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Understanding the Primary Market Buying Process in Vietnam

Oct 26, 2021

Understanding the Primary Market Buying Process in Vietnam

Having a space to call your own, feel completely at ease, raise a family, or retire in peace - for many, owning a home would be a dream come true. As the real estate market grows in Vietnam, many people have chosen to live in apartments as their primary residence. Apartment complexes often have many conveniences, facilities, and a residential community; the price is generally lower than a landed house. In Vietnam's real estate market in 2021, more and more types of property are available for purchase.

Homebase understands that buying a home is a significant milestone in your life. This article guides you through the process of purchasing an apartment directly from a real estate project.

The primary real estate market's definition - Vietnam's real estate market 2021                          

What is the primary real estate market?

The primary real estate market consists of the real estate products traded and issued for the first time.

Most people associate buying primary real estate with purchasing an apartment, house, or piece of land directly from a real estate developer. In this article, we will focus on buying an apartment in the primary market.

Read more on the secondary real estate market here.

                                                                                                                                         

Determine your needs

Before buying an apartment, you must determine your needs, wants, and resources. Ask yourself questions like:

Answering these questions will help you sort through the hundreds of real estate projects available to find some of the ideal spots for you. For example, a project with an accessible price but located far from schools or supermarkets may not suit a growing family. An elderly couple looking for convenience and a quiet neighborhood may not want to live in the city’s heart.

With your needs in mind, Homebase can help you select a few projects, and you will choose the most suitable one.

                                                                                                                                         

How to choose an ideal project?

Consider the following elements:

+ Construction permit,

+ Planning 1/500,

+ Approval for an investment plan,

+ Land allocation decision,

+ Notice of eligibility for capital monetization,

+ Bank guarantee

Be sure to check through the information thoroughly to reduce the risks involved.

Buying an apartment as a foreigner

If you are a non-Vietnamese citizen looking to buy an apartment in Vietnam, be sure to check the following:

                                                                                                                                         

Make a booking

Project developers often divide the sale of apartments into several stages for new projects, each with a fixed number. Developers generally require potential customers to make a booking to visit the project, as home-buying demand can exceed the supply of apartments available on the official opening day. The booking money will be deducted from the initial payment or refunded if a purchase is not made.

Customers also benefit from this booking system, as the ones with a booking have the privilege of selecting the apartments, depositing, and choosing the one they like best in the project. Being an early viewer also means you can take advantage of any discounts or incentives offered by the developer.

Bookings are open 1 to 2 months before the official opening date. Interested customers will pay the booking fee and receive a confirmation from the developer. Here is an example of a booking form:



Depositing your selected apartment

If you have decided on your apartment, it is time to make the first official payment to the developer. This payment is known as a deposit.

This deposit is usually around 10% or 15% of the total purchase price of the apartment. If you had paid a booking fee, the booking fee would be deducted from your deposit.

Top tip: bring along your ID or passport along with the booking receipt for the deposit procedure. After paying the deposit, you will sign a written confirmation along with the developer. Depending on the project, this will be a deposit agreement, consulting contract, or capital contribution.

Signing a Sales and Purchase Agreement (SPA)

After the deposit, you will continue to make payments to the developer. Generally, when 30% of the total purchase price has been paid, you will sign the Sales and Purchase Agreement (SPA).

The SPA is a milestone document that determines your ownership of the apartment. It should clearly show all of the terms and details of your transaction. You can also use the SPA to get a bank mortgage and sell the property in the future.

Before signing the SPA, be sure to check the project’s construction progress, as the developer must have completed the foundation construction of the project at this stage. The developer can only sign a SPA with you if they have met certain legal requirements. Homebase advises you to review all documents the developer is willing to provide and to do the following before signing the SPA:

A full SPA will include the following pieces of information:

                                                                                                                                         

The payment schedule

An advantage of purchasing from the primary real estate market is that the buyer does need not make a one-time payment for the entire value of the apartment. The developer will offer a payment plan so that customers have several installment payment options. Usually, it takes 2 to 3 years for the apartment to be handed over to you after making the deposit.

The installments can be made in cash or bank transfer, and the developer will generally send you a payment reminder a week before the payments are due. If you cannot make the payment on time, you can often apply for a late payment extension without incurring the penalty of interest.

It is good to know that developers frequently offer special incentives to customers willing to pay in fewer installments or with a one-time payment. These could include discounts, a commitment to buy back the apartment at a set interest rate, or a grace period to pay interest and principal, or entry into a lucky draw, and more.

Here is an example of a payment schedule:


Apartment handover

Generally, when you have paid for 70% of the apartment value, the developer will need to finish building it and hand it over to you. During the handover period, check through the list of items that the developer had committed to, and report back if you find anything missing or see any flaws.

Homebase advises to check through the following during handover:

Spend some time testing the elevators. Do they open and close smoothly? Is it too fast or too slow? Does it land on the correct floors?

Also, check the building’s fire precautions - note whether the fire alarms are in operation, whether the sprinklers are running, where the closest firebox to your apartment is, and whether the building is equipped with fire hammers and water hoses and helmets, etc.

Closely inspect the apartment’s finishing, furniture (if any), electricity units, water flow, and construction quality.

For example, you might want to check if the built-in cabinet doors open smoothly or if they are misaligned. Check if the door locks are rusted, jammed, or broken. Inspect for damage on electric stoves, induction cookers, trash cans, etc. See if the wooden floors have any swelling, creaking, chipping, and other signs of wear and tear.

Examine all the electrical outlets and items, water systems, and air conditioning systems to see if they run stably. Any leakage from the air-conditioner? Is the pipe protruding? Do the power outlets work? In addition, you should check the number of electrical outlets and request that they arrange it reasonably to meet the family's needs.  Check whether the water flow is weak or strong, especially the water force from the toilet spray. Check the showers for leaks; if you do find any, ask the contractor to replace them immediately.

Check if the wall is cracked or not; you must immediately complain of any cracks to avoid water damage to the wall. Check the paint on the walls and ceiling to see if it is dirty or scratched. Is there any color difference between the ceiling and the walls?


Before signing the handover minutes, you must measure the area of the apartment's rooms and measure the actual size of the apartment. This is an important step that many people seem to miss.

Inspect carefully for damage or missing items before signing the apartment handover minutes confirmation.

                                                                                                                                               

Application for the pink book

Typically, the buyers will pay up to 95% of the purchase price after handover. The remaining 5% is paid when the developer gives you the pink book. The pink book generally takes 1 to 6 months after the handover to be made.

You will need to prepare the following documents for the pink book:

You also need to pay related fees such as registration, certification, home address, etc.

                                                                                                                                       

We are here to help

Are you interested in purchasing property from Vietnam's real estate market 2021? We can help you buy the house of choice.

Feel free to reach out to Homebase if you have any more questions about buying an apartment from the primary real estate market. Get in touch via phone/Zalo/WA at (+84) 964 245 404 or email at contact@gethomebase.com.

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