real estate<\/a> in Canada, you may have the option of purchasing a property that is already built (referred to as a resale property) or one that is in the process of being built (referred to as a new-build or pre-construction property). If you choose the latter, you are typically buying the unit directly from the builder or developer, and you are buying it before it has been constructed. This means that the unit you purchase may not be livable for some time (possibly several years). Since the building does not yet exist, developers usually create detailed virtual renderings out of the plans and a model unit for prospective buyers to tour. There are many benefits to purchasing a pre-construction condo, such as the fact that they are often cheaper to purchase than resale condos. In addition, when you buy a new-build condo, you might be able to customize certain details of the unit, and you will also be the first person to live in it, which can be appealing. That said, pre-construction condos can also be risky as you haven\u2019t had a chance to see your specific unit in person, and construction projects can be delayed by months if not years. A delayed project could lead to you renting for longer than you intended or prevent you from earning rental income for a longer period. Plus, if you decide to sell your condo before construction is complete, the process can be complicated (which we will detail below). Overall, buying a pre-construction condo comes with both pros and cons, so before doing so, we recommend carefully considering your personal needs, lifestyle, and how long you intend to keep the condo before selling.<\/span><\/p>\n–\u00a0<\/span><\/p>\nCan I Sell a Pre-Construction Condo?<\/strong><\/h2>\nOn to the main question this post intends to tackle \u2014 can you sell a pre-construction condo? This is a common question and the short answer is yes, it is possible to sell a condo that has yet to be built. However, it can be difficult depending on the circumstances. To help you understand whether selling your new-build condo is right for you, we outline the process through which condos of this kind are sold, a process known as assigning or assignment sales.<\/span><\/p>\n\u00a0–<\/span><\/p>\nAssignment Sales<\/strong><\/h3>\nSelling a pre-construction condo is done through a process called an assignment sale. Any time you sell a unit before it is finished being built, it is called assigning. Why? This is due to the fact that you are, in effect, assigning the contract or the right to take possession of the unit at a future date to another person, as opposed to outright selling the property to that person.\u00a0<\/span><\/p>\n <\/p>\n
When you buy a pre-construction unit, you gain the rights to 100% of that unit just for making a down payment. Unlike when you buy a resale home, down payments for pre-construction units are not paid upfront. Rather, they are paid over the course of construction according to a predetermined deposit structure. The most common amount for a pre-construction condo down payment is 20%, and a typical deposit structure might look like this:\u00a0<\/p>\n<\/span><\/p>\n
<\/span><\/p>\n\n- $5,000 down payment upon closing the deal<\/span><\/li>\n
- Balance of 5% in 30 days<\/span><\/li>\n
- 2.5% in 120 days<\/span><\/li>\n
- 2.5% in 180 days<\/span><\/li>\n
- 2.5% in 420 days<\/span><\/li>\n
- 2.5% in 540 days<\/span><\/li>\n
- 5% on occupancy<\/span><\/li>\n<\/ul>\n
In terms of the mortgage and closing costs, when you sell your unit before it is complete (that is, assign your unit), you don\u2019t have to worry about either. This is because mortgage payments and closing costs like utility fees, land transfer tax, occupancy fees, and more are not paid until construction is complete. Therefore, selling your condo before this happens can <\/span><\/p>\n[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.18.0″ _module_preset=”default” background_color=”#edf7f3″ custom_padding=”32px||32px||true|false” da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” header_2_text_align=”center” header_2_text_color=”#38505b” header_2_font_size=”2.63rem” header_2_line_height=”3.75rem” max_width=”800px” module_alignment=”center” header_2_font_size_tablet=”32px” header_2_font_size_phone=”27px” header_2_font_size_last_edited=”on|phone” header_2_line_height_tablet=”3.75rem” header_2_line_height_phone=”32px” header_2_line_height_last_edited=”on|phone” global_colors_info=”{}”]<\/p>\n
“Selling a pre-construction condo is done through a process called an assignment sale. This is due to the fact that you are, in effect, assigning the contract or the right to take possession of the unit at a future date to another person, as opposed to outright selling the property to that person.”<\/strong><\/h2>\n[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.18.0″ _module_preset=”default” custom_padding=”||76px||false|false” da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” min_height=”1145.9px” custom_padding=”23px||0px|||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”21px” text_line_height=”1.6em” header_2_font=”||||||||” header_2_font_size=”36px” header_2_line_height=”1.3em” header_3_font_size=”1.25rem” header_3_line_height=”1.88rem” header_4_font=”|700|||||||” header_4_font_size=”1.25rem” header_4_line_height=”1.88rem” global_colors_info=”{}”]<\/p>\n
