November 7, 2024 | Investing
Is Buying an Assignment Sale in Pickering a Good Idea?
Assignment sales are a unique opportunity in real estate. If you find the right investment, they can be extremely fruitful. However, since each contract is different, you will need careful planning and strategic guidance from an experienced professional who understands this sector of the real estate market.
In this post, we’ll take a deeper dive into the world of assignments so you can decide for yourself if buying now is a good idea.
Are you ready for your next venture? Our Pickering real estate team can help you with all of your investments throughout the GTA. Learn more about our services here.
A World of Opportunity in Pickering
With as many as 75 new condo developments and a multitude of new-build homes on the way, Pickering is a premium city for anyone considering buying an assignment sale. This family-friendly community boasts stunning natural beauty, complete with beautiful waterfront parks and scenic trails. It is also home to numerous schools with excellent reputations, and a thriving career market is quickly attracting new residents from all over.
The high quality of life Pickering offers, combined with the most affordable housing market in the GTA, has helped it become one of the fastest-growing cities in the region. In fact, we are expecting our population to expand by nearly 75,000 people by the end of 2041, and several of the top developers in the GTA are hard at work to keep up with the residential demand.
Though there are opportunities all over the city, Seaton is one of our favourite areas to watch – and not just because it’s a stone’s throw away from our office on Brock Road! As one of the largest residential and commercial developments in Canadian history, this upcoming community will feature a variety of housing structures. Many families have already moved in, but there are still numerous new developments on the way.
Which Pickering neighbourhood is right for you? Discover all you need to know about our favourite communities in the posts below:
Who Buys Assignments
Purchasers of assignment sales come in two distinct categories: end-user buyers and investors. End users buy with the intention of moving into the home once construction is complete. Investors are looking for ways to grow their equity and make a profit. You could do this by renting out the house or condo after it becomes move-in ready.
Alternatively, you could sell your assignment to another investor or end-user even before the building is finished. Imagine you made your purchase directly from the builder, and decide to sell a year or two later as housing values have risen. You could then potentially capitalize on the increase and sell your interest in the property even before the mortgage comes due.
The big picture seems simple, but assignment sales can be technically and legally complex. It’s always a good idea to consult with an experienced real estate agent and lawyer before deciding one way or another.
Thinking of buying a home? The posts below will help you create a plan for success:
The Risks of Buying Assignments
The ability to get in on the ground floor of a pre-construction project can be appealing. However, you should be aware of the risks and extra costs involved in an assignment sale. Remember that the original purchaser could have a different deposit structure from another buyer in the same project. There could also be a different occupancy date, a different price, or different upgrades. What suits the first buyer may not work out as well for you, depending on what you want from the project. Plus, there are other considerations.
First and foremost, if you’re buying as an investor, there is no guarantee that your assignment will grow in value. Even if it does (as it likely will), there’s no guarantee that you will find a buyer if you decide you want out of the contract.
In addition, not every builder allows assignment sales in the first place. Though you always want to review and understand any contract before signing it, this caution is especially critical when buying an assignment sale. Other considerations include:
- The closing costs of an assignment sale are often higher than with a resale home. In addition to the regular land transfer taxes, utility hookups, and legal fees, there are also builder’s fees, occupancy costs, and developmental levies. New-builds are also subject to HST. However, these can be offset through a federal rebate if the home will be your primary residence.
- You may have a long wait before the home is ready to move in. Delays can happen, which also makes it hard to pin down a date.
The number of developments makes Pickering a great place to live and invest. Learn more in What You Need to Know About Pickering’s Hot Condo Market.
Advantages of Assignment Sales
For the right person, an assignment sale offers a multitude of advantages. This is true whether you’re buying with the intention of moving in or as an investor. In either case, you stand to gain a lot of equity as housing values rise all over the city. That is just the beginning of the benefits that come with a successful assignment.
- As an end user, you will undoubtedly look forward to your pristine, brand-new home that’s full of state-of-the-art technology. Many people love the idea of being the first occupants of a spotless, fully-customized house that has never been lived in.
- Since you’re getting in early, your down payment structure is usually spread out over time, which often means you need less cash upfront to buy an assignment than a resale house. This can make it more accessible for first-time buyers or investors to get into the market.
- When available houses are in short supply, it can be comforting to know that there’s an upcoming unit with your name on it. This is especially true in high-demand areas where every listing seems to sell in the blink of an eye.
- The wait can be shorter when buying an assignment sale from the original purchaser. Depending on how much time has passed, the builder should be further along in the development process.
Want to explore real estate investing in more detail? Check out Long-Term Versus Short-Term Rentals: How They’re Different.
How Your Real Estate Agent Can Help
Assignment sales can be lucrative, but there are many nuances and complications to be aware of. Though technically, any agent can help you from anywhere, it is usually best to work with a local Realtor® who has personal insight into the various communities.
Getting the location right is essential with any real estate transaction. Whatever your reason for buying an assignment, a lot of thought and research goes into picking a neighbourhood.
As Pickering agents, we can’t imagine advising a client on what the best neighbourhood may be in Niagara or Kitchener. And an agent outside of the city won’t have the same feel for the hottest communities in Pickering, either. For the best outcome, the expertise of an agent who knows the area and has extensive investment experience is invaluable.
Do you want to explore your opportunities when buying, selling, or investing in Pickering real estate? Our experienced agents are happy to help at any stage in the process. Reach out today to 647-875-8000 or email info@teamrajpal.com with any questions.
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