When you decide which property to purchase, the buyer is required to make a written form of offer, which the real estate agent submits to the seller’s agent. This will ensure your status as the buyer and first-in-line for purchasing.
Next, you can enter into one-on-one negotiations with the seller. In normal practice, even if there is another potential buyer for the same property, you will have the first priority to talk to the seller as long as your offer was made first.
Before signing the purchase contract, you will get the “Explanation of Important Matters” from the seller’s agent. This is a legal disclosure document that should contain all important information a buyer needs to know before signing the purchase contract. It is in Japanese and can be quite long. We will explain the important items to you in English. These include, among other things:
Once both parties agree on the terms and conditions of the sales of the property, the next step is signing the purchase contract. The real estate agent(s) will prepare the contract documents and arrange a time for the contract signing. In normal practice, this is when the seller and the buyer meet for the first time. Some of our clients are located overseas at the time of contract signing, in this case we can arrange an on-line (Zoom or Skype) signing. Please ask for further details.
Before this initial meetings, the buyer is required to prepare:
A bank will make a preliminary bank loan assessment when you apply for a loan. This should be done before you sign the contract. Please ask us for further details for the procedures.
After the bank approves your eligibility for a bank loan, you will move on to the actual loan application. This will take about three to four weeks. When it is completed, the funds will be available for you to purchase the property. There are certain required documents you will need to submit to the bank for the application. We will work with you to go through this process.
When your application is approved, you need to sign a loan contract with the bank for the bank loan.
*Please ask the bank for details
This process is conducted by a Japanese legal scrivener (a type of solicitor that specializes in real property matters).
If the buyer purchases the property with a bank loan, the closing is held at the bank.
The legal scrivener checks the deed of the property and makes sure that the title is clean and transferable. Once this process is done, he or she will give a go ahead sign to the bank to transfer the funds to the seller’s bank account. When the seller confirms the receipt of the funds, the delivery of the property (i.e., title/ownership) to buyer is completed.
The buyer is required to pay the following at the closing:
✓ The remaining amount of the purchase price
✓ The remaining 50% of the agency fee
✓ Registration taxes and the legal scrivener’s fees
✓ Prorated amount of asset tax
✓ A prorated amount of monthly management fees (if the property is apartment)
If there are any other payments due for the buyer, it will all be calculated and the buyer needs to pay.
Below are the current rates of the fees and taxes (as of December 2020):
Agency fees: Purchase price x 3%+60,000 yen x consumption tax
Stamp tax:Please ask
Registration and license taxes: Appraised value of fixed assets tax x 20/1000
Solicitor fees: Please ask
Asset tax: Appraised value of fixed assets tax x 1.4%
Urban planning tax: Appraised value of fixed assets tax x 0.3%
About one month after purchasing the property, you will receive the acquisition tax document. With this, you need to submit the form of confirmation of the purchase. Once you receive the payment slip, you need to take it to a bank or post office and pay.
Acquisition tax: Appraised value of fixed assets tax x 4% or 3%
If you are a non-resident of Japan, you will need to authorize someone who is a resident in Japan (with a power of attorney) to make tax payments on your behalf. Please ask for details.