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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.

Related posts.

6 important facts to consider when selling a preconstruction condo.

Everything you need to know to sell your preconstruction condo assignment

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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.

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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.

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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

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…

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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. 

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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

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What You Need to Know About Condo Assignment Selling and Buying

By Condo Culture

9 Primary Steps Involved in Selling a Condo Assignment

• Review the Terms of Your Agreement of Purchase and Sale
• Get Approval From the Builder to Ensure Your Unit Can Be Assigned
• List Your Assignment For Sale (Advertising on MLS is typically prohibited by the Developer)
• Have Your REALTOR® Field Buyer Offers and Negotiate the Best Deal Possible
• A First Deposit Is Collected and Held In Trust By Your Real Estate Brokerage or Lawyer
• Work Through the Conditions Of An Offer With Your Selling Team
• Builder Approval Needed From the Purchaser On Proof Of Financing
• A Second Deposit Is Collected - Typically the original 15% to 20% Deposit
• Remaining Money Is Received Once the Unit Closes - the Difference Between Your Original Purchase Price and the Assignment Sale Price

There are all sorts of intricacies with condo assignment sales and purchases, so it’s important to first connect to a brokerage and REALTOR® with lots of assignment transaction experience under their belt.

We have helped hundreds of clients with their assignment buying and selling needs, and our client’s excitement and enthusiasm when a transaction is completed is incredibly rewarding! We are the area’s premier condo selling and buying team and walk hand-in-hand throughout the entire assignment process with our clients. We have a few exciting condo assignment listings available right now at Station Park and Garment Street Condo, each one includes a detailed floor plan so you can understand what the final product will look like. If one or more of those assignments interest you, be sure to click on the “TALK TO A CONDO CULTURE EXPERT” button and provide your information so one of our specialists can reach out to you.

Before getting into the nitty-gritty details of condo assignments, let’s first touch on the basics of them, so you have a sound understanding of the terms and how they work.

Outlining What a Condo Assignment Sale Is

In its purest form, a condo assignment is a unit that was originally purchased by a buyer during the pre-construction phase and that buyer wants to sell it prior to the building’s construction being completed, before an occupancy date reached and the building has been officially registered. The original buyer may want to sell the condo due to changing financial circumstances, he or she originally intended to move into the unit but plans have changed, it’s an investor who has too many units and wants to sell one off, or for a variety of other reasons.

Each condo developer handles assignment options differently, and some don’t allow them at all, so it’s important that if you’re buying a pre-construction unit, you understand the circumstances around them in case you need or want to sell prior to the completion date.

When a pre-construction is first purchased by a buyer, an Agreement of Purchase and Sale (APS) is drafted which outlines the purchaser’s legal rights and obligations. The person who is selling a condo assignment is named the assignor and the buyer is designated to be the assignee. An assignment clause is typically included in the APS and the fee is usually in the $5K to $15K range, but every developer has its own fee and terms.

How An Assignment Deal Gets Finalized

A conditional offer and agreement between the assignor and assignee becomes legally binding once the first deposit is made by the assignee, and that amount is negotiable. The assignee has 10 days after making the first deposit to have his or her lawyer review all original documentation to ensure everything looks solid. One common clause to be aware of is unit upgrades and unpaid unit upgrades, so there are no financial surprises as the condo moves through its construction process. The assignee is typically responsible for any outstanding costs including unpaid upgrade expenses, but like most aspects of assignment deals, everything is negotiable. Once the lawyer review is completed and deal conditions have been met, the next deposit by the assignee is required - typically 15% to 20% of the sale price or whatever the assignor originally paid as a deposit. Once the developer approves the transaction or when the assignee receives a mortgage once the building has been registered and occupancy begins, then the difference in price between the pre-construction price and assignment sale price will be paid to the assignor. The assignee is also responsible for the typical real estate closing costs at this point including Tarion warranty enrolment fees .

