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Assignment of pre-construction condos in Toronto

If you follow this blog, you know that I’m not a big fan of investing in pre-construction condos. I think of pre-construction condo investment now a days as a speculative investing. Long gone are the days when developers and builders had to price homes and condos below market value to entice buyers to purchase into their projects and if projects went through, the buyers stood to make great gains on their “investment.”

Now a days, with consumer confidence running so high, it’s hard to find projects where builders are pricing units at a discount and buyers stand to make a profit.

Our market reality today is that “investors” that spent money and rushed into the market and bought units will be looking at assigning their contracts or selling them in the coming months and years. This is where I see the next frontier for today’s investor.

We will see “investors” not being able to close or trying to get rid of properties at prices that they paid years earlier or lower than they had purchased.

This brings me to the point of this blog.

I had an interesting week negotiating as assignment agreement for one of our listing and was amazed to find how many real estate agents don’t know or shy away from assignment agreements. There are definitely pit falls when taking over contracts but there are ways to mitigate them by reviewing the following

  • Lawyer review: Have your lawyer review the documents that you have signed
  • Purchase and Sale Agreement Review: Have your lawyer review the details of the purchase and sale agreement to make sure you can perform
  • Review all the closing cost associated with taking over the contract
  • HST: Make sure the Assignor takes over all hst obligations and they are included in the assignment price
  • Consent for assignment of agreement from the builder

It’s an interesting way to invest and I see this as the next wave. Keep an eye on the market for condo buildings that aren’t completed/registered and units are for sale. The best time to hit the building is when you have a large number of units for sale and look for similar condos that are competing.

Happy investing!

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