday, April 3, 2024, in Livonia, Mich. Woychowski, a former engineer at General Motors, said the Seagull represents a “clarion call” for the U.S. auto industry. (AP Photo/Mike Householder)

The battery of a BYD Seagull electric vehicle as seen at the Caresoft Global facility Wednesday, April 3, 2024, in Livonia, Mich. Caresoft President Terry Woychowski, a former engineer at General Motors, said the Seagull represents a “clarion call” for the U.S. auto industry. (AP Photo/Mike Householder)

The steering wheel of a BYD Seagull electric vehicle as seen at the Caresoft Global facility Wednesday, April 3, 2024, in Livonia, Mich. Caresoft President Terry Woychowski, a former engineer at General Motors, said the Seagull represents a “clarion call” for the U.S. auto industry. (AP Photo/Mike Householder)

A model performs a live-streaming near a BYD Sea Leopard DM-i car model during the Auto China 2024 in Beijing, Sunday, April 28, 2024. Global automakers and EV startups unveiled new models and concept cars at China’s largest auto show, with a focus on the nation’s transformation into a major market and production base for digitally connected, new-energy vehicles. (AP Photo/Andy Wong)

LIVONIA, Mich. (AP) — A tiny, low-priced electric car called the Seagull has American automakers and politicians trembling.

The car, launched last year by Chinese automaker BYD , sells for around $12,000 in China, but drives well and is put together with craftsmanship that rivals U.S.-made electric vehicles that cost three times as much. A shorter-range version costs under $10,000.

Tariffs on imported Chinese vehicles probably will keep the Seagull away from America’s shores for now, and it likely would sell for more than 12 grand if imported.

Sales staff stand near the Seagull electric vehicle from Chinese automaker BYD at a showroom in Beijing, Wednesday, April 10, 2024. The tiny, low-priced electric vehicle called the Seagull has American automakers and politicians trembling. The car, launched last year by Chinese automaker BYD, sells for around $12,000 in China. But it drives well and is put together with craftsmanship that rivals U.S.-made electric vehicles that cost three times as much. Tariffs on imported Chinese vehicles probably will keep the Seagull away from America’s shores for now.(AP Photo/Ng Han Guan)

Sales staff stand near the Seagull electric vehicle from Chinese automaker BYD at a showroom in Beijing, Wednesday, April 10, 2024. (AP Photo/Ng Han Guan)

But the rapid emergence of low-priced EVs from China could shake up the global auto industry in ways not seen since Japanese makers exploded on the scene during the oil crises of the 1970s. BYD, which stands for “Build Your Dreams,” could be a nightmare for the U.S. auto industry.

“Any car company that’s not paying attention to them as a competitor is going to be lost when they hit their market,” said Sam Fiorani, a vice president at AutoForecast Solutions near Philadelphia. “BYD’s entry into the U.S. market isn’t an if. It’s a when.”

U.S. politicians and manufacturers already see Chinese EVs as a serious threat. The Biden administration on Tuesday is expected to announce 100% tariffs on electric vehicles imported from China, saying they pose a threat to U.S. jobs and national security.

Culinary Local 226 members picket at the start of a 48 hour strike at Virgin Hotels in Las Vegas, Friday, May 10, 2024. About 700 workers walked off the job at a hotel-casino just off the Las Vegas Strip Friday morning in what union organizers said would be a 48-hour strike after spending months trying to reach a deal for new 5-year contract with Virgin Hotels. (K.M. Cannon/Las Vegas Review-Journal via AP)

The Alliance for American Manufacturing says in a paper that government subsidized Chinese EVs “could end up being an extinction-level event for the U.S. auto sector.”

Earlier this year, Tesla CEO Elon Musk told industry analysts Chinese EVs are so good that without trade barriers, “they will pretty much demolish most other car companies in the world.”

Outside of China, EVs are often pricey, aimed at a higher-income niche market. But Chinese brands that are not yet global household names are offering affordable options that will appeal to the masses — just as the U.S., European and many other governments are encouraging a shift away from gasoline-powered vehicles to fight climate change.

