How to use gold to buy a house from Vinhomes?

People will not use gold to buy houses directly from Vinhomes, but will exchange gold through a gold and silver company to obtain money to buy real estate, with a mechanism to peg the value to gold after 5 years.

Vinhomes has just announced the launch of a sales program through the conversion of customers' gold. Photo: Viet Linh .

Vinhomes has just announced the launch of a program to support customers using gold to participate in real estate transactions, following a cooperation agreement with gold, silver, and gemstone companies. According to the company, this policy aims to contribute to transforming idle gold currently hoarded by the public into a more flexible circulating capital for the economy .

Immediately after the announcement, many investors believed this was a "gold-for-house" policy. However, the actual mechanism of the program involves a third party – gold and silver companies – while real estate transactions between customers and Vinhomes are still conducted using cash.

Specifically, Vinhomes stated that customers will not deliver gold directly to the company. Instead, buyers will bring the gold to partner gold, silver, and gemstone companies (not yet officially announced) to exchange it for cash, and then use the cash to sign a real estate purchase contract with Vinhomes.

In other words, Vinhomes still collects money as in a normal real estate transaction. The role of the gold and silver companies is to convert gold into cash and facilitate reverse conversion if customers require it later.

For example, if a customer holds 100 taels of gold and uses this converted amount to buy a house, after 5 years, the customer can choose to continue holding the property or receive an amount equivalent to 110 taels of gold at the current gold price. If they want to keep the gold, the customer can use this money at the gold and silver company they signed an agreement with to convert it back into gold according to their personal needs.

The entire process of converting gold to cash or vice versa is carried out through partner gold, silver, and gemstone companies to ensure the value of customers' assets and verify the legal origin of the gold.

The company also stated that the program is not intended to encourage people to buy new gold for real estate investment. This policy is primarily aimed at customers who have already accumulated gold and wish to convert it into an asset. Therefore, the condition for participating in the program is that customers must own gold before April 25th. The value of the gold must be equivalent to at least 80% of the value of the house, with the remaining amount payable in cash.

During the program period, customers have the right to transfer the purchase contract or the house. The transferee will inherit the rights and obligations of the contract under this program. Vinhomes and the gold, silver, and gemstone company will assist with the related procedures.

An expert in the field of risk management believes that this model is relatively suitable for the group of customers who tend to accumulate gold long-term, as Vinhomes has stated from the beginning.

"If you simply keep gold in a safe, the asset will generate almost no additional income. Meanwhile, this model helps buyers both gain added value (10% as committed by Vinhomes - PV) and have the opportunity to benefit if the property appreciates in value," the expert said.

However, for those buying gold for short-term speculation or seeking high financial returns, a 10% increase over 5 years may not necessarily be the best option. If gold prices remain stagnant or decline for an extended period, the investment return could be lower than depositing money in a bank savings account.

In that case, profitability would depend primarily on the increase in the property's value during the holding period.

From the business perspective, the expert suggested that Vinhomes needs a risk management plan in case the price of gold rises too sharply. For example, during the period 2020-2025, the price of gold increased more than three times, far exceeding many traditional investment channels such as savings, stocks, or real estate.

"If this scenario repeats itself in the next five years, the financial pressure on businesses and partners participating in the program will be significant, because the final payment obligation is pegged to the price of gold at the time of settlement," the expert commented.

According to him, to operate the model long-term, businesses and gold and silver companies will likely need mechanisms to hedge against gold price fluctuations, balance cash flow, and control market risks, rather than simply implementing it as a regular sales program.

Source: https://znews.vn/dung-vang-mua-nha-cua-vinhomes-the-nao-post1653999.html