Buying Property in Japan as a Foreigner, Part 2 - Relationships

Congratulations – you’ve followed the advice laid out in our previous article, sourced and recruited local Japanese representation, either in the form of a foreigner-friendly real estate professional or a direct Japanese assistant, and are now ready to tackle Asia-Pacific’s biggest property market!

The first step of your market research, and the most important building block of your future investment portfolio in the land of the rising sun, begins with what the Japanese value above all else – relationship building. As mentioned previously, while Japan has been trying to open itself up to the world, this is still very much a closed, ethnocentric market. And while the market, internally, is quite transparent, meaning that most property listings are available on the open market, with most of the relevant information readily available – there is still a huge gap between locating these coveted deals and actually getting someone to sell them to you.



There are a great many multi-listing property websites (MLS) on the Japanese web, and a great number of properties appearing and disappearing on these websites on a daily basis. There is also a seemingly infinite number of individual realtor websites advertising the same properties, as well as a great many others, which never even make it to the MLS. Beyond these, there are also a huge number – much larger than in other developed countries – of realtors who do not use the Internet at all, and instead use “old-school” methods of printed or even hand-written flyers taped to their shop windows, for potential walk-in traffic to review while walking down the street.

Don’t let their old-fashioned methods fool you into underestimating these realtors, however. More often than not, these local agencies will have the best deals around – the reason they haven’t “made it” to the web being mainly that they never had the need to. The Japanese love paperwork, as previously mentioned, as well as old-fashioned window shopping, and place great value on local and reliable service. And beyond all of the above, the best way to get a good deal hands-down is to develop a relationship with good agencies, get on their active investors’ lists, then receive a call or e-mail when a new listing becomes available – BEFORE it ever makes it to the general market.

So your assistant’s or buyers’ agent first job, would be to actively, painstakingly search the Internet (or, if they live in an attractive investment location, walk the streets) and locate interesting listings, compile a list of interesting agencies, and write down a telephone scripted introduction, in preparation of contacting said agencies.

(Tip – when reviewing said listings, take care to differentiate between what the Japanese call “coupon yield”, which is the equivalent of gross or cap rates and “net yield” – which isn’t really net per-se, as it still doesn’t include purchase costs, property management fees, insurance premiums, taxes and other similar smaller expenses – but is at least slightly closer to the real bottom line. The difference between the two can be huge, since the “coupon yield” doesn’t include building management costs, which can make a huge difference, particularly with well-maintained buildings which charge a substantial management fee, and older blocks, which carry higher contributions to the reserve funds pool (known in other countries as the sinking fund, or renovation/repair fund pool).

1520062986274?e=1628726400&v=beta&t=T89p QMqddeqj4aTrrSfcYKPVin9wrnakQjOQynj28M



Once a list of potential listings and their corresponding agencies have been compiled, it is now time to make the first contact with the listing realtors. It is absolutely essential that this first contact be made via telephone call, and by a native Japanese person versed in “keigo” (Japanese “business speech”). ‘Flying under the radar’ is critical with the foreigner-shy and ‘proper-manners-obsessed’ Japanese, and e-mails failing to comply will simply not be returned in the vast majority of cases – particularly if the e-mail alludes to the existence of a foreign buyer such as yourself. The person contacting the realtor must be polite, speak fluent business Japanese, and know how to present your case smoothly, immediately addressing all concerns the realtor might have. These concerns would normally include:

1. Fear of Foreigners

The realtor must be satisfied that no direct contact with foreigners will be required by either himself or the seller at any point in time. This has already been mentioned in the previous instalment in this series, but cannot be emphasized enough – a Japanese person can, in many cases, be terrified of the idea of having to communicate with foreigners, let alone in any language other than Japanese. The person making contact on your behalf must therefore assure them that they will be representing the buyer in all matters relating to the purchase, have the legal, document-backed permission to do so, and that the realtor or their colleagues and client (the seller) will NOT be required to deal with anyone