“The Western markets did not democratize EVs. They gentrified EVs,” said Bill Russo, the founder of the Automobility Ltd. consultancy in Shanghai. “And when you gentrify, you limit the size of the market. China is all about democratizing EVs, and that’s what will ultimately lead Chinese companies to be successful as they go global.”

Inside a huge garage in an industrial area west of Detroit, a company called Caresoft Global tore apart a Seagull that its China office purchased and shipped to the U.S.

Company President Terry Woychowski, a former chief engineer on General Motors’ big pickup trucks, said the car is a “clarion call” for the U.S. auto industry, which is years behind China in designing low-cost EVs.

After the teardown, Woychowski, who has been in the auto business for 45 years, said he was left wondering if U.S. automakers can adjust. “Things will have to change in some radical ways in order to be able to compete,” he said.

There’s no single miracle that explains how BYD can manufacture the Seagull for so little. Instead, Woychowski said the entire car, which can go 252 miles (405 kilometers) per charge, is “an exercise in efficiency.”

Higher U.S. labor costs are a part of the equation. BYD can keep costs down because of its expertise in making batteries — largely for consumer products — that use lithium iron phosphate chemistry. They cost less but have lower range than most current lithium-ion batteries.

Americans are still learning how to make cheaper batteries, Woychowski said. Ford is building a lithium iron phosphate battery factory , using technology from China’s CATL.

BYD makes many of its own parts, including electric motors, dashboards, bodies and even headlights. It also has the advantage of its huge scale — 3 million vehicles sold worldwide last year.

“By having that all in-house and vertically integrated, there’s an incredible advantage that they have,” Woychowski said.

BYD designs all aspects of its vehicles with cost and efficiency in mind. For instance, the Seagull has only one windshield wiper, eliminating one motor and one arm, saving on weight, cost and labor to install.

U.S. automakers don’t often design vehicles this way and incur excess engineering costs, Woychowski said. Hoses, for instance, have to meet longstanding requirements in combustion engines for strength and ability to carry fluid under high pressure, many of which aren’t needed for electric vehicles, he added.

The weight savings add up, allowing the Seagull to travel farther per charge on a smaller battery. For example, the Seagull that Caresoft tested weighs 2,734 pounds (1,240 kilograms), about 900 pounds less than a Chevrolet Bolt, a slightly larger electric vehicle made by GM.

So Detroit needs to quickly re-learn a lot of design and engineering to keep up while shedding practices from a century of building vehicles. The trick will be determining which procedures to keep for safety and quality, and which to jettison because they aren’t needed, he said.

“You’re going to have to come and be extremely serious about this, and you better park your paradigms at the door,” Woychowski said. “Because you’re going to have to do things differently.”

Even with its minimalist design, the Seagull still has a quality feel. The doors close solidly. The gray synthetic leather seats have stitching that matches the bright green body color, a feature usually found in more expensive cars. The Seagull “Flying Edition” tested by Caresoft has six air bags, rear disc brakes and electronic stability control.

A brief drive through some connected parking lots by a reporter showed that it runs quietly and handles curves and bumps as well as more costly electric vehicles.

While the acceleration isn’t head-snapping like other EVs, the Seagull is peppy and would have no problems entering a freeway in heavy traffic. Woychowski says its top speed is limited to 81 mph, (130 kilometers per hour).

BYD would have to modify its cars to meet U.S. safety standards, which are more stringent than in China. Woychowski says Caresoft hasn’t done crash tests, but he estimated that would add a couple thousand dollars to the cost.

BYD sells the Seagull, rebranded as the Dolphin Mini in some overseas markets, in four Latin American countries for about $21,000, twice what it costs at home. The higher price includes transportation costs, but also reflects the higher profits possible in less cutthroat markets than China.

In Europe, BYD offers larger models such as the Seal, which starts at 46,990 euros ($50,000), in France. The Chinese maker’s top two overseas markets were Thailand and Brazil in the first two months of this year, according to the China Passenger Car Association.

