Many people have asked me to explain the difference between the three different methods of buying Real Estate and which is best.
The best method will be determined by the investor/end user, based on what your expectations and requirements are. Most end-users would prefer:

Re-Sale. They typically are looking for something right away, they have a limited amount of deposit saved, and they have a good job and good credit. Unfortunately purchasing only Re-Sale pretty much guarantees the highest and best use or peak value as they will be purchasing something based on market value which at the time will be available to everyone. In other words the highest bid wins. The good news is that they usually get what they are looking for, they get to see it and the banks love them because they will be occupying the property. They are their own tenant and therefore investing into themselves; they will usually stay for a longer term and therefore realize a sizable profit. Investor’s used to be interested in this form of buying but found that they did not have a niche or edge and they were not impressed with the long wait times and their costs associated with buying and selling not to mention the actual maintaining of the tenant and property. The profit was good but they needed something better.

Pre-Sale. 1995-2010 has shown one of the greatest appreciations for pre-sale opportunities. In most cases investors saw an increase of $50,000 to $100,000 appreciation in their property values over a period of 2-3 years. With 15% down this gave the investor a total return of 200%-400% over a short period of time whereby they did not have to worry about tenants, mortgage financing and carrying costs. This was the way to go. Mind you many of these investors had difficulties closing due to the job loss or recession and walked away from their profits. Many more came in to the development on their own, after the prices had already jumped and they saw a break even or slight increase by final closing. Others were stunned by closing costs of upwards of $20,000 plus in hidden development fees, taxes and adjustments as they never took the time to seek out an agent to represent their best interest. They figured that their agent was the one assigned to them by the developer. In some cases that would have been me, 15 years of selling for new home sales developments. My biggest problem was that I tend to help and sympathize with the buyer yet constantly reminded where my bread was buttered and told that I work for the developer, the one who signs my cheque. Finally I broke this tradition to start my own brokerage and like x-coppers I became very busy with clients whom wanted to be protected by someone having the inside knowledge.

Pre –Sale or Pre – Construction, buying units off floor plans with little to know information and nothing to see. More risk, more profit, perfect for the investor.

Assignment. Since the ‘70s we have practiced quietly the act of assignments. This is where one person buys, in most cases Pre-Sale and sells their rights after interim closing but before final closing a period of time which could take 3-9 months. Perfect for all parties. The investor saves on carrying costs and final closing costs, does not need to apply for a mortgage, and gets the bulk of their profits much sooner for just lending the deposit to the developer. Great for the end user who gets to see the property and make sure they like it, they usually cannot make decisions based on a floor plan alone. They tend to buy the unit for a substantial discount from the market or re-sale price and they live in it during the interim occupancy. They get a new home property rather than a used one. The only one who does not benefit from an assignment is the government. You see the government charges land transfer and city tax and gst along with a host of other taxes and fees and they get to charge it again to the re-sale buyer even though they would buy it one day after final closing. With an assignment you would take over the original agreement and double taxation does not take effect.

To sum it up, End Users for Re-Sale, Investors for Pre-Sale and both parties for Assignments.