When can you assign a pre-construction condo?<\/strong><\/h3>\nWhen you can sell (or assign) your pre-construction condo depends on the agreement you signed with the developer. The good news is that most development projects allow for assignments. However, there may be some restrictions on how soon after purchasing you can sell it, as well as fees associated with assigning. Assignment fees vary widely and can be anywhere from $5,000 to $20,000, and sometimes even more than that. These fees can usually be negotiated, but there is never a guarantee that the developer will agree to reduce the fee. Although uncommon, some developers offer free assignments, though even these typically come with legal fees of between $500 and $1,500. Overall, sellers should be prepared to pay a hefty fee if they want to sell their pre-construction condos. Budgeting will be important to determine whether selling your pre-construction condo is worth it given the fees. Please note that not all projects allow for assignment so it\u2019s important to ask about this before purchasing a pre-construction condo.<\/span><\/p>\n–<\/span><\/p>\nHow do you assign a pre-construction condo?<\/strong><\/h3>\nThe process of assigning a pre-construction condo is not all that different from selling a resale property. The process involves marketing the property to attract buyers, negotiating an offer, and making a deal. The main element that distinguishes the assigning process from a typical home sale transaction is the deposit structure and when and how the deal closes. It\u2019s also worth noting that many developers prohibit sellers from listing an assignment sale on MLS\u00ae or other online real estate marketplaces. Therefore, you will need to find other, more creative ways of attracting buyers, which is where hiring a REALTOR\u00ae comes in handy.\u00a0<\/span><\/p>\n–<\/span><\/p>\nHow to Sell a Pre -Construction Condo Through an Assignment Sale<\/strong><\/h2>\nReady to sell your pre-construction condo via an assignment sale? Keep reading for a step-by-step guide on how to do this.\u00a0<\/span><\/p>\n–<\/span><\/p>\n1. Contact the developer<\/strong><\/h3>\nThe first step is to get approval from the developer to assign your unit. As mentioned, most developers allow owners of pre-construction condos to assign their units, however, not all do. Therefore, it\u2019s important to reach out and get more information about what is and isn\u2019t allowed. Assuming the developer allows assignment sales, be sure to get further information, such as the fees that come with assigning your condo and any rules or restrictions, such as what websites or platforms you may not be allowed to promote it on. It is also a good idea to ask about the process of signing a new agreement once you\u2019ve found an eager buyer.\u00a0<\/span><\/p>\n–<\/span><\/p>\n2. Market your assignment<\/strong><\/h3>\nOnce you\u2019ve gotten approval from your developer, it\u2019s time to market your property and attract potential buyers. Since you likely will not be allowed to advertise your unit on the MLS\u00ae or other real estate marketplace websites, we recommend contacting a REALTOR\u00ae for help. They can reach out to their personal buyer pool and implement other effective marketing strategies to get your unit in front of as many eyeballs as possible.\u00a0<\/span><\/span><\/p>\n[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”Section” module_id=”sell-widget” _builder_version=”4.24.2″ _module_preset=”default” background_color=”#f0faf4″ custom_padding=”0px||0px||false|false” da_popup_slug=”sell-widget” da_disable_devices=”off|off|off” global_module=”300633″ global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row column_structure=”2_5,3_5″ use_custom_gutter=”on” gutter_width=”3″ make_equal=”on” _builder_version=”4.24.2″ _module_preset=”default” background_enable_color=”off” module_alignment=”center” global_colors_info=”{}”][et_pb_column type=”2_5″ _builder_version=”4.24.0″ _module_preset=”default” custom_css_main_element=”margin: auto;” global_colors_info=”{}”][et_pb_image src=”https:\/\/wahi.com\/wp-content\/uploads\/2024\/04\/Group-5922.png” title_text=”Group 5922″ src_last_edited=”off|desktop” _builder_version=”4.24.2″ _module_preset=”default” max_width=”480px” global_colors_info=”{}”][\/et_pb_image][\/et_pb_column][et_pb_column type=”3_5″ _builder_version=”4.24.0″ _module_preset=”default” custom_css_main_element=”margin: auto;” global_colors_info=”{}”][et_pb_text _builder_version=”4.24.2″ _module_preset=”default” header_font=”Poppins|700|||||||” header_line_height=”44px” max_width=”100%” max_width_tablet=”” max_width_phone=”270px” max_width_last_edited=”on|phone” module_alignment=”center” custom_margin=”||10px||false|false” custom_margin_tablet=”” custom_margin_phone=”30px||10px||false|false” custom_margin_last_edited=”on|phone” header_text_align_tablet=”” header_text_align_phone=”center” header_text_align_last_edited=”on|phone” header_font_size_tablet=”” header_font_size_phone=”30px” header_font_size_last_edited=”on|desktop” custom_css_main_element=”font-weight: 800 !important;” custom_css_free_form=”#sell-widget h1{|| font-weight: 700 !important;|| font-size: 30px;||}” global_colors_info=”{}”]<\/p>\n