BYD builds electric buses in California and told The Associated Press last year that it is “still in the process” of deciding whether to sell autos in the U.S. It is weighing sites for a factory in Mexico, but that would be for the Mexican market, two company executives said in media interviews earlier this year.

The company’s CEO said at a conference in May that it has no plans to sell EVs in the U.S.

BYD EVs aren’t being sold in the U.S. now largely because of 27.5% tariffs on the sale price of Chinese vehicles when they arrive at ports. Donald Trump slapped on the bulk of the tariff, 25%, when he was president, and it was kept in place under Joe Biden. Trump contends that the rise of EVs backed by Biden will cost U.S. factory jobs, sending the work to China.

The Biden administration has backed legislation and policies to build a U.S. EV manufacturing base. The administration also is investigating cars made in China that can gather sensitive information .

Some members of Congress are urging Biden to ban imports of Chinese vehicles, while others have proposed even steeper tariffs. This includes vehicles made in Mexico by Chinese companies that now would come in largely without tariffs.

Ford CEO Jim Farley has seen Caresoft’s work on the Seagull and observed BYD’s rapid growth across the globe, especially in Europe, where he used to run Ford’s operations. He’s moving to change his company. A small “skunkworks” team is designing a new, small EV from the ground up to keep costs down and quality high, he told analysts earlier this year.

Chinese makers, Farley said, sold almost no EVs in Europe two years ago, but now they have 10% of the electric vehicle market. It’s likely they’ll export around the globe and possibly sell in the U.S.

Ford is preparing to counter that. “Don’t take anything for granted,” Farley said. “This CEO doesn’t.”

Associated Press writers Paul Wiseman and Didi Tang in Washington contributed to this report. Moritsugu reported from Beijing.

Skip to main content
Keyboard shortcuts for audio player

China makes cheap electric vehicles. Why can't American shoppers buy them?

Camila Domonoske

BYD electric cars wait to be loaded onto a ship at a port in Yantai, China, on April 18. China has rapidly become a major auto exporter, but tariffs have kept cheap Chinese EVs out of the U.S. market — so far. STR/AFP via Getty Images hide caption

New EVs aren't cheap.

At least, not in the United States. In other parts of the world , bargain electric vehicles from China abound, but a 27.5% tariff has kept those cars out of the United States.

Arvind Srinivasan, who recently shopped around for an EV under $25,000, feels conflicted about that.

"As a consumer, yeah, I would buy a Chinese EV, probably without question," he says. "But as a person who cares about the country, in that view, I feel like, no, we should either tariff or ban them."

Even higher tariffs and outright bans are both real possibilities.

That's because cheap Chinese EVs could be devastating to a key sector of the U.S. economy: auto manufacturing. And the Biden administration's climate strategy, which would benefit from cheaper EVs, also prioritizes U.S. jobs.

Chinese electric carmakers are taking on Europeans on their own turf — and succeeding

The Sunday Story: Answering Your Questions About Electric Vehicles

Climate, national security, American jobs: This is why Srinivasan is torn. Even if he's not a fan of big auto companies, exactly.

"At some point, if we don't support U.S. auto manufacturers, [Chinese automakers] are just going to come in, undercut it," he says. "Then we're dependent on China for cheap EVs. And I don't think that's sustainable for the country long term."

Plenty of filet mignon but no hamburger

EV prices have been falling, but cheap ones remain elusive.

That might sound paradoxical, but steak at a discount costs a lot more than hamburger meat. Right now, luxury electric SUVs — the filet mignon of the automotive world — are on sale . But small, cheap cars? That hamburger case is empty.

Well, almost empty. Srinivasan, who wanted an EV to save on gas, found exactly one option. After poring over the new and used offerings, he went with a new Chevy Bolt — just $23,500 after a tax credit.

Arvind Srinivasan, pictured with his Chevy Bolt, wished there were more options when he was shopping for an affordable EV. Bhargav Devana/Arvind Srinivasan hide caption

Arvind Srinivasan, pictured with his Chevy Bolt, wished there were more options when he was shopping for an affordable EV.

