Imagine interviewing only one surgeon before an operation. Or taking the first stockbroker who calls you back. Or signing off on the first quote for a new furnace without checking anyone else. Most of us would never gamble with our health, our savings, or our homes like that. And yet, in real estate, many do.

In 2021, as Ontario’s housing market was climbing by tens of thousands of dollars a month, one buyer decided to invest in a townhouse. On paper, it looked like a sure thing. The purchase was an “assignment sale” — real estate’s equivalent of buying a ticket for a ride that someone else no longer wants to take. An early buyer had secured the unit from the builder at one price. Now, they were selling that contract — at a premium.

For our buyer, that premium turned out to be the start of a financial unravelling.

Assignment sales are marketed as clever shortcuts to instant equity. The original purchaser walks away with a tidy profit, while the second buyer inherits the contract and the obligation to close with the builder. When the market is booming, that looks like a win-win. But when the music stops, the second buyer is the one left without a chair.

In this case, the builder delayed closing for nearly two years. During that time, municipal development charges rose by $25,000. Mortgage rates climbed far beyond what the buyer had budgeted for. Property taxes, initially estimated at $3,000, ballooned to more than $8,000 — based on resale prices that were already higher than the home was worth when it finally closed. The on-demand hot water system? Rented, not owned, with its own long tail of costs.

The monthly carrying costs, expected to be manageable, swelled to more than $5,000 — nearly double what had been planned. And today, the property is worth roughly $300,000 less than the price agreed to in 2022.

It’s tempting to dismiss this as bad luck, the kind of unfortunate timing that sometimes shadows any investment. But it’s also a reminder: in real estate, due diligence isn’t optional. It’s oxygen.

Assignment sales are risky by design. They shift the benefits to the seller of the contract while pushing the risks — delays, rising costs, higher taxes, volatile interest rates — onto the buyer. No real estate agent, lawyer, or mortgage broker can erase that exposure. But the right professionals can at least help buyers see the red flags before signing away their financial future.

Real estate will always involve risk. But risk isn’t the same as blindfolded gambling. A resale home may not carry the allure of getting in “early” on a development, but it offers something far more valuable: certainty. You know what you’re buying, when you’ll own it, and what it will cost you. In the end, boring can be beautiful.If you are looking to invest in a resale home, and do it in a stress-free manner, I can be reached at lindsay@buyselllove.ca or 905-743-5555.

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