Selling guide

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Procedures to sell real estate in Japan

(Updated on March 25, 2020)

Owners of Japanese real estate properties can sell their properties on their own without the help of real estate brokers. However, in many cases, many owners use listing services provided by real estate companies as the process of selling properties requires expert knowledge on legal issues, tax, sundry expenses, etc., and includes cumbersome procedures. Here, we cover information on selling Japanese real estate.

Process flow for selling properties in Japan

The general process of selling real estate properties in Japan is as follows:

                                 Confirm the reason for selling the property                      


There are a variety of reasons for a property owner to sell their properties, including changes in their family structure and their lifestyles. We recommend owners to identify specific reasons for selling their properties at first, and then to make sure of their desired conditions and economic situation such as when to sell and the amount of cash available for use. Doing so will create a concrete image of what the selling price would be, when to sell, and other conditions.



           Collect information associated with the property such as its market price           


Collect information such as the market price of the area near the property to determine a rough figure of the selling price through the Internet (real estate information websites), housing information magazines, advertising inserts prepared by real estate companies and other sources. The price of the property largely depends on its age and layout, and therefore some owners who are unsure of the price should ask several real estate companies to make simple assessments of their property.



                      Select a real estate company                    


Visit real estate companies, tell them your desired conditions, and consider which company (companies) to ask for listing services. Through this process, you can obtain more detailed information.



                    Request real estate company for investigation and assessment                


Ask the real estate company (companies) to provide an assessed price that takes into account recent property transactions in the area and the market trends. Unlike the simple assessment mentioned above, this will give you a more precise figure provided through a field investigation.



         Request real estate company for listing services (conclusion of listing agreements)         


Select a real estate company (companies) to entrust selling of the property and conclude a listing agreement with them. There are three types of agreements*: 1) ippan baikai (open listing) 2) sennin baikai (exclusive agency listing), and 3) senzoku sennin baikai (exclusive right-to-sell/lease listing). Your method of selling the property, such as requesting one or more than one company to sell the property, will change depending on the type of agreement you select. For the property to be sold with desired conditions, it is important to select an appropriate real estate company and agreement type based on advantages and disadvantages.



                         Start sales activities                         


Determine the offer price by considering not only the assessment price, but also factors such as the listing commission, tax and other expenses, recent property sales cases in the area and the market trend. In line with this price, real estate company (companies) will start sales (advertising) activities using media such as the Internet and advertising inserts. Viewing of the property will also be made upon requests.



                         Negotiate with purchaser candidates                       


When you find a purchaser candidate, negotiate and coordinate the price, handover timing and other sales conditions with them. If candidates are not found for a long period of time, the selling price and other measures need to be revised. The timing and the amount of decrease of the price revision are crucial decisions. Consult your real estate broker on such decisions and reconsider the price carefully.



                         Disclose property information                         


Before concluding the sales and purchase agreement, notify the buyer about information on the selling property that needs to be disclosed in advance. If defects such as scratches, damage, malfunctions or mortgage settlements are not disclosed to the buyer, which may lead to problems. On the basis of disclosure information, the real estate company explains the details of the property in accordance with the system called “explanation of important matters.”



               Procedural work for concluding sales and purchase agreements                


Carry out contract procedures when you and the purchaser reach an agreement on the conditions. Check the contents of the agreement carefully. The procedure is as follows:


  1. 1) Explanation of the sales and purchase agreement (agreement amount, handover conditions, termination conditions, etc.)
  2. 2) Conclusion of sales and purchase agreement (signing and affixing seals to documents such as the written agreement, the documents for explanation of important matters, etc., as well as confirming IDs, etc.)
  3. 3) Giving and receiving of deposit


When receiving the deposit from the purchaser, you will pay half of the listing commission to the real estate company (in some cases, the whole amount is paid when handing over the property).



                     Preparation for handover of the property                       


Preparations are required before the handover of the property, including notification of the new address to electricity and gas companies, housing loan payment arrangements (if applicable), and arrangement of a judicial scrivener. The real estate company usually provides you with assistance to carry out these arrangements.



                          Handover of the property                            


Receive the remainder of the purchase amount from the purchaser when handing over the property. At the same time, apply for registration of cancellation of the mortgage, transfer of ownership, and other matters. You will also pay the listing commission to the real estate company. When a profit arises from selling the real estate property, you must pay taxes (income tax, inhabitant tax, etc.) for such profit. Make sure to pay requisite taxes without any omissions.


Types of listing agreements

When you have chosen your real estate company and ready to think about listing your home for sale, you have to sign a listing agreement with the broker company. There are three common types of listing agreements:


(1) Ippan baikai (open listing)

The owner can enter into this type of agreement with multiple real estate companies. When the owner finds a purchaser on his/her own, the owner and the purchaser can enter into an agreement without a real estate company. Real estate companies have no obligation to make activity reports or to register information at a specified real estate information network.


(2) Sennin baikai (exclusive agency listing)

The owner can enter into this type of agreement with only one real estate company. When the owner finds a purchaser on his/her own, the owner and the purchaser can enter into an agreement without a real estate company. The real estate company must register information at a specified Japanese real estate information network called REINS (Real Estate Information Network System) within seven business days from the date of agreement. The real estate company must also make activity reports to the owner at least once every two weeks. 


(3) Senzoku sennin baikai (exclusive right-to-sell/lease listing)

The owner can enter into this type of agreement with only one real estate company. The owner is subject to more restrictions than sennin baikai and can only sell the property through a real estate company, even when the owner finds a purchaser on his/her own. The real estate company must register information at REINS within five business days from the date of agreement. The company must also make activity reports to the vendor at least once a week.





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