"It was like, 'OK, this car isn't great, but it's cheap,'" he says. "No one sells anything remotely close to its price target."

In fact, right now, not even Chevy sells anything close. General Motors is moving on from the older battery that powers the modest-sized, never-profitable hatchback. The Bolt is not currently in production.

Larger vehicles carry larger price tags. As companies pour billions of dollars into making electric vehicles, they're trying to offset those huge expenses. So even though EV prices have fallen about 10% from last year, they're still averaging about $54,000, according to Kelley Blue Book.

EVs won over early adopters, but mainstream buyers aren't along for the ride yet

Companies say they're working on cheaper options. Ford has a "skunkworks" team tackling the project; GM has pledged to bring back the Bolt with a new battery; Stellantis has said a profitable $25,000 EV is key. Tesla, the undisputed market leader for EVs, says it's bringing a cheaper model to market by next year.

But they don't have much time to waste.

Volvo, the Swedish carmaker owned by a Chinese company, plans to sell a Chinese-made EV in the U.S. beginning this summer, at a relatively budget-friendly starting price of under $35,000. (Volvo says it's paying the tariff; the company did not comment when asked about reports that it will be refunded that money in exchange for exporting U.S.-made vehicles.)

People look at a BYD Seagull at the Bangkok International Motor Show in Nonthaburi, Thailand, on March 27. Lillian Suwanrumpha/AFP via Getty Images hide caption

People look at a BYD Seagull at the Bangkok International Motor Show in Nonthaburi, Thailand, on March 27.

How is an "impressive" car just $10,000?

Meanwhile, cheap — really cheap — Chinese EVs are proliferating. The BYD Seagull costs just $10,000 in China.

Chinese-made cars used to be a punchline. Economist Sue Helper, who has spent decades tracking globalization and auto manufacturing, remembers seeing BYD vehicles a few years ago that were, in a word, "terrible." But she recently took a Seagull for a test drive in a parking lot in Detroit. (They are not allowed on U.S. streets.)

"It's impressive," she says. "It's cute."

The Indicator from Planet Money

The surprising leader in evs.

The Seagull would cost more than $10,000 in the U.S., given that it would have to be modified to meet U.S. safety standards. But you could double the price of the Seagull and it would still be a steal.

In fact, you could double the price and pay the 27.5% tariff, and it would still undercut every EV for sale in the United States.

Why? Helper points out that, first, it's a very small car, a rare beast in the U.S. these days. And China has economies of scale and clever design.

There's also, she says, "the Chinese playbook of 'let's subsidize and repress labor and get ourselves a foothold in an international market and take it over.'"

For instance, she says, the Chinese government heavily subsidizes China's EV industry to give it an international advantage. Wages in the Chinese auto industry are lower. And some companies in the Chinese auto-supply chain almost certainly use forced labor, or modern-day slavery , according to human rights groups.

Why aren't cheap Chinese EVs for sale in the U.S.?

National security concerns and old-fashioned protectionism have kept these cars out of the U.S. so far.

When president, Donald Trump imposed a heavy tariff on Chinese-made vehicles, which the Biden administration has extended and could increase.

This year, the U.S. Commerce Department launched an investigation into whether Chinese vehicles' navigation and communication features could spy on Americans.

The department's investigation could result in a prohibition on certain Chinese-made vehicles. Sen. Josh Hawley, R-Mo., has proposed hiking tariffs on Chinese vehicles, while Sen. Sherrod Brown, D-Ohio, has proposed an outright ban .

The $7,500 tax credit for electric cars keeps changing. Here's how to get it now

Scott Paul of the Alliance for American Manufacturing is lobbying for higher tariffs and says he'd back an outright ban. His organization represents unionized steelworkers and companies in the auto-supply chain.

"We've seen this play out in the past in other industries," he says. "We need to get ahead of this instead of responding to it after the fact, when we're just cleaning up the mess and we're seeing these factories wiped out, these jobs displaced and these communities devastated."

Meanwhile, a different "Alliance" — the Alliance for Automotive Innovation, which represents automakers — also recognizes the risk but couches it differently.

