Advantages Of Presale Assignment Of Contract And Sale

  1. Swift Sale: A presale assignment enables you to sell a property before it is completed, which is particularly beneficial if you need a quick sale.
  2. Increased Liquidity: By selling the contract before the property is complete, you can convert your investment into cash faster, increasing your liquidity.
  3. Reduced Risk: When you sell a presale assignment, the buyer assumes the risk of the property’s value. You are not liable for any losses if the property’s value decreases.
  4. Flexibility: A presale assignment allows you to sell a property without going through the traditional process of finding a buyer, negotiating, and closing the sale. This flexibility is helpful when you need to sell quickly or cannot commit to the conventional sale process.
  5. Potential Profit: If the property’s value appreciates between purchasing the contract and its completion, you may profit from the sale of the contract.

It is essential to recognize that there are also potential risks and drawbacks associated with presale assignments, such as possible construction delays or decreases in property value. Therefore, carefully considering all potential risks and benefits is necessary before entering such an agreement.

Advantages of a Presale Assignment for the Current Buyer Assigning the Contract:

  1. Quick Profit: If the buyer secures a contract at a lower price and then assigns it to another buyer at a higher price, they can make a quick profit.
  2. Flexibility: Assigning a contract during a presale allows the buyer to secure a property without committing to the full purchase price and closing process, offering more flexibility and the ability to pursue other investment opportunities.
  3. Reduced Risk: By assigning the contract to another buyer, the original buyer can reduce their risk of the property not appreciating in value or not selling for a profit.
  4. No Ownership Responsibilities: As the original buyer does not complete the purchase and take ownership of the property, they are not burdened with the costs and responsibilities of owning and maintaining the property.

It is important to note that assigning a contract also carries risks, such as the potential loss of the original buyer’s deposit if the sale does not go through. Consulting with a legal professional is advisable before deciding to assign a contract.

Advantages of a Presale Assignment for the New Buyer:

  1. Early Access to Property: A presale assignment allows the new buyer to secure their property purchase before completion. It is beneficial if the property is in high demand or the buyer wants to be among the first to live in the building.
  2. Potential Price Appreciation: If the value of the property increases during construction, the new buyer may benefit from the appreciation in value.
  3. Customization Opportunities: In some cases, the new buyer may have the chance to customize the finishes and features of their unit, such as flooring, countertops, and appliances.
  4. Avoiding Construction Delays: The new buyer can close on the property at the originally agreed-upon date, even if there are construction delays, bypassing the need to wait for completion.

It is essential for the new buyer to carefully review the presale assignment terms and understand any associated risks, such as potential construction delays or changes to the final product. Seeking legal advice before proceeding is also advisable.

Disadvantages of Presale Assignments:

  1. Lack of Control: Assigning your rights to purchase a property before its completion means giving up control over its development and features.
  2. Risk of Delays or Cancellations: Presale assignments are contingent on successful project completion. Delays or cancellations could result in the loss of your investment.
  3. Limited Resale Options: Selling the property before completion may limit resale options and hinder your ability to recoup your investment.
  4. Limited Information: Presale assignments often offer limited information about the property and development, making informed decisions challenging.
  5. Market Fluctuations: Property value can fluctuate significantly during development, potentially leading to paying more than market value at completion.
  6. Additional Fees: Presale assignments may come with extra fees like assignment fees or closing costs, increasing the overall investment cost.

In conclusion, while presale assignments can offer advantages, they also involve risks that need careful consideration before making an investment decision. Contact one of our experts.