Can I Sell My Contract Before Closing?

Yes, in most cases — subject to the developer's approval rights — a buyer who has executed a pre-construction purchase contract can sell or assign that contract to a new buyer before closing. This transaction is called an assignment.

Developer approval: Most pre-construction purchase contracts give the developer the right to approve or reject any proposed assignment. Some developers prohibit assignments entirely during the presale period to prevent speculative flipping. Others permit assignments subject to payment of an assignment fee — typically 1% to 2% of the purchase price — to the developer.

Assignment process: An assignment involves three parties — the original buyer (assignor), the new buyer (assignee), and the developer. The assignor transfers their contractual rights and obligations to the assignee, who steps into the original buyer's position and completes the purchase at closing.

Profit potential: If the market has appreciated since the original contract was executed, the assignor may be able to sell the contract at a premium above the original purchase price — capturing some of the appreciation that has occurred during the construction period without closing on the property.

Tax implications: Profits from contract assignments are taxable as ordinary income in the year the assignment closes, regardless of the buyer's overall holding period for the eventual property. Assignment gains do not qualify for capital gains rates or the primary residence exclusion. Buyers who plan to assign their contracts should consult with a tax advisor before executing the assignment.