Real Estate Sales Flows
In Japan, real estate owners can sell their properties directly to buyers without going through any real estate agents. However, real estate agents can offer expertise in legal matters, tax and other specialized knowledge required to handle long and complex transactions and expenses. For this reason, most would choose real estate agents as their intermediaries. Real estate agents are generally able to get the highest market prices for a property and at the same time navigate all the various procedures involved in the sale of a property to completion. Therefore, it is recommended to get a trustful real estate agent to assist you in handling all required procedures smoothly without any worries.
Here below is a general flow for selling real estate in Japan. Let's get started.
Reason(s) 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 websites), housing information magazines, and 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 properties.
Find the right real estate company (companies)
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 potential purchasers
When you find a potential purchaser, negotiate and adjust the price, handover timing and other sales conditions with them. If potential purchasers are not found for a long period of time, the selling price needs to be reviewed. 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:
- Explanation of the sales and purchase agreement (agreement amount, handover conditions, termination conditions, etc.)
- Conclusion of sales and purchase agreement (signing and affixing seals to documents such as the written agreement, the documents for the explanation of important matters, etc., as well as confirming IDs, etc.)
- 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 the 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.
The above is a general flow for selling properties. Normally, most real estate agents like ourselves do their best to assist their clients to close deals as fast as possible. Therefore, knowing what is required in each step of the above procedures as a seller would help to have sales activities carried out in a timely manner.
One of the most common causes of delay in the above schedule is that much time has been taken to get the required documents from sellers.
Most of the documents needed to sell a property are decided at the beginning, so being able to prepare these documents beforehand ensures to get a deal to run smoothly.