We met the real estate agent at Honda Station on the Sotobo Line in Chiba Prefecture. As we drove to the property we talked about the area. Though a typically cramped Japanese bedroom community, it’s a bit older than most, so the houses were more varied in shape and size, with wider spaces between them, not to mention the extra public park space.

The house we were inspecting adjoined a large open tract of land, which is why we were interested, and when we arrived we discovered the land contained a cemetery. This surprised us because the price of the property, ¥11.8 million, didn’t reflect the close proximity of a graveyard, which would normally be a disincentive. The house was built in 1980, so the price seemed high to us already and we assumed it was because of the size of the plot, which was large for the neighborhood but not particularly huge.

We didn’t mind the cemetery since its presence meant the eastern side would remain open and undeveloped, but the house turned out to be a real mess. The owner, a middle-aged woman, was still living there and had not tidied up for our visit. Even if it had been cleaned, we realized the house would need a great deal of work to make it desirable. Out of earshot of the owner, we said as much to the agent, implying that the price was unreasonable. The agent didn’t respond and quickly suggested visiting another property nearby, one that was newer and, obviously, more sellable.

About 13 percent of all residences in Japan now stand vacant. There is a housing glut, and in a culture geared heavily toward new things, realtors have their work cut out for them. So we couldn’t understand why this real estate company even agreed to handle such a property if the owner was unwilling to negotiate on price, which seemed to be the case. We’ve heard of realtors refusing to handle properties because they were considered either unsellable or sellable only at a price that would not justify the time and resources necessary to make the sale happen. This obviously wasn’t one of those companies.

It goes like this: An owner looking to sell contacts a real estate company, which assesses the property and makes a sales contract with the owner. There are three types of contracts: The senzoku sennin baikai (exclusive full-service agent), which gives the agent the exclusive right to sell the property and no other agency or the owner can sell it; the sennin baikai (full-service agent), which is the same except if the owner finds a buyer himself they can sell it without paying the realtor a fee; and the ippan (general),which allows the seller and the main agent to list the property with other agents.

The more exclusive the contract, the more aggressive the sales activities — or at least that’s the general idea. Not surprisingly, the majority of contracts are ippan, because the property gets more exposure, especially since almost all real estate companies use the Internet now, either setting up their own dedicated websites or participating in real estate portal sites, such as Suumo and Athome. On portal sites it isn’t unusual to see the same property listed multiple times, each by a different realtor.

Agents also register properties they represent through the nationwide Real Estate Information Network (REINS), which allows other member companies to get involved. However, potential buyers who are interested in specific neighborhoods or regions are advised to visit agents actually based in those areas, since many of the better properties may be only available through local agents.

Pricing is the stickiest part. Basically, there are four prices: Kibō, the desired price; satei, the price as assessed by the realtor based on market value and other criteria; uridashi, the price listed in the ads; and seiyaku, the final contract signing price. Unless you’re selling a property in central Tokyo or another large city, real estate agents frankly tell the seller that the final price will likely end up lower than not only the desired price but also the assessed one, which is pitched higher to allow room for negotiation.

A few salespeople have admitted to us that owner-sellers tend to be unrealistic about prospects, which is understandable. They want to get as much as they can out of their properties and, at first, may be unable to accept the fact that their homes and land have declined in value since they built or bought them. Though it’s the job of the agent to make clients understand the real value — the price they can actually get — many don’t, which means the properties may linger on the market for many months, even years.

It’s a buyer’s market, but sifting through all the properties that are available can be exhausting, especially since Japan’s policy of promoting new homes at the expense of older ones has resulted in a pre-owned housing stock of generally substandard quality.

One way of streamlining the process is to seek used properties that are being sold directly by realtors. Several weeks ago we inspected a house in Sakura, Chiba Prefecture, that was even older than the one in Honda. It was being sold under the auspices of a major real estate network for ¥9.3 million.

Apparently, a real estate company had bought it from its previous owner, remodeled it, and listed it through the network. When we visited, it already had new interior walls and flooring, a new kitchen, double-paned windows on the first floor, and a new exterior paint job. When we told the agent there were still some things we would want to be changed, he said that he would talk to the real estate company (not his) and negotiate for additions, taking into consideration our budget.

The advantage of having a realtor as the seller rather than an individual owner is that the realtor knows what’s possible and thus will be more flexible. Moreover, if you buy a house from a realtor, it comes with a two-year structural warranty, whereas when you buy from an individual the guarantee may only be several months. (When you buy a new house, by law the developer has to carry insurance and guarantee the structure for 10 years.)

Often realtors will advise clients to remodel a house or condominium to make it more sellable, but the clients will only invest the minimum amount of money needed. But realtors have a better idea of what’s required to make the sale and so if they are selling the property, they will likely invest more. Realtors also frequently work with construction contractors who will give them a deal, allowing more scope for renovations. Whether the realtor’s taste matches that of a potential buyer is another question, but despite the “reform boom” that has seen more and more people buying cheap properties and fixing them up, most seem to prefer buying a house they can move into right away.

Buying directly from a realtor has its advantages, especially in the current market, which is competitive and not getting any less so. The price offered us for the house in Sakura had already been reduced from ¥9.9 million, and they seemed willing to reduce it even more.

Philip Brasor and Masako Tsubuku blog about Japanese housing at www.catforehead.wordpress.com.

The fees that come with real estate deals

Shōhizei (consumption tax): There is no consumption tax levied when you buy a used house or apartment from an individual owner because the seller in that case is not a commercial entity.

You do pay consumption tax if you buy a used or new home from a realtor or developer. In addition, consumption tax applies to the realtor’s fee, which can be charged to both the buyer and the seller.

No consumption tax, however, is levied on sales of land by itself (without a house or apartment included).

Chūkai tesūryō (realtor’s fees): Fees are charged in property-price bands of up to ¥2 million (5 percent); ¥2 million to ¥4 million (4 percent); and any balance over ¥4 million (3 percent).

For properties priced at more than ¥4 million (which most are), this can be more easily and still accurately calculated as 3 percent of the total price plus ¥60,000.

Some realtors waive handling fees for certain types of contracts.

Baibai keiyakusho inshidai (contract-signing fee): This a stamp duty that runs between ¥10,000 and ¥20,000, depending on the price of the property. (P.B., M.T.)

NB. Loan-related fees are not included in this list

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