Condo Assignment – Richmond BC

June 25, 2008

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Should you consider buying a “condo assignment”?

When a deal makes sense after doing your deal diligence, there is no reason why you should not do the deal.

Buying A Condo Through Assignment Sale

When you are buying into a condo assignment and agree to take over the original purchase contract, the following example illustrate the cost break down for the purchase:

Example:

Original price from the developer in 2006 at $360,000 with 10% ($36,000) paid to date, completion is scheduled for end 2008.

If your agree to pay $385,000 by assignment of the purchase contract from the first buyer, you must pay the following to the seller in order to assume the assignment contract:

Original Deposit = $36,000
(10% paid to date by Original Purchaser)

Plus:

Difference in Assignment Price from Original Price = $25,000
(New Price $385,000 less original Price $360,000)

Total to Purchase Assignment = $61,000
(payable to seller to take over contract)

When the property is ready for occupancy in 2008, you will complete the sale with the developer according to the terms and conditions as per the original contract. Over the past 3 years, the “lift” (price difference between the original contract and the assignment deal) could be as much as $35,000 to $80,000. But, recent assignments are found to be less profitable, and with a softer housing market now some investors may have to lose money to get out of their contracts. click here for some new condos in Richmond available for assignment.

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Before entering into an assignment contract, make sure that the seller has obtained the consent to assign his or her contract, and find out who is responsible for paying the GST and assignment fee. Any deposit for the transaction should be held by your Solicitor or your real estate agent “in trust”.

How do you know you are not taking over an assignment on a project that is in trouble? Is the project going to complete on time? All developers are protected under the presale contracts for any cost escalations that can be pass on to the buyers. Check and make sure you will not end up taking over the cost escalation from the seller!

It is always advisable to use a Realtor who can represent you as Buyer Agent to negotiate the price on an assignment sale. As a home buyer, you should find out resale new condos available for sale.

If you like to find out more information about assignment deals in Richmond or elsewhere in Greater Vancouver, contact me at 604-721-4817 or email me.

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