"The overall competitiveness of the auto industry in the U.S. will be harmed if heavily subsidized Chinese vehicles can be sold at below-market prices to U.S. consumers," John Bozzella, the president of the Alliance for Automotive Innovation, told NPR in a statement. The group declined to state a position on banning Chinese autos.

There's good reason for the more measured tone: Major automakers operate globally, not just in the United States. China is a rival, sure, but it's also the world's largest auto market, as well as a major supplier. As Bozzella has previously put it , where China is seen by policymakers as "binary" — good or bad, friend or foe — for automakers, "'China' is complicated."

Climate impacts are complicated too

Bonnie Dixon, another frustrated car shopper, is also torn over Chinese EVs.

Bonnie Dixon, pictured with her 1997 Ford Ranger, drives only about once a week. When she does, she would prefer to be driving a zero-emission vehicle. But she can't find a new one in her budget. Bonnie Dixon hide caption

Bonnie Dixon, pictured with her 1997 Ford Ranger, drives only about once a week. When she does, she would prefer to be driving a zero-emission vehicle. But she can't find a new one in her budget.

Dixon, who works part time as a research scientist and is on a tight budget, drives an older gas pickup she'd love to swap for a zero-emission car. She's wary of used cars so is looking at new ones. She needs a car capable of driving long distances — she can't have a short-range EV that works only around town. New, affordable, long range: no dice.

She doesn't know much about the politics of tariffs, she says. "What I am aware of is just the great urgency of needing to reduce carbon emissions."

If she could buy a Chinese EV, wouldn't that help the planet?

The answer, according to some climate advocates, is complicated.

They argue that buying time for U.S. automakers to change — to make more EVs, at cheaper prices, with cleaner supply chains — could be better for the climate in the long run.

In a boost for EVs, EPA finalizes strict new limits on tailpipe emissions

What biologists see from the shores of the drying Great Salt Lake

The human cost of climate-related disasters is acutely undercounted, new study says

"We are trying to move the market so that all automakers are making vehicles as sustainably as possible," says Katherine García of the Sierra Club. And when it comes to things like greener steel and electricity, American companies rank much better than Chinese ones. Meanwhile, labor groups and green groups have united around the argument that decarbonizing will be good for the planet and U.S. workers.

García emphasized that people can take public transit, bike and drive used EVs to help fight climate change. But she also sees an urgent need for cheaper new EVs — just maybe not cheap Chinese EVs.

It's a position that resonates with Dixon.

"Definitely the best solution would be if we could build them in the U.S.," Dixon says. "That's what I'm hoping — that the U.S. car manufacturers will get their act together and produce these more affordable EVs that we need."

In the meantime, when she needs to drive, she hops in her old gas pickup.

auto industry
electric vehicles

IMAGES

Assignment Cost Sheet Sums
Illustration of Cost Assignment in ABC
Tutorial 1-Cost Assignment-Answers-1.docx
Lecture 2
Assignment cost sheet sums
College Cost Assignment

VIDEO

BA 600 Week2 Assignment Sell Yourself
Managerial Accounting: Accumulating and Assigning Types of Costs to Cost Objects
Handling Requests for Commission Discounts in Business Sale Transaction
Should I Sell a Cash-Secured Put or a Covered Call?
Seller Review of Diamond Equity-We Buy Houses Georgia
Cost Assignment: General Principles

