Selling properties in Japan through real estate brokers
-Types of listing agreements
In the case of selling properties through a real estate company (companies), a listing agreement with the real estate company needs to be signed. There are three types of listing agreements. Before you put your property on the market, perusing the characteristics of each type of these agreements will be to your benefit.
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.
This type of agreement is only valid up to a maximum of 3 months and shall not be automatically renewed. Even if a 4-month listing agreement is signed, it can only be valid for 3 months by law.
(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. Same as ② , this type of agreement is only valid up to a maximum of 3 months.
There is no such thing as the best option out of these three listing agreements. Depending on the sellers’ strategies and also their relationship with the real estate agents, that will be how people decide on the best agreement.
With open listing agreements ① with multiple agents simultaneously, it might have better marketing exposure and can reach more potential purchasers. However, it could also be the case that brokers without exclusive rights, tend to spend less time and effort on selling while they are also not obliged to report any details of the activity status. That makes it difficult for the seller to know how these real estate agents sell his/her property daily as well as the activity status.
There are only two main differences between the above two exclusive agreements ② and ③. One is how often the agent is required to provide the seller with an activity report, and the other is whether or not the seller is allowed to sell directly to a buyer whom he/she find without going through the exclusive agent. If a seller is unlikely to find a purchaser on his/her own, getting an exclusive agent ③ with more frequent updates on the activity status is highly recommended.
We have explained the three different types of listing agreements in the above. As you may know, most of the real estate brokers only support the Japanese language, so unless the seller is able to speak business-level Japanese, the language barrier could cause a lot of inconveniences even if ① is chosen.
We are exclusive real estate brokers ③ to most of our clients, we always act in their interest with every possible resource to close deals as fast as possible.