Purchasing a pre-construction condo unit is an exciting step in the world of real estate. It all begins with the signing of an Agreement of Purchase and Sale between the buyer and the condo builder. This agreement secures the buyer’s right to the specific unit they have chosen, creating the foundation for a future property transaction.
Resale Transactions: When Ownership Has Matured
In contrast, a “Resale” transaction occurs when a seller is in possession of the condo unit, the building is complete, and the property is officially registered. This is distinct from an Assignment sale, as the seller has full ownership of the property and can sell it as an established, tangible asset.
Understanding the Distinctions
In assignment sales, the seller doesn’t own the physical condo unit but rather the right to purchase it. In resale transactions, the seller owns the condo unit, and the buyer becomes the new owner upon closing.
Assignment sales occur before the condo building is completed and registered, typically during the pre-construction phase. Resale transactions involve already constructed and registered properties that are ready for occupancy.
In assignment sales, the seller transfers the original Agreement of Purchase and Sale to the new buyer. In resale transactions, a new Agreement of Purchase and Sale is created between the seller and the buyer.
The deposit structure and financing terms may differ in assignment sales compared to resale transactions. Buyers in assignment sales may need to assume the deposit structure and financing terms set by the original purchaser.
In resale transactions, buyers have the opportunity to inspect the physical property and conduct viewings. In assignment sales, buyers often rely on the original purchase contract and may not have the chance to physically inspect the unit.
A Win-Win for Both Sellers and Buyers
For Sellers:
The flexibility to sell before the official property transfer takes place can be a significant advantage, especially if market conditions have improved since the initial purchase.
Sellers in assignment sales typically sidestep the usual closing costs associated with property transfers, which can translate to substantial savings.
Buyers who have yet to occupy the unit don’t have to bear occupancy fees, making the process smoother and more cost-effective.
Since the property hasn’t reached the closing stage, sellers don’t need to secure a mortgage, offering financial relief.
Sellers can cash out by reclaiming the deposits they’ve paid and potentially making a profit if the market has appreciated.
For Buyers:
Buy a Brand New, Never-Lived-In Condo:Assignment buyers have the opportunity to purchase a pristine, never-lived-in condo unit, offering a fresh start with no wear and tear.
Unlike pre-construction condos, which can take several years to build, assignment buyers can move in sooner, avoiding the extended waiting period.
New buyers still benefit from the Tarion warranty, ensuring protection against defects and subpar workmanship.
The original VIP incentives offered in the initial contract can be retained, potentially adding to the buyer’s financial benefits.
Assignment buyers may have more room for negotiation with the seller, potentially securing a favourable deal.
Conclusion:
In conclusion, understanding the distinctions between assignment and resale transactions is crucial for condo buyers and sellers. Assignments offer unique advantages, allowing sellers to capitalize on market shifts before closing while providing buyers with the opportunity to purchase a new condo without the waiting period. Both parties can benefit from this arrangement, and staying informed about this aspect of real estate can open doors to valuable investment opportunities. To explore further insights into condo investments, reach the Platinum agents at SG Homes for expert advice and updates on Real Estate market.
