One of the biggest concerns when selling a property, whether you are selling it in Japan or elsewhere, is, whether you are getting the right price for it or not. It is natural that the owner of the property desires to get the maximum worth of his or her property and the new owner wants to save as much as possible.
Although, in an informed market, it is difficult, and even unethical, to sell your property much beyond the market price, there are many steps you can take to ensure that your property is evaluated according to its true worth, based on its location, condition and utility value. In this post we are going to learn about the process of selling properties in Japan.
Assessing the valuation of your property
How much is your property worth, that’s the first thing you want to find when you want to sell property in Japan. The property value may depend on
- Market conditions
- The physical condition of the property
- How old or new the property is
Another factor that may have an impact on the value of your property is how much time you have. Sometimes property owners, in order to sell the property as soon as possible, are ready to settle with whatever proposal they are getting. When you are planning to sell your property in Japan, make sure you have enough time to gather all the information.
The best way to find the true value of your property in Japan is to closely work with a real estate agent you can trust. Since he or she already has his or her finger on the pulse of the market and is constantly doing research, he or she will be in a better position to give you the information you need.
You can check the actual price of a real estate property in Japan is the website of the Ministry of Land, Infrastructure, Transport and Tourism (MLIT). They are constantly publicizing the real estate transaction-price information to maintain and promote transparency in the market.
What’s the selling costs?
How much money you eventually get can be calculated using the following formula:
Miscellaneous costs may include:These miscellaneous costs are just general representations. There may be more costs depending on the nature of the property you are selling.
Here is one example of the selling costs;
Selling 95,000,000yen house in Setagaya-ku.
3,231,000yen, 3.4% of selling price as the selling costs.
Listing your property for sale in Japan
Once you are sure how much you can get for your property you are prepared to put up the listing in the local directories. Your sales agent or real estate agent can do that for you. You may also need to advertise your property using appropriate channels.
Your real estate agent will act as an intermediary. He or she will be interacting with the buyers on your behalf. He or she may also help you with local property laws. For him or her to be able to represent you duly, you will need to sign a mediation agreement or a mediation contract.
Mediation contracts are of different types, depending on how much involvement you seek from your real estate agent in Japan.
The real estate sales contract in Japan
Once you have found a buyer, either through the real estate agent, or by yourself, you will receive an “offer to purchase” or an “application form” Kaitsukesho-meisyo 買付証明書. This is a document that contains, the payment method, the preferred hand over schedule and other conditions for signing the contract.
When you are fine with the contents of the “offer to purchase” document, you are ready to sign a sales contract. Before you can do that, the sales contract will need to be drafted according to mutually agreeable conditions.
Before you can sign the contract, you will need to reveal everything about the property which may have a bearing on the buyer’s decision. You will need to tell him or her about any leakages or damages that are present in the property. What is the surrounding environment? Is there a termite infestation or any other pests? If there is a state of disrepair, how much? All this information will be disclosed in the “Confirmation Note of Inspection of the Premise” 物件状況等報告書.
There is another document that is called “List of Facilities” 付帯設備表in which you will mention in case there are any defects or malfunctions in the amenities including kitchen, bathroom, air conditioning and water heaters (and other fittings).
The contract between you and the buyer will be legally binding once both the party agree to the conditions and the buyer submits the down payment to you. You cannot violate the contract now and any sort of diversions may invite penalties.
These are the things you may require to have on the transaction date:
- Property registration certificate.
- Jitsuin, which is an officially registered seal (if you are selling your real estate property in Japan as a foreigner and you don’t have such a seal, you can substitute it with a registered signature).
- An original copy of the seal registration certificate (mustn’t be older than 3 months).
- Stamp duty.
- A photocopy of your identification proof that can be your passport or your driver’s license.
- List of facilities in the property.
- Confirmation Note of Inspection of the Premise
The final stage involves moving out and handing over the keys to the property to the seller. Of course, before that, the buyer needs to settle the balance amount. You may also like to make sure that no unnecessary items are left on the premise and you have paid off all the management fee, repair reserve funds, and parking fee(for an apartment ).
Also, if some portion of the mortgage remains to be paid, it is necessary to pay it in lump sum when you get the balance from your buyer.
Listed below are the final stages of the process of selling real estate property in Japan:
- All the necessary documents are checked and verified by a judicial scrivener – these documents are needed for the “Registration of Ownership Transfer” Item-touki 移転登記.
- The buyer pays a final settlement. Once the payment is settled, a final checkup and verification that the mortgage has been paid is conducted, most probably by the judicial scrivener.
- Up till the day of the delivery, as the previous owner you are responsible for settling all the fixed asset taxes and any other property management fees (for example, in the case of an apartment).
- Once a final payment has been made, you need to hand over all the concerned keys. For example, keys to the main entrance, backdoor, garage door (including the remote, if applicable), cupboards and lockers and bathroom and kitchen doors.
- Both you and the seller then sign the “Delivery Confirmation” and exchange signed copies, confirming that the process of selling the property has culminated.
- You make the payments to the real estate agent and a commission fee to the judicial scrivener. This completes the process of selling property in Japan.
The final items needed for settling the remaining balance may include:
- Property registration certificate
- The officially registered seal.
- The original copy of seal registration certificate (issued within 3 months).
- Tax certificate.
- Agent commission and the judicial scrivener commission.
- Registration fees for registration of change of residence and, if applicable, registration of mortgage disposition.
- Different keys to the property.
- Other documents pertaining to the property such as management regulations, manuals and instruction sets.
If you have any questions or concerns in the process of selling properties in Japan, please email us anytime!!