How to Sell Your Condo Episode 10 – Understanding Multiple Listing Contracts for Vancouver Property Sellers
In Episode 9 of How to Sell Your Condo in Vancouver, we discussed marketing strategies…
Recent media articles on presale condo assignments of contract have been full of factual errors and have misrepresented presale assignments as shadow flips.
A shadow flip is when an existing property primarily a single family house or single family house lot is purchased by a buyer under false pretenses. The contract that was used to purchase the property has a clause in it saying that the buyer can assign the contract without the permission of the seller. This practice victimized unsophisticated sellers of single-family houses in areas that had lots of demand before the Advent of the foreign buyer’s tax. This practice of assigning existing properties without permission is now not allowed in British Columbia. If the buyer of an existing property wants to assign it prior to completion, they need to get the seller to sign a release saying they will allow an assignment of the contract to occur.
A presale condo assignment of contract is when the buyer of a presale condo sells their rights or “assigns” their rights under the contract to another person. The original seller of the presale, the Developer or builder of the property has to give written permission to allow the assignment to occur.
Presale condo assignments regulated by legislation called the Real Estate Development and Marketing Act here in British Columbia.
Again, to assign a presale condo contract you need to get permission from the original seller which is the developer.
Developers here in British Columbia are some of the most sophisticated and richest people in the province and typically have the best lawyers in the province at their beck and call. There’s nothing Shadow about this. The written permission of some of the most sophisticated and well-off people in The Province who actually are actually building the property is required to let the sale of the presale condo assignment.
To clarify nobody is taken advantage of and everyone who is party to the contract has to give their written permission for a transfer of ownership of the rights in the contract.[Sellers-bak page=”Shadow Flips”]
Presale condo assignments do not inflate the price of real estate in Vancouver.
Presale condo assignments actually increase the supply of available properties at times when they are available for sale. This supply actually keeps prices stable or lower than they would be without presale condo assignments. The reason why presale condo assignments occur is because of a lack of supply and too much demand. This excess demand can be seen from the rise in prices we have seen in Vancouver recently.
A person buys a presale. That presale increases in value caused by increasing demand for property. Our person by assigning their presale condo is increasing property supply and are keep prices lower than they could have risen by making their assignment available for sale.
There are three major reasons why property prices are high in Vancouver and continue to rise.
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