Off-plan property is a property before a structure has been constructed upon it.
Property investors or property speculators like to purchase property in this way in the hope of making substantial capital gains. This usually occurs because developers who offer property for sale off-plan often offer financial incentives to early adopters. (Usually with good discount for early buyers). Importantly, the price will usually increase a lot time after time. The best selling price is usually at the handover time (a few months before or after that)
It is important to note that for off-plan property to be attractive, there must be a high level of other infrastructure in the immediate area such as a new university, express roads, etc. either already built or due to be built within the next few years.
Advantages of buying off-plan
In a rapidly rising housing market, buying off-plan enables investors and home buyers to buy a property at a lower price.
Steps to buy off-plan Property in Vietnam
1. Initial announcement of new projects (‘rumor phase’)
For new projects (condos, townhouses and more), there’s a so-called ‘rumor phase’. In this phase, the developer will announce some basic information about the future project, such as:
The location
The area
The type of project (condominium or townhouse)
The amount of units
The price range
Others
This information is normally provided strictly to agents. You can't find such information on any official public press.
2. Pay the booking fee
At the initial announcement of new projects (see above), the developer will also start collecting refundable booking fees from potential buyers. This is normally done together with the agent.
How high is the booking fee?
The booking fee is normally:
$2,500 for mid-end properties
$5,000 for high-end properties
$10,000 for luxury properties
After you paid the booking fee, you’ll receive a booking number, which means that you’ll be in the list of ‘First buyers’, and have priority when the first sales event is launched within a near future.
Can I get a refund of the booking fee?
You can cancel the booking and get back your money at any time, for any reason, or for no reason at all (and that’s why it’s called a refundable booking).
3. Attend the official sales event
At the end of the rumor phase, the developer will organize an official sales event. Most often, this sales event accepts people by invitation only: if you have a booking number you’ll get an invitation to attend the sales event.
The developer normally shares official information about the project to the public 1-2 weeks before the sales event, including: Floor plan, the types of units, the design, unit layouts, area (GFA, NFA). Those who have booking numbers can choose units from the list during the event.
Do I need to attend the sales event in person?
In case you can't join the event in person for any reason, the agent can attend on your behalf (Authorization Form) & on behalf of you to sign the Booking Form to convert the Refundable Reservation into Non-refundable Booking (that means you have chosen the units in this Launching Event)
The exact price & promotions will be officially announced at the sales event. After reviewing the price & all other conditions at the sales event, you have the right to get a refund (if you are not satisfied), or you can decide to choose units at this stage. (Decide to BUY or NOT)
Sign the deposit agreement
At a later stage, you’ll sign a deposit agreement, which basically changes the refundable booking into a non-refundable deposit. This is done around 2-3 weeks after the official sales event.
From this moment, you can’t request any refund. Depending on the payment scheme, when signing the deposit agreement, you need to pay 10-20% of the unit value at this stage.
Signing the Sales & Purchase Agreement (SPA)
About 3-6 months after signing the deposit agreement, you can sign the sales and purchase agreement (SPA) and pay another 10-20% (depending on the payment scheme).
According to the Law on Real Estate Trading, which had effect from 2014, off-plan real estate projects can be put up for sales on the market once the foundation of the building is completed, which normally takes 3-6 months.
Payment installments
Each project has its own payment scheme. However, you can expect the most typical payment scheme to be 1-2% on a monthly basis.
According to the Law on Real Estate Trading, the total installments should not exceed 70% of the unit value, before the unit handover. For projects dedicated to foreign investors, the number is set to 25-50%.
Hence, you pay by installments and up to 50-70% of the purchase price, then you simply wait for the completion of the building. At the time of the handover, you’ll need to pay a remaining 25-45%. The last 5% you pay once you received the certificate of ownership (also known as the pink book).
The process may vary from projects to projects. But the above described process is the most common form.
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