Know the Value of Your Home<\/h1>\n
[\/et_pb_text][et_pb_text _builder_version=”4.24.2″ _module_preset=”default” text_font_size=”22px” text_line_height=”26px” header_font=”||||||||” header_line_height=”26px” header_2_font_size=”22px” header_2_line_height=”26px” max_width=”100%” max_width_tablet=”” max_width_phone=”270px” max_width_last_edited=”on|phone” module_alignment=”left” custom_margin=”||30px||false|false” text_font_size_tablet=”” text_font_size_phone=”18px” text_font_size_last_edited=”on|phone” text_orientation_tablet=”” text_orientation_phone=”center” text_orientation_last_edited=”on|phone” module_alignment_tablet=”” module_alignment_phone=”center” module_alignment_last_edited=”on|phone” global_colors_info=”{}”]Instantly track the value of your most precious asset.[\/et_pb_text][et_pb_button button_url=”\/ca\/en\/home-estimation\/what-is-my-home-worth?check-bestimates-modal=true” button_text=”Get estimate” button_alignment_phone=”left” button_alignment_last_edited=”off|desktop” _builder_version=”4.24.2″ _module_preset=”default” custom_button=”on” button_text_size=”12px” button_border_radius=”4px” button_letter_spacing=”1px” button_font=”|700|||||||” button_use_icon=”off” custom_margin=”||||false|false” custom_padding=”10px|20px|10px|20px|true|true” button_text_size_tablet=”” button_text_size_phone=”13px” button_text_size_last_edited=”on|phone” custom_css_main_element=”font-weight: 800 !important;” custom_css_free_form=”#sell-widget a.et_pb_button{|| font-weight: 600 !important;||}||||@media (max-width: 600px){||#sell-widget a.et_pb_button{||display: block;||text-align: center;||}||}” global_colors_info=”{}” custom_css_main_element_last_edited=”on|desktop” custom_css_main_element_tablet=”font-weight: 800 !important;” custom_css_main_element_phone=”font-weight: 800 !important;”][\/et_pb_button][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.18.0″ _module_preset=”default” background_color=”#ffffff” custom_padding=”33px||3px||false|false” da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” custom_padding=”||57px|||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”21px” text_line_height=”1.6em” header_2_font=”||||||||” header_2_font_size=”36px” header_2_line_height=”1.3em” header_3_font_size=”1.25rem” header_3_line_height=”1.88rem” header_4_font=”|700|||||||” header_4_font_size=”1.25rem” header_4_line_height=”1.88rem” global_colors_info=”{}”]<\/p>\n
<\/p>\n
\u00a03. Review and negotiate offers<\/strong><\/h3>\nAs offers start to pour in, you should be prepared to review each promptly and respond to or negotiate with the ones that interest you. If you hire a REALTOR\u00ae, they can negotiate on your behalf and advise you on the best strategies to employ, as well as which conditions or offer prices are worth accepting.\u00a0<\/span><\/span><\/p>\n –<\/span><\/span><\/p>\n4. Sign the agreement and accept the first deposit<\/strong><\/h3>\nStep 4 is to finalize the agreement by signing on the dotted line and accepting the buyer\u2019s first deposit. This deposit is typically held in trust in a lawyer\u2019s account or a real estate company\u2019s account, but it will be transferred to you once the deal is done.\u00a0
<\/span><\/p>\n–<\/span>
5. Have a lawyer review all paperwork<\/strong><\/h3>\nThe next step is to hire a real estate attorney to review all the paperwork. This is an important step, no matter what type of home you are selling. A lawyer will review the purchase agreement and all supporting documents (there are often even more documents in an assignment sale compared to a traditional home sale).\u00a0<\/span><\/p>\n–<\/span>
6. Get approval from the developer<\/strong><\/h3>\nThe second to last step is to have the buyer (or assignee) approved by the developer. With most assignment sales, the developer will have stipulated that they get to approve the new buyer. This process will involve confirming that the assignee has proof of financing to mitigate the odds of something going wrong after closing.\u00a0<\/span><\/p>\n–<\/span>
7. Accept the second deposit<\/strong><\/h3>\nThe final step to selling your pre-construction condo is to accept the second deposit. Assuming the assignee was approved by the developer, they will provide the second deposit, which should cover the entire deposit made by you, the original buyer. Typically, the seller will not receive the profit until the closing of the unit. <\/span><\/p>\n[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.18.0″ _module_preset=”default” background_color=”#f0faf4″ min_height=”334.8px” custom_padding=”3px||0px|||” da_disable_devices=”off|off|off” global_module=”849″ saved_tabs=”all” locked=”off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.20.2″ _module_preset=”default” height=”1px” custom_padding=”0px||0px||false|false” locked=”off” global_colors_info=”{}”][et_pb_column type=”4_4″ admin_label=”Column” _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_button button_text=”post popup button” button_alignment=”right” module_id=”dipi_popup_id_295151″ _builder_version=”4.20.2″ _module_preset=”default” positioning=”absolute” horizontal_offset=”-10000000px” z_index=”-1000000″ global_colors_info=”{}”][\/et_pb_button][et_pb_code _builder_version=”4.24.2″ _module_preset=”default” global_colors_info=”{}”]