(Updated on March 25, 2020)

• Flows for purchasing Japanese real estate
• How to find a property
• Real estate broker commissions

Depending upon the type of sale, real estate properties are roughly divided into (i) properties sold in lots and (ii) properties sold through brokerages, which have different purchase flows. The differences in sales type and the flows for purchasing properties are indicated below.

Properties sold in lots are directly purchased from a real estate company that is selling the property. Typical cases are newly built condominiums and detached houses that are simultaneously sold in large numbers in the same location.

The purchaser makes an offer to the real estate company to purchase the property by filling out an application form.

The purchaser receives explanations of important matters regarding the property from a licensed real-estate transaction manager of the real estate company before entering into the sales contract.

Upon an official decision to purchase the property, the purchaser enters into a sales contract with the vendor. An application deposit (contract deposit) of 10 to 20 percent of the property price, in general, will be required for this.

The purchaser must be screened by the financial institution and guarantee company for approval for the mortgage.

After completion of the property’s construction, the property is handed over by the vendor on payment of the remaining amount of the purchase price. The real estate registration procedures are then carried out. 

Properties sold through brokerages are properties purchased through real estate companies (real estate brokers) that have been requested to mediate by the vendor. Most of the properties sold through brokerages are pre-owned housing. Newly built detached houses sold in small numbers are generally included as well. The real estate companies charge brokerage commissions for properties sold through brokerages.

The purchaser enters into a mediation contract that indicates the property to be purchased, the content of brokerage service, the amount of brokerage commission, etc.

The purchaser makes an offer to purchase the property through a real estate broker. The offer is generally made in writing.

The purchaser receives explanations of important matters regarding the property from a licensed real-estate transaction manager of the real estate company before entering into the sales contract. 

 Upon an official decision to purchase the property, the purchaser enters into a sales contract with the vendor. An application deposit (contract deposit) of 10 to 20 percent of the property price, in general, will be required for this.

 The purchaser must be screened by the financial institution and guarantee company for the mortgage’s approval.

After the property is prepared for delivery, it is handed over by the vendor on payment of the remaining amount of the purchase price. Real estate registration procedures are then carried out. 

Japanese real estate properties can be searched on the internet, in newspapers or their advertising inserts, or by referral by a real estate company.

The advantage of internet searches is that we can easily collect information regardless of time and place. Information on properties whose purchasers are broadly solicited can also be accessed from abroad. However, caution is required since some information may not be provided in English. In addition, as Japan’s newspapers tend to be reputable and reliable, some of the information on important or valuable properties are provided in the newspapers. This form of information is difficult to access outside Japan. The efficient way of finding the most suitable property is to ask a real estate broker with a strong information networking capability. 

When a real estate transaction is concluded, a brokerage commission is required to be paid to the broker. The amount of this commission, whose upper limit is regulated by the Building Lots and Buildings Transaction Business Act, can be decided by the real estate company on its own as long as it does not exceed the limit.

 

Half of the brokerage commission for a sales contract is generally paid when the contract is entered into. The other half is paid when the payment is settled and the property delivered.