COMMENTS

A Comprehensive Guide To Selling Your Assignment Condo
What Does It Cost To Sell An Assignment condo: The major fees when selling an assignment include the builder's assignment fee, real estate commissions, and tax on the profit. Builder's assignment fees usually range from $1500-$25,000 (in some extreme cases they go as high as $80,000). The assignor usually pays both the assignor and the ...
What is 'Assignment Selling'? Using Content to Close Deals Faster
3 steps to implement assignment selling. The benefits of assignment selling are substantial, but getting started can be a challenge. Luckily, we've got free courses covering much of this, but here's what you need to know in a nutshell. Before step 1. Understand your sales process
What Is An Assignment Fee
So if you get a deal at $100,000 and another investor (cash buyer) is willing to pay $150,000 for it, you walk with a $50,000 assignment fee (assuming no closing costs are removed from this). There are 4 factors to increasing your assignment fees… Become a better marketer
What is an Assignment Fee? The Ultimate Wholesaler's Guide
The average assignment fee for a real estate wholesaler is between $2000 and $7000. Of course, this number will depend on the market you're in as well as the level of experience that you have. Many wholesalers charge upwards of $10,000 or even $20,000 for their assignment fee.
What Is An Assignment Fee? A Guide For New Wholesalers
An assignment fee is a wholesaler's compensation for their pivotal role as a contract flipper. In its simplest form, an assignment fee is the money the wholesaler receives for facilitating the transfer of contractual rights from the original seller to the end buyer. In many ways, an assignment fee is the antithesis of its rehabbing counterpart ...
What is Assignment Selling?
Assignment selling is a hugely effective way to build trust, reduce poor quality leads and get higher click-through rates. In a nutshell, assignment selling is about creating content to answer your customer's most asked questions before they make a purchase. By making this content available, and using it in your sales process, you allow ...
8 Ways to Increase Your Assignment Fee as a Wholesaler
Since your assignment contract with the seller was $80,000, you make an assignment fee of $10,000. ... (ARV x .75) - Repair Costs - Assignment Fee = Max You Should Pay. Imagine that you found a property with an ARV of $250,000 and you expect repair costs to be about $20,000. Also, you want to make $10,000.
What Is an Assignment Sale? Understanding the Ins and Outs of This Real
Understanding the Financials: Costs and Fees. Engaging in assignment sales tends to involve several costs that both the buyer and seller must anticipate. These include the assignment fee charged by the developer, legal fees for contract transfer, and possibly higher legal fees due to the complexity compared to a resale property.
What Is An Assignment Sale & How Does It work?
Are there any advantages of purchasing an assignment? Is it better than buying a resale? This video is your comprehensive guide on assignment sales. You'll l...
4 Common Assignment Selling Mistakes (and How to Fix Them)
Here are four common things to avoid: Assigning too much or too little content. Moving forward even if the prospect blatantly ignores the assignment. Using only text-based content. Not selecting unique content for each prospect or situation. Let's dive into each to see how you can avoid it. 1.
Wholesaling Made Simple! A Comprehensive Guide to Assigning Contracts
No notice to the Seller of an assignment is necessary. Such an assignment will create a novation and release the original Buyer from this contract and substitute the assignee in its place. ... (this price includes payment to the owner and all associated fees and estimated closing costs) and for an assignment fee of $_____, we will sell our ...
10 Things To Know About Assignment Sales in Real Estate
An assignment is when a Seller sells their interest in a property before they take possession - in other words, they sell the contract they have with the Builder to a new purchaser. When a Seller assigns a property, they aren't actually selling the property (because they don't own it yet) - they are selling their promise to purchase it ...
How Assignment Selling Has Made Me a Better Salesperson
Whether you've been in sales for 20 minutes, 20 months, or 20 years, selling business to business or business to consumer, adopting assignment selling will change your life, and I'm here to tell you first hand how it will make you a better sales person.. Sales comes down to one fundamental belief: trust.
Trading Options: Understanding Assignment
An option assignment represents the seller's obligation to fulfill the terms of the contract by either selling or buying the underlying security at the exercise price. This obligation is triggered when the buyer of an option contract exercises their right to buy or sell the underlying security. To ensure fairness in the distribution of American ...
Assignment of Contract In Real Estate Made Simple
