Real Estate

Basics on buying Assignment?

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  • Feb 8th, 2020 2:31 pm
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Deal Addict
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Dec 15, 2001
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Basics on buying Assignment?

I'm coming across Assignment ads, that say, bought house for $1.2m, asking $1.1m or builder now asking $1.5m, selling for $1.4m.

So I got curious and emailed a seller, asking what exactly they are looking for. They replied with "make me an offer".

I'm confused. How does buying assignment work? Don't I just pay the seller the builder deposit and whatever the legal/processing fee is to transfer the contract? Plus whatever seller wants in profit.... but what happens when the seller say they are discounting?
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Deal Addict
Jan 17, 2006
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GSXXRR wrote: I'm coming across Assignment ads, that say, bought house for $1.2m, asking $1.1m or builder now asking $1.5m, selling for $1.4m.

So I got curious and emailed a seller, asking what exactly they are looking for. They replied with "make me an offer".

I'm confused. How does buying assignment work? Don't I just pay the seller the builder deposit and whatever the legal/processing fee is to transfer the contract? Plus whatever seller wants in profit.... but what happens when the seller say they are discounting?
Well, if that the case seller will probably pay you to assign it to you. Never had experience with it though, but I guess those who got houses in hot spring of 2017 and have trouble or just don't want to close it, can assign it to you with discount from builder's price, basically pay you to get it out of their hands.
Can you show example of ads like that?
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Jan 9, 2019
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GSXXRR wrote: I'm coming across Assignment ads, that say, bought house for $1.2m, asking $1.1m or builder now asking $1.5m, selling for $1.4m.

So I got curious and emailed a seller, asking what exactly they are looking for. They replied with "make me an offer".

I'm confused. How does buying assignment work? Don't I just pay the seller the builder deposit and whatever the legal/processing fee is to transfer the contract? Plus whatever seller wants in profit.... but what happens when the seller say they are discounting?
I've sold multiple condos on assignment, I can help.

It's pretty close to a normal transaction. Work out the final price that you want to pay, but you're also responsible for the buyers deposit, the closing deposit and costs as well as the sellers profit. Your realtor will walk you through all this.

Seller discounting is just them lowering the price, it's not a special term for assignments.

For the person assigning, there's many reasons they would do it. For myself, I bought preconstruction condos for the sole purpose of selling on assignment. Others, may not want the condo anymore because of how long the build took, or too expensive, who knows. The assignor receives their full deposit back, plus all the profit from the sale, with the only expense of assignment fee (if builder has) and realtor fee. (and lawyer)
Penalty Box
Mar 27, 2004
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I am surprised you can find a house on assignment? Usually freehold homes are forbidden from assignment by builders.
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Jul 2, 2018
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oasis100 wrote: I am surprised you can find a house on assignment? Usually freehold homes are forbidden from assignment by builders.
Plenty of builders allowed assignment of freehold homes.
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Feb 29, 2008
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I have bought through assignment. You have to pay the profit, deposit and any other fees associated ( ie builder charge )

They’re not bad if you have the money ready to go. I figure this would be a good time to buy assignments.
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Feb 2, 2014
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GSXXRR wrote: I'm coming across Assignment ads, that say, bought house for $1.2m, asking $1.1m or builder now asking $1.5m, selling for $1.4m.

So I got curious and emailed a seller, asking what exactly they are looking for. They replied with "make me an offer".

I'm confused. How does buying assignment work? Don't I just pay the seller the builder deposit and whatever the legal/processing fee is to transfer the contract? Plus whatever seller wants in profit.... but what happens when the seller say they are discounting?
It depends on what the seller wants OP.

If the seller (assignor) wants to completely be free of the purchase, then they will ask for deposits made to the builder and their profit (assignment price - original purchase price) upfront as the assignment deposit. This was they seller has all their cash now and the assignment has closed.

Or the seller can ask for a typical deposit which you see on a resale property (around 5% of the purchase price). The seller is still out the deposits given to the builder and is still owed their profit until the property closes and mortgage is released. Upon closing, the lawyer will forward the funds to the seller. So the seller won't get their funds until closing of the property (as opposed to the above).

Hope that makes sense.
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
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Apr 14, 2017
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CdnRealEstateGuy wrote: It depends on what the seller wants OP.

If the seller (assignor) wants to completely be free of the purchase, then they will ask for deposits made to the builder and their profit (assignment price - original purchase price) upfront as the assignment deposit. This was they seller has all their cash now and the assignment has closed.

Or the seller can ask for a typical deposit which you see on a resale property (around 5% of the purchase price). The seller is still out the deposits given to the builder and is still owed their profit until the property closes and mortgage is released. Upon closing, the lawyer will forward the funds to the seller. So the seller won't get their funds until closing of the property (as opposed to the above).

Hope that makes sense.
If I were to buy an assignment at 435k and the original purchaser has the contract for 335k, would I have to pony that profit up as cash or can that come off my mortgage?
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Jul 3, 2011
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Well the only thing of importance is that they're feebly doing is disclosing that current market value is a losing position and putting you on notice that the market is going in a direction detrimental to your pocket book.

At which point you would want to ensure via an attorney's assistance that the closing date is adjusted in accordance with the possession date from the builder and that future deterioration won't impact your financing.
GSXXRR wrote: I'm coming across Assignment ads, that say, bought house for $1.2m, asking $1.1m or builder now asking $1.5m, selling for $1.4m.

So I got curious and emailed a seller, asking what exactly they are looking for. They replied with "make me an offer".

I'm confused. How does buying assignment work? Don't I just pay the seller the builder deposit and whatever the legal/processing fee is to transfer the contract? Plus whatever seller wants in profit.... but what happens when the seller say they are discounting?
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Feb 2, 2014
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FreshCo wrote: If I were to buy an assignment at 435k and the original purchaser has the contract for 335k, would I have to pony that profit up as cash or can that come off my mortgage?
There are a few lenders that will use the assignment price.
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Newbie
Apr 23, 2015
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Markham, ON
JayLove06 wrote: I have bought through assignment. You have to pay the profit, deposit and any other fees associated ( ie builder charge )

They’re not bad if you have the money ready to go. I figure this would be a good time to buy assignments.
How did the HST rebate work? Did you have to pay the builder HST on top of the purchase price?
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Feb 29, 2008
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vuitton wrote: How did the HST rebate work? Did you have to pay the builder HST on top of the purchase price?
This was like 10 years ago so it's foggy. I don't recall having to pay HST on top of the price.
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Aug 8, 2008
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Vaughan
vuitton wrote: How did the HST rebate work? Did you have to pay the builder HST on top of the purchase price?
Most of the time, it'll be that the HST is included in the price, and the developer will get you to sign something that says that you assign the HST rebate to the developer. This is, of course, only if you're not going to use it as a rental.
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SunFires wrote: Most of the time, it'll be that the HST is included in the price, and the developer will get you to sign something that says that you assign the HST rebate to the developer. This is, of course, only if you're not going to use it as a rental.
Builders almost always require the buyer to pay excess HST on the closing of an assigned property because an assignment is viewed as a novation of the original APS, and therefore, a builder will not accept an assignment of the HST rebate from the new purchaser (i.e. the assignee). So you would have to pay the excess HST on closing, and apply to CRA to receive the HST rebate.

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