Table of ContentsAre you considering diving into the complex world of Japanese real estate? For first-time buyers, the process can be overwhelming, and understanding the intricacies is crucial. This guide provides a step-by-step breakdown of the purchasing procedure, essential precautions, and key aspects to consider during property viewings.Call or email us here >>Understanding the Real Estate Purchase Process: A 5-Step Journey1. Collection of property informationTo start, gather property details from various sources like real estate Listing sites, real estate agency websites, and flyers. Feel free to contact us for information on houses and condos in Tokyo and surrounding prefectures. We specialize in properties within Tokyo's 23 wards.2. Purchase applicationWhen you find your dream property, initiate the purchase process by contacting the seller or a real estate agency. Keep in mind, popular properties might have multiple applicants, making it a first-come, first-served or lottery-based selection. Prepare money for an earnest money deposit, typically ranging from tens of thousands to hundreds of thousands of yen, in advance.3. Make a financial planUpon selecting a property, craft a financial plan detailing your budget, including mortgage estimations, funds, income, and various expenses such as brokerage fees and taxes. A well-thought-out plan ensures a smooth financial journey through the purchasing process.4. Conclude a real estate sales contractOnce you have decided to purchase real estate, it is time to sign a sales contract with the seller. In general, the contract is signed by both Seller and Buyer at the office of a real estate company where the four parties, the seller, the buyer, listing agent and buyer's agent will gather. The licensed real estate transaction specialist will read and explain the "Explanation of Important Matters" of the property to be purchased, both parties will agree on the contents of the contract, and the contract procedure is completed when the contract is signed and sealed. Typically, an earnest money deposit (usually about 10% of the purchase price) will be paid to the Seller at this time. 5. Delivery of PropertyOn closing day, the remainder of the Purchase Price of the property (minus the earnest money deposit) needs to be paid to the Seller. For buyers using housing loans, successful mortgage screening leads to settlement at the bank, receipt of keys, and delivery of the property. In addition, it is customary to change the registered owner of the real estate on the delivery date through the services of a judicial scrivener on Closing day as well. Crucial Considerations for Foreign Buyers: Disaster Risk, Defects, and Initial CostsNow that you know the flow of purchasing real estate, you may be wondering about the points to keep in mind when choosing a property and signing a contract. There are three main points to keep in mind when purchasing real estate. Confirmation of disaster riskJapan is prone to natural disasters like earthquakes, typhoons, and floods - so it is understandable that many people may feel anxious. You can check the disaster risk of the property you are buying on the hazard map. Evaluate the disaster risk of your chosen property using hazard maps provided by the Ministry of Land, Infrastructure, Transport, and Tourism. Additionally, inquire about flood hazard maps during the sales contract discussions to make an informed decision. Confirmation of defectsIn real estate transactions, defects include not just damages such as dents and scratches but leaks, termite damage, noise and odors. In addition to visible defects, properties that cause psychological discomfort, such as ones where murder or suicide took place, also fall under this category. While sellers are obligated to disclose defects, proactive buyers conduct detailed previews before the purchase. Clearly define responsibilities regarding defects in the sales contract to prevent post-contract issues.Confirmation of initial and closing costsWhen purchasing real estate, there are initial as well as closing costs in addition to the purchase price of the property. For example:● Earnest Money Deposit● Brokerage fee● Title Registration fees / Judicial Scrivener fees● Tax (stamp duty,real estate acquisition tax, etc.)● Moving costs● Various insurance premiums (fire insurance, group life insurance, etc.)The above expenses need to be prepared in cash, so consider the amount of borrowing for the mortgage when planning your finances. As a guide, closing costs will be about 3 to 7% for new properties and 6 to 10% for used properties, taking into account the renovation cost. Calculate these costs meticulously, factoring in life events like childbirth and education. Ensure your financial plan accommodates these expenses without straining your budget.Insights for Informed Property Viewings: What to Focus OnWhen purchasing real estate, it is common for potential Buyers to have a property viewing before purchasing. A property viewing is where prospective buyers actually visit the site and tour the outside and inside of the property. Many people decide whether to purchase the property based on their impressions at the time of viewing. Confirmation of equipmentInspect the property's equipment meticulously, especially in used properties. Pay attention to plumbing and lighting fixtures' condition. For new properties, cross-verify the information in brochures during the viewing.Check sunlight and viewEvaluate sunlight accessibility, especially in residential areas. Adequate sunlight is essential for drying clothes and maintaining warmth in winter. Also, you want to live in a place with as good a view as possible. High-rise condominiums may look good in photos, but when you actually look inside, the scenery may change depending on the room. Therefore, we recommend that you check the view from the balcony carefully when viewing. And whether or not the air is good is also an important point because it is related to the usage rate of the air conditioner in summer.Check the surrounding environmentWhile exploring the property, also evaluate its surroundings. Consider noise levels, neighbor interactions, and nearby traffic conditions. Asking the seller or real estate agent about local amenities and nearby facilities provides a clearer picture of your potential future living environment.SummaryWe hope that this blog post demystifies the intricate process of purchasing real estate in Japan. From understanding the purchase flow to crucial precautions and viewing considerations, this comprehensive overview equips you with the knowledge needed to make an informed decision. Remember, a well-informed buyer is a confident buyer in the complex world of Japanese real estate. And if you have any further questions about the purchasing process or wish for assistance, don't hesitate to contact us. Mr.LAND is a real estate agency based in Tokyo, Japan with over 30 years experience in the industry. At the Global Division, we specialize in helping international clients buy and sell real estate in Japan with full support in English. We pride ourselves in tailoring every transaction to meet the needs of each client. 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