Selling a pre-construction condo before closing is known as an assignment sale. This process allows the original buyer (assignor) to transfer their contract to a new buyer (assignee) before taking possession of the unit. If you're looking to sell your pre-construction condo before closing, here’s a step-by-step guide to help you navigate the process.
1. Check Your Purchase Agreement
Before listing your condo for an assignment sale, review your Agreement of Purchase and Sale (APS) to confirm whether assignment sales are allowed. Some builders place restrictions or charge assignment fees, which should be considered when deciding to sell.
2. Get Builder Approval
Most developers require written approval before you can assign your contract. This may involve:
Paying an assignment fee (varies by developer).
Completing forms and paperwork.
Adhering to any marketing restrictions (e.g., some developers don’t allow public advertising).
3. Determine Your Selling Price
To set a competitive price:
Consider your original purchase price plus any deposits paid.
Check resale prices in the area.
4. List Your Assignment Sale
Since many builders restrict MLS listings for assignment sales, your options include:
Working with a Realtor: Realtors experienced in assignment sales can market your unit through their network.
Private Listings: Websites that specialize in assignment sales, such as AssignmentPlus.ca, can connect you with potential buyers.
Word of Mouth & Investor Groups: Many investors actively seek assignment opportunities.
5. Market to the Right Buyers
Assignment sales are typically appealing to:
End-users: Buyers looking for a move-in-ready unit.
Investors: Buyers seeking to enter the market at an earlier stage before occupancy.
Other Pre-Construction Buyers: Those who missed out on initial sales but still want a unit in the project.
6. Negotiate the Terms
Once you find a buyer, negotiate key details, including:
The assignment price.
Who will cover builder assignment fees and closing costs.
Any adjustments, such as development levies or HST obligations.
7. Work with a Lawyer
Assignment sales involve legal complexities, so having a real estate lawyer who understands pre-construction contracts is crucial. They will:
Ensure all terms comply with the builder’s requirements.
Draft the assignment agreement.
Advise on potential tax implications, including HST.
8. Close the Assignment Sale
Once the contract is assigned, the assignee takes over the remaining payments and obligations. The deal officially closes when the condo is registered, and the builder transfers title to the new buyer.
Key Considerations Before Selling
Time Restrictions: Some builders allow assignment sales only after a certain percentage of the project is sold.
HST & Tax Implications: The assignment may be subject to HST and capital gains tax. Consult a tax professional.
Market Conditions: The demand for assignment sales can vary based on real estate trends and interest rates.
Final Thoughts
Selling a pre-construction condo before closing can be a good way to exit an investment, but it requires careful planning and legal considerations. Understanding your builder’s rules, pricing your unit correctly, and marketing to the right buyers can help ensure a smooth transaction.
If you need assistance finding buyers for your assignment sale, platforms like AssignmentPlus.ca can connect you with interested investors and homebuyers.
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