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How to Assign a Condo Unit FAST - Don't Walk Away Until You Watch This!

At the very beginning of 2023, I published this video in response to news headlines saying “Record Number of Condos to Flood Toronto Market in 2023”.

Indeed, there were 20,165 new condo units taking occupancy last year, it was only the third time we had completions over 20,000 units.

But last year, I didn’t actually encounter anyone who couldn’t close a unit because of mortgage issues.

There were a few things that helped the situation.

The first half of last year was very strong, resale condo prices in mid 2023 were only around 6% down from the peak in 2022.

And the interest rates were relatively lower because the rate hikes didn’t happen until the second half of the year.

On top of that, the rental demand was so strong that not only new units were digested, but rents were pushed up as well.

The extra few hundred dollars of rent per month helped the landlords pay some running costs.

So we survived through 2023.

This year, 2024, is going to be another record year of completions.

26,934 units are scheduled for occupancy this year, 33% more than last year.

So we have significantly more people who need to close a unit this year.

And the current market conditions are very tough for people who need to get a mortgage during the first half of this year.

Condo prices have come down roughly 15% from the peak.

For people who bought a pre-construction unit during the high times, the appraisal value can come in 10 to 15% lower than the purchase price from 3-4 years ago.

So the mortgage amount may come in less than expected and people would have to come up with extra funds to cover the difference.

Some people may fail to find extra funds and some people may completely fail to get a mortgage because of the much higher interest rates.

In some cases, people felt hopeless, they couldn’t find a way to close the unit.

They decided to walk away from the purchase, thinking that losing the 20% deposit would conclude the case.

But the worst has yet to come.

You might have seen this blogTO article “Toronto condo developer launches lawsuit against buyer who couldn’t pay for unit”.

Yes, it is true.

I have seen the Statement of Claim from the Superior Court.

The developer wants to keep the deposit and on top of that they sue the purchaser for damages with an amount bigger than the original purchase price.

I think most people won’t sleep well after seeing that claim statement.

So if you are having trouble closing your unit and you plan to walk away, hold on, talk to me first.

I may have a solution for you.

You will still lose your deposit money, but the developer won’t go after you for your damages.

I can potentially get you a buyer to take over your unit by assignment.

Yes, there are still buyers in the current market, but they are looking for deals.

If you are subscribed to my Deal of the Week emails, you have seen those deals where the original purchaser is giving up all the deposits, $100,000 off the original purchase price and so on.

So far, all the units I sent out in the past couple months were sold.

I cannot guarantee, but there’s a good chance that someone will take over your unit.

If you are ready to lose all your deposits anyway, don’t just walk away and get yourself into trouble.

You should try to assign the unit and conclude the case in a clean way.

I did successfully assign some units when the original buyers came to me for help just a couple of days before the final closing date.

On the other hand, if you belong to the group of people who have some extra cash on hand and are ready to grab some deals, you can subscribe to my Deal of the Week emails.

I will help to find a perfect match for you buyers and sellers.

Speaking of the assignment market, there are people who are able to get a mortgage, but they still want to assign the unit because they would be running into a negative cash flow with the high interest rate.

I get it, but you need to understand that you are trying to assign at the worst time, you are competing with assignors who are ready to lose all their 20% deposit.

Let’s just say you need to chip in $2,000 dollars a month, after a year, you would have contributed $24,000.

Versus if you sell now, you need to be ready to lose all your deposits, that’s easily $100,000.

And you should think about why you wanted to invest in the first place.

You believed in the long term outlook in the Toronto real estate market and you were aiming to capture a profit.

Have you lost all the hope?  

And you’re now thinking that everything will go downhill from this point on?

If that’s the case, I agree with you, you should cut loss now and take the hit.

But if you still believe in the long term outlook and you have the ability to keep the unit, why would you want to join the bloodshed and lose your deposits?

Just so you know, pre-construction sales have been really slow and because of that, construction activity plunges big time.

In 2023, only 15,891 units started construction.

Overall, it is a 45% decline from 2022.

The slowdown was especially significant in the second half of 2023, with only 4,397 starts, which is a 72% drop from the same period in 2022.

Pre-construction sales will continue to be slow in this year, in fact, there hasn’t been any new project launches since the start of 2024.

All this is going to translate to severe supply shortages a few years down the road.

So here are my two cents.

If you are planning to walk away from your pre-construction purchase, talk to me first.

If you can afford to close the unit, keep it. I know high interest rates and negative cash flow is not fun, but do you really want to lose $100,000 right away?

If you are a buyer ready to grab a deal, sign up for Deal of the Week at the link below.

My job is to find a perfect match for you buyers and sellers.


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