The terms of how an investor will be paid upon assigning a contract should, nonetheless, be spelled out in the contract itself. The standard assignment fee is $5,000. However, every deal is different. Buyers differ on their needs and criteria for spending their money (e.g., rehabbing vs. buy-and-hold buyers).
Assignment Sales Explained
Additional Closing Costs (Levies) ... the assignment seller gets a price above purchase price and the buyer, in most cases, snags a property below market price. Since assignment sales tend to occur well into the construction phase, there's also less risk imposed on the buyer in an assignment sale. That being said, there are a number of reasons ...
What Is Assignment Sale And How Does It Work?
No Carrying Costs: With Assignments, you can avoid paying monthly fees such as occupancy fees that can often last upto 2 years. No Closing Costs: With Assignment Sale, Sellers don't need to take out a mortgage or incur any other costs. Play The Market: With Assignments, you can take advantage of the condo market. You have the option to sell ...
How Wholesalers Use Assignment of Contract
For example, if you purchased the property for $15,000 and tried to sell it for $45,000 with a $30,000 assignment fee then you might encounter a lot of resistance from the buyer who thinks you are marking up the property excessively.
What is an Assignment Sale [2021]: Agreement Purchase Involved & More
An assignment sale occurs before the final closing of the property between the original purchaser (Assignor) and the builder. As a new purchaser of an agreement, you are going to assume everything that the original purchaser agreed to in their original contract. For this reason, it is important to appoint a lawyer by your side to go over two ...
What is an Assignment Sale?
Simply put, an assignment sale is the sale - or an "assignment" of a contract to purchase a pre-construction condominium suite. An assignment sale is usually applied to the pre-construction condominium that has not been registered yet, so no one can take ownership of the unit itself. Only the contract can be sold.
What's the Cost Basis When Exercise Options or Get Assigned?
When you exercise a call option, the cost price paid for the underlying stock on a per share basis is the sum of the call's strike price plus the premium paid for the call and the trading fees charged by the exchanges and regulatory agencies. Cost Basis = Strike Price + Options' Premium + Fees. Likewise, when you are assigned on a call option ...
Understanding Options: Assignment
Assignment refers to the obligation of an option seller to fulfill the contract's terms when the option holder, or buyer, chooses to exercise their right. ... Certain complex options strategies carry additional risk. There are additional costs associated with option strategies that call for multiple purchases and sales of options, such as ...
How Much Will I Make Selling My House?
Closing costs and transaction fees. Seller closing costs are one of the biggest expenses in selling a home. Expect to spend 8% to 10% of the sale price on closing costs. For a home selling at the median U.S. home sale price of $324,967, that's between $25,900 and $32,500. The majority of these seller closing costs typically goes to agent ...
5 Real-Life Sales Scenarios Where You Need Assignment Selling (w
Below, we'll share five common scenarios where assignment selling can be used and explain how our sales team typically handles them: Qualifying a lead for fit and commitment. Ensuring prospects are educated. When a prospect doesn't complete the assignment. Aligning a new client's team. Assignment selling when sponsoring or exhibiting at an event.
The federal government can do more about home costs than you think
The cost to buy a home has reached historic highs in the U.S. — the median price of a home is $420,800, according to the Federal Reserve Bank of St. Louis — and housing and mortgage costs are ...
A Guide to Seller-Paid Mortgage Rate Buydowns
Total savings for buyer/cost to seller: $9,104. With a 3-2-1 buydown, the mortgage rate and monthly payments are lower for the first year of the loan, rising in the second and third years, ...
Starbucks: Buy, Sell, or Hold?
Starbucks recently reported lower-than-expected revenue growth. The mega coffee chain currently pays a 3.1% annual dividend yield. Its shares trade at a P/E ratio of 21, well below the five-year ...
Small, well-built Chinese EV poses big threat to US auto industry
A shorter-range version costs under $10,000. Tariffs on imported Chinese vehicles probably will keep the Seagull away from America's shores for now, and it likely would sell for more than 12 grand if imported.
Chinese EVs are cheap. For America, that could be a problem : NPR
The Seagull would cost more than $10,000 in the U.S., given that it would have to be modified to meet U.S. safety standards. But you could double the price of the Seagull and it would still be a ...
There Is More to Hertz Dumping 20,000 EVs From Fleet Than ...
EVs are only 11 percent of Hertz's total fleet, so the 20,000 EVs the company is going to sell off by the end of 2025 represent 4.4 percent of the entire fleet.