Benefits for Assignors

Most notably, the seller of an assignment is often making some sort of a profit - how much that ends up being varies depending on current market conditions, how far along the development is, what the assignment fee was, HST and tax implications, and other factors.

The next benefit is that there are no closing costs because the sale is happening before the building has wrapped up construction, so no mortgage is involved and closing costs are non-existent.

Once the assignment is sold and the APS belongs to the new owner, the assignor receives money as outlined above and can use it as he or she pleases for real estate or otherwise. Want to sell your condo assignment? Be sure to connect with us to leverage our deep experience with selling assignments as we have thousands of active buyers engaged on the region's top condo specific search site: CondoCulture.ca, do email marketing to thousands of subscribers through our One List and weekly newsletter , promote listings on our social media accounts, feature listings in our Uptown Waterloo store windows, plus so much more to ensure the success of our condo assignment sellers.

Benefits for Assignees

A big benefit to buying a condo assignment is that you can get access to a development that’s likely already sold out. Station Park is one example - the first two towers sold out extremely quickly in 2019, but we have sold dozens of assignments in Tower 1 and Tower 2 to buyers who couldn’t get their hands on a unit initially, but got their opportunity through an assignment.

With the condo resale market white-hot and multiple offers on almost every listing, assignments provide a fantastic buying opportunity as there’s often less competition for this type of real estate purchase. Assignments typically can’t be listed on traditional marketing channels such as MLS so you tend to see that fewer potential buyers are aware of them. This means that Assignment Units can often be purchased for their list price or at least in that general range. At any given time, Condo Culture has a number of off-market, exclusive listings that cannot be found on MLS, Realtor.ca, or coming soon listings. Bottom line - working with our team of REALTORS® gives you an unfair advantage for tapping into these exclusive listings as they first become available.

There can also be some outstanding value buying opportunities if assignors need some capital relatively quickly and are extra motivated to sell fast. There might be some room to negotiate on the list price and a unit can even potentially be purchased below the current estimated market value. This sort of scenario is especially attractive if the occupancy date is just a few months away and the asset can be used to live in or lease out in the not too distant future. Be sure to leverage our condo assignment buying experience - we have literally sold dozens of them over the past few months, and hundreds throughout our company’s history.

Assignments and HST

The assignor will need to pay HST on the profit that he or she makes on a condo in addition to the deposit money that gets returned - on average, roughly 78% of those amounts are taxable, but each and every assignment deal is unique and should be supported by experienced professionals including lawyers and accountants.

Real estate is often a numbers game, and what we are increasingly seeing is the list price being adjusted to essentially bake in the HST expense that will need to be paid. So if an assignor wants to clear $x from the sale, our experts are calculating the estimated HST that will need to be paid and adding it in. Every assignment sale and situation is unique, and that’s where our team’s specialized expertise comes in handy, so an assignor won’t be surprised when it comes time to pay the government their fair share. However, we strongly recommend working with professional accountants who have significant assignment deal experience - we can provide you with a shortlist of our favourites should you decide to list yours for sale through Condo Culture. We can almost always provide a breakdown of financial insights to our clients, but again, we strongly encourage working with a professional accountant who is well versed in assignment transactions to receive the most accurate numbers.

End-users who are looking to buy assignments can potentially get a break when it comes to paying the HST, but as we outline below, every deal is different, assignment laws are evolving, and it’s so important to have an experienced accountant and lawyer on your team to know what potential options are at your disposal.

Top Legal Considerations and Clauses For Assignment Deals

Every assignment deal is different and unique in its own right, so it’s vitally important to hire a lawyer who has extensive experience with these types of transactions. Laws regarding assignments may change over time, so again, a lawyer who has this specific expertise will be key to your assignment selling and buying success. Our team has worked with several lawyers to help bring assignment deals to the finish line, and we are more than happy to make recommendations when the time comes for legal representation.

A big part of each assignment deal is that the deal isn’t officially completed until the project’s developer has given formal approval in writing, and during this time, the seller has the ability to cancel the sale if he or she decides to (this is a very rare occurrence). One of the most common reasons for this happening is the condo’s value is increasing rapidly and the seller may feel that he or she can get a better deal elsewhere to realize a larger profit. No profit is made on an assignment sale until the building is registered, and the deal officially closes. The assignor will get the first deposit and his or her 15% to 20% deposit back, but won’t get the additional money until the building’s registration event takes place. Legal terms such as these mentioned here are typical assignment deal standards, but each agreement certainly has its own, and your lawyer will need to go through every clause and sentence with a fine-tooth comb.

In most cases, MLS / Realtor.ca can’t be legally utilized for assignment listings (unlike resale properties), so the buyer has to come from elsewhere. Again, that’s why Condo Culture is incredibly valuable when it comes to assignments since we have a large buyer database to pull from and the region's most active condo search site, along with many different marketing channels to ensure our sellers can connect with quality buyers to maximize the final sale price.

You need a complete team between a real estate professional, lawyer, and accountant to support you whether you’re selling or buying an assignment. This type of real estate product is much different from a resale property as you’re essentially buying and owning an agreement until the condo is registered and reaches its occupancy date.

We have created resources on this important topic in the past, we outlined the benefits of condo assignments and provided information on what they are and how to manage the assets, and also how to assign a pre-construction condo .

We are the area’s condo assignment expert, so if you’re looking to sell or buy one of these units, be sure to reach out to us so we can explore potential options with your exciting goals at the forefront of it all. Also, feel free to stop by our Waterloo office (pictured above) right below Bauer Lofts at 191 King Street South in Waterloo for a conversation, our team would love to speak to you about any of your condo goals.

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• Real Estate

Selling Assignments – When You Are the Assignor

• October 28, 2019

Sell a property before you take possession as a preconstruction assignor. 

Welcome to assignment selling, the investment strategy that allows you to buy more with less.

You could just make a handsome profit.

What is meant by assignment sale?

How assignments work

Is assignment the same as selling?

Who sets the price?

Making the most of assignment sales

Preconstruction Buyer or Assignor? 

Assignment selling has its own special lure. 

As the original owner, you get all the perks of new home valuations, without (generally speaking) the risk of losing your deposit or being sued if you change your mind about owning.

Being an assignor allows you to buy a home and sell your interest in it before the possession date. As long as the agreement of purchase and sale doesn’t restrict assignment selling, an assignor can sell any property before possession. 

How Being an Assignor Works

Let’s say you buy a presale condo. While you are waiting for it to be built, you lose your job. Since the condominium isn’t completed or registered, you don’t own it yet. So rather than giving up your purchase deposit, you sell your contract with the builder and get some or all of your deposit back. The new buyer takes over your agreement of purchase and sale as is. What’s in the agreement of purchase and sale . 

As long as you haven’t taken final possession, you can take advantage of assignment selling after you move in. That’s because what you own during the interim occupancy period is an interest in your unit, not the unit itself. The buyer assumes all the obligations and rights attached to your interest when you dispose of it. 

Selling a property before possession makes you the assignor and the buyer the assignee. Now imagine how you could turn being an assignor into an investment strategy. You can even use it for resale homes by speculating that prices will go up between when you buy and assign a property. Buy and finance income property in Ontario.  

When You Assign a Property…

Assignment selling is similar to marketing any home, but with a few distinct features.

• You pay the developer the full purchase deposit.
• The new buyer (the “assignee”) refunds your deposit, plus or minus any profit or loss you made on the assignment.
• The assignee pays the land transfer taxes and typically HST. They pay the balance owed for the property, receive the title and take possession. Calculate land transfer taxes in Ontario . 
• You pay a real estate commission and legal fees.
• The developer may also charge you a fee and request to approve the buyer.
• On the upside, you avoid carrying costs (“occupancy fees”) while the unit is built but not yet registered.
• And, the assignee pays the closing costs.

You’re free to move on or re-invest.

Axess Law reviews these details with you and makes all of the necessary legal arrangements. Our real estate lawyers handle any problems that arise with the assignee or developer.

Setting a Price in Assignment Selling

Assignments can sell for less than you paid, especially if real estate values have declined or you are competing with other sellers. Buyers may also offer less since the building is unfinished. Your unit can take longer to sell and resale values are a complete unknown, making setting the fair market value tricky. Are assignments a good deal? 

On the other hand, prices may have increased between the time you sign the agreement of purchase and sale and assign the agreement to another purchaser. That can result in an assignment selling for more than you agreed to pay the builder. 

Because the assignee is taking over your contract as assignor, the new buyer can’t negotiate with the developer. They can only negotiate the price with you, giving you (the assignor) a chance to profit. Ultimately, it’s wise to consult a realtor to help you decide on a fair price.

Tips for Selling Assignments

• Don’t dawdle if you plan to profit from being an assignor. The developer may not consent if your unit is nearing completion or your sale competes with their marketing of unsold units.
• Check if your agreement of purchase and sale restricts advertising or prevents listing assignments on the MLS. Your agreement may be cancelled and you may lose your deposit if you do so.
• Word of mouth is a powerful way to promote assignment selling. Tell your friends and colleagues to spread the word.

Look for realtors who specialize in assignment selling and can help you find a buyer. Buy assignment properties . 

Affordable Real Estate Lawyers, Anywhere You Are 

Access lawyers for less in the Greater Toronto Area, Ottawa, or anywhere in Ontario  when you buy, sell, or transfer property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it. 

Hire a real estate lawyer anywhere in Ontario.  

Book Appointments Online or By Phone

Our real estate lawyers video conference online anywhere in Ontario, or meet you in person at our convenient Ottawa or Greater Toronto Area law offices . We have onsite parking and easy transit access. Make day or evening appointments by dialing our 647-479-0118 lawyer line (toll free to 1-877-402-4207 ) or book online . It takes just minutes of your time.  

We have onsite parking and major transit access.

Click here to learn more about Axess Law’s real estate law services.

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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 will be given an assignment clause/right in the form of a contract. You can choose to sell your assignment before the condominium is even built.

• 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, the process of this transaction and how it can be transferred.

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

• Buying an Assignment

Selling an Assignment

Assignments faq.

The Details of an Assignment Sale

What Is an Assignment Sale? Why Do These Kinds of 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.

In 2017, John Smith buys a pre-construction condominium suite from ABC Developments for $400,000 with a total down payment of 20%, equalling $80,000. The project is set to be completed in 2022.

In 2021, John discovered he will be relocated to a new city. He can’t afford to buy a new home while holding onto his pre-construction condo.

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

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.

• In 2022 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.

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.

Is It Worth It to Buy an Assignment?

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.

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.

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.
• No Carrying Costs: You can avoid paying monthly fees like occupancy fees that can sometimes last for up to two years.
• No Closing Costs: You don’t need to take out a mortgage or incur any other closing costs.

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’re interested in either buying or selling an assignment, you need a realtor who is experienced in finding, negotiating and drawing up the offer for these types of sales. This means you’ve come to the right place! We have a wealth of expertise, knowledge and resources when it comes to assignment sales and we would be more than happy to discuss the idea with you.

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
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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. 

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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.

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Buying Condos on Assignment — A Quick Guide

Buying condos on assignment is becoming the norm in the real estate business. Investors use this strategy to purchase a condo cheaply and sell before closing to maximize profit. Understanding what a condo assignment is can be difficult, especially for newbies in the niche. Our team will discuss condo assignments and what you need to know before diving in to your next investment. 

What Is a Condo on Assignment Sale?

A condo on assignment sale is a written document issued to the purchaser of a pre-construction condo unit from the builder or an investor intending to sell. This agreement indicates that since the building hasn’t been officially registered, no one can take possession of the condo unit. However, you are allowed to sell the agreement to an interested buyer before the building is fully registered.

You will only get full ownership of the building after the final closing date – the period when the property title will be transferred to you. Once the property has become registered, you can sell the property and the title. It’s after the closing date that you will begin your mortgage payment.

Remember, the condo unit isn’t officially yours, even after making your down payment. You will only get a condo assignment sale as proof of your down payment and not the property’s title until after the closing date.

Why Purchase a Condo on Assignment?

There are reasons why buying condos on assignment is a familiar strategy investors and realtors use these days. If you already bought a pre-construction condo, you can maximize profit before closing and registration by selling the contract to another buyer. This is called “flipping.”

If you also have to relocate or out of cash, you can sell the contract to an interested buyer and get your money. Here, the agreement can protect you from accruing further costs.

Another reason to purchase a condo on assignment is that you’ll be buying at a price less than the market value when it’s completed. 

Important Factors to Remember

When buying a condo on assignment, you need to keep the following factors in mind.

You will be liable to pay taxes, such as Land Transfer Tax and other legal fees after the final closing date. Our experts recommend that you employ the services of a tax advisor for proper guidance.

Down Payment

Buying a condo on assignment sale demands that the builder collects a down payment from you. The deposit structure varies from builder to builder and the current phase of the building construction, but the typical range is between 15% – 30% of the total price of the building.

The builder must approve all the transactions regarding assignment sales. Some builders may not approve until the date of assignment sale is near the final closing date to avoid any confusion on whose name the property will be registered to.

You are mandated to provide Proof of Sufficient Funds to show that you can pay for the purchase before the builder can issue the contract. The remaining amount after the initial down payment is paid in the form of a mortgage.

The builder automatically assumes that you are using your condo as your primary residence after registration. Therefore, you become obligated to assign the HST Rebate entitlement to the builder.

Real Estate Broker

You need the help of a professional and seasoned real estate broker to help you with the transaction and ensure that it goes smoothly. This is because the paperwork involved is relatively complicated, and many agents or real estate brokers may not fully understand how condo on assignment sale works. 

Closing an Assignment Sale

When buying a condo on assignment sale, you will be responsible for closing costs once the builder registers the building. These costs include Land Transfer Tax, Utility Connection Fees, Development Charges, etc. [1] However, you are exempted from HST if you plan on using your condo as your primary residence. 

When purchasing a condo on assignment sale, you need to take note of the following:

• Assignment closing date (when the transaction is completed)
• Occupancy closing date (the first date when the builder hands over the keys to the purchaser)
• Final closing date (when the title of the property is transferred to you)

How do you buy an assignment for a condo?

To buy an assignment for a condo, you must be ready to purchase one of the pre-construction condo units from the builder. Afterward, you can request an assignment from the builder, showing that you own one of the units.

How does a condo assignment work?

A condo assignment transfers partial ownership of the building from the builder to the buyer. When buyers decide to purchase a pre-construction condo unit, they agree with the builder, signifying partial ownership.

When buying condos on assignment, it’s vital that you go through all these factors, as explained by our real estate experts, to avoid any complications, especially during the closing dates. An error could jeopardize your chances of buying a pre-construction condo, so take your time while going through the transaction. 

More pages:  

• Toronto condo and housing bubble 
• Advantages and disadvantages of condo living 
• Expenses of condo building 
• Assignment sale in Toronto
• Assignment sale in Vancouver
• Purchasing condo in Canada  

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Key takeaways

• Closing costs can vary significantly by state, ranging from less than 1 percent of the home’s sale price to 5 percent or more.
• Washington, D.C. has the highest average closing costs in the country, while Missouri has the lowest.
• Homebuyers can potentially negotiate certain closing costs to lower their upfront costs.

Buying a home is one of the biggest investments you may ever make, but the asking price doesn’t offer the complete picture of how much you’ll need to get the keys. You’ll also have to account for closing costs, which are the fees associated with finalizing a real estate deal, like home appraisal and credit check fees.

One big factor that impacts your closing cost tab is where in the U.S. you’re buying — typical costs can vary widely from one state to another. If you’re in the process of buying a house , or just starting to think about it, keep reading for details on the average closing costs by state.

How much are average closing costs?

Closing costs are the upfront fees you pay when getting a mortgage and finalizing a home purchase. The national average closing costs for purchasing a single-family home come to $6,905 including transfer taxes, and $3,860 without, according to the most recent data from CoreLogic’s ClosingCorp (which covers the year 2021).

You’ll also pay closing costs when you refinance your mortgage . Those costs, however, tend to be much lower: an average of $2,375, according to ClosingCorp.

In general, closing costs for a home purchase cover expenses and fees including:

• Credit check
• Title search and insurance
• Attorney fees
• Origination fee
• Application fee
• Underwriting fee
• Transfer taxes, if applicable

Closing costs by state

Depending on what state you’re in, ClosingCorp’s data shows that these fees can amount to anywhere from less than 1 percent of the home’s sale price to more than 5 percent at the highest end of the range.

States with no transfer taxes

One of the expenses that adds to closing costs is real estate transfer taxes , which cover the cost of transferring a title or deed from the seller to the buyer. However, some states do not charge a transfer tax:

• Mississippi
• North Dakota
• Oregon (most counties)

Markets with the highest average closing costs

What are closing costs, who pays closing costs, how much are closing costs, how can you save on closing costs.

Article sources

We use primary sources to support our work. Bankrate’s authors, reporters and editors are subject-matter experts who thoroughly fact-check editorial content to ensure the information you’re reading is accurate, timely and relevant.

“ Average Closing Costs for Purchase Mortgages… ” CoreLogic’s ClosingCorp. Accessed on April 2, 2024.

“ All You Need to Know About Real Estate Transfer Taxes by State in 2024 ,” Property Shark. Accessed on April 2, 2024.

Guide to closing on a house: What to expect during the closing process

What is a closing disclosure?

How to reduce closing costs: 7 negotiation strategies

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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. And when someone knows, likes, and trusts you, you can build a relationship faster and shorten that gap during the buying process.

Many people get into sales because it allows greater income potential and offers the flexibility that traditional jobs don’t.

But that doesn’t mean sales professionals want to work around the clock just to feed our families. We don’t like to be stuck in a box. We are creative, talkative, hungry for a challenge, and at our core — just really like to help people.

Out of necessity, we are constantly striving to become more efficient, to increase our skills.

But in the day to day, we find ourselves talking to more prospects than ever, faced with more resistance, hard questions, and endless objections. As a result, we work longer hours and spend more time behind the wheel or in front of the keyboard.

Assignment selling can be the answer for you if you apply it right.

But first, a reminder of how far we've come:

Let’s define assignment selling

Assignment selling is the process of intentionally using educational sales enablement content you have created about your products and services to resolve the major concerns and answer the burning questions prospects have so they are much more prepared for a sales appointment.

In layman’s terms, it means answering your prospect’s questions before they ask them on a sales call. Think about it: How much research do you do online before you buy something new? Studies show the average is 70% — and that’s increasing every day.

No one wants to talk to a sales person until they’re pretty convinced they know what they want to buy. They want to do their own research, they want to get answers to their questions about cost, problems, and comparisons.

In today’s digital world, you should be able to find out most of that information yourself online. And then, when you’re pretty sure you want to buy that product or service, that’s when you contact the company and speak to a live person to help you make a final decision. 

If this is true, then why do we continue to live in a distorted reality that a prospect has to come to a salesperson for all the answers? They don’t.

And the more we empower the buyer to get those questions answered without having to talk to us, the closer we will get to the sale without having to do anything except keep them moving through the sales process.

How do we do that? By being transparent about the buyer’s questions before and during the sales process. 

Chances are, if you’ve been asked a question once, you’ve been asked it multiple times, and you’ll be asked it from future prospects as well. 

Getting started with assignment selling

As a first step, here are some examples you, as a sales rep, could ask yourself:

• What questions do you currently get asked the most often?
• What are you currently being asked that buyers should know every time?
• What questions do you get asked that immediately indicate the buyer is not close to ready to make a decision?
• What do your clients and buyers push back on the most?
• What are your buyers’ biggest doubts or worries (with respect to the product, the process, or the company)?
• What do your buyers have to convince their key decision-makers of?
• Why are people not buying from you?
• What are the things that your customers must see and believe in order to move to the next stage?
• What are the things that would cause a client NOT to move to the next stage?

Once you’ve answered these questions you can get your team involved to create that video or written piece of content that answers these buyer questions . Then publish it as a blog article or a page on your site, and use that content in your sales process.

Assignment selling allows you to spend more time on better fit prospects

How many prospect calls have you had in the past week that were just not a good fit for your product or service?

How far into the conversation did it take you to realize that? How much time did you spend researching your prospect before you met with them? How many hours did you spend on the presentation deck before the call? How frustrated were you when they weren’t a good fit? 

Now, imagine a scenario where each prospect gets a video before the first sales appointment. This video explains some of the commonly asked questions that normally get asked in the first call.

Here at IMPACT, we call this an 80% video . Why? Because it answers 80% of the questions prospects would ask on the first call.

Based on their years of experience, our sales team put together a list of the commonly-asked questions we get on the first call.

We then send a two-minute video to all prospects before that first call and ask them to watch it. I ask each prospect to watch it before our call and if they can’t, to please reschedule out of respect for both of our time.

Think about it. If they aren’t willing to spend two-minutes watching a video, how well do you think that first appointment will go? 

We can tell from our HubSpot analytics  if they’ve watched it or not, and if they haven’t — I reschedule the call.

This saves me time talking to someone who is not up to speed on some of our services and a range of costs they can expect working with us.

If they have watched the video and especially if they’ve visited several pages on our website, we can have a more fruitful conversation.

The prospect can spend more time talking with me about how to move forward versus me having to educate them.

Assignment selling speeds up the sales process

You may live in the world of the one-call close, but more often than not, buyers are not making a decision in just one meeting. And that’s where assignment selling comes in to speed up the sales process. 

If you’ve sent your prospect the 80% video , chances are they will come well qualified and you will have a great first meeting. But what happens when you come to the end of that first meeting and that person isn’t ready to buy? Maybe you need to set up a demo.

Perhaps the prospect needs to bring in their boss to the next meeting. There are often just too many variables that go into the sale to finalize everything in just one meeting.

So, set the next meeting but don’t leave it at that. Send them something in between and tell them you want them to review it in advance of the next call.

If you’ve been compiling a list of questions and objections you get in the sales process, this will become easier over time; eventually you can create a library of materials to send between meetings.

You can then even create templates with the most relevant materials, spend just a little time customizing that follow-up email to your prospect based on the call, and press that send button.

I always stress to the prospect that I am going to be sending them something and that I expect them to review it before our next meeting.

If you have analytics like we do, you can see exactly how many pages they’ve read and even how much of the video they have watched.

I now know going into my next meeting just how invested that prospect is. Have they opened the email? Have they read the articles? Have they watched the video? 

Then, the next conversation is not a sales pitch. It starts with questions like “what was your biggest takeaway from the information you’ve reviewed since our last meeting?” or “from the video that you watched, what specific questions do you have?” 

Then you can get right down to business because you know you have an engaged buyer and you can have a much more productive conversation. 

Assignment selling increases your close ratio

If you’ve started to use assignment selling in your sales process before the first call to pre-qualify good fit customers and dis-qualify bad fit ones, you’ve likely saved time already. 

Now you’re having first conversations with better fit buyers. They come to the first call having some of their initial questions answered.

Based on what they tell you, you can send them additional materials to review in advance of the next call.

Never just send them the information and hope they call. Tell them you’re going to send them the information and book the next call. 

It is perfectly acceptable to say “I’m going to send you this information to review in advance of our next call. If, after reviewing it, you decide it doesn’t make sense to have the next call, either you’ve decided yes, you’d like to proceed or no, you’re going to go another route, we can cancel that call.” 

By getting right to the point and using assignment selling, it saves time for you both.

If they don’t do the homework and cancel the call, you haven’t wasted any more time.

If they do the homework and decide to buy, you have shortened the sales cycle.

If they do the homework, get on the next call and continue through the sales cycle more familiar with how you can help, you’re on the right track.

When you update your CRM with your calls at the end of the week and you see that you had fewer calls, but more time spent on quality calls, and closed more business using assignment selling, your close ratio will have gone up and your boss will smile.

Not only is your close ratio higher, but you’re closing more deals and better deals.

My best advice for getting started with assignment selling

You can see how assignment selling can save you time, have you connecting with better fit prospects, and improve your close rate. 

Content never sleeps. But we as salespeople do.

To get started with assignment selling, review the nine questions I asked earlier in this article to help you get started. Involve anyone in marketing and leadership to get these articles and videos written and published. Then start using these resources immediately. 

And if you need more actionable tips about how to put this into place, I invite you to sign up for IMPACT+ and take our free 30-minute course on assignment selling. 

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Discount chain 99 Cents Only Stores is winding down its business and selling hundreds of branches

• 99 Cents Only Stores, a discount chain with branches in several states, is winding down operations.
• It's selling its 371 stores and will liquidate its merchandise and fixtures.
• The company blamed a number of factors including the pandemic, shrink, and inflation.

Discount chain 99 Cents Only Stores is closing down.

The retailer, which has 371 stores in California, Texas, Arizona, and Nevada, said on Thursday that it was winding down its business operations.

It will have liquidation at all its stores and will also sell its real estate.

"This was an extremely difficult decision and is not the outcome we expected or hoped to achieve," Mike Simoncic, interim CEO of the company, said in a statement.

The chain sells a range of items including fresh produce, food cupboard items, home goods, and beauty products. It also sells products by name brands — ones shown on its website include Nivea, Lego, and Heinz — which it says it gets from big-box stores that over-order.

Some of 99 Cents Only Stores' products are obtained through liquidation deals. The company owns its own fleet of trucks "to keep costs down."

Related stories

The chain, which opened its first store in Los Angeles in 1982, originally charged 99 cents for most of its items.

Over the last two decades, the company has deviated from this price "to provide our customers with a wider assortment of product offerings and extreme value products and also to keep pace with rising operating costs," it said .

In 2008, it raised the price of 99-cent products to 99.99 cents. "In almost all instances, this price was rounded up to one dollar at the register, and since that time, that is the amount a customer will be charged for merchandise at this price point," the company said.

It said that over the years, it has also increased the number of products it sells priced at more than $1.

Other discount chains have struggled to stick by low price points, too. Dollar Tree — the last of the US' three big dollar-store chains to stick to $1 — moved away from the price point in 2021.

The pandemic, shrink, and inflation

Simoncic, who will step down from his role, cited factors such as the pandemic, shifting consumer demand, rising levels of shrink , and persistent inflationary pressures as hindering the company's ability to operate.

The pandemic caused major shifts in the way that people shop, with a huge jump in online shopping. The last few years have also been characterized by high inflation, which has pushed up operating costs.

The company said that it had conducted an "extensive analysis" of ways to continue operating. "Following months of actively pursuing these alternatives, the company ultimately determined that an orderly wind-down was necessary and the best way to maximize the value of 99 Cents Only Stores' assets," it added.

Watch: The surprising reason millennial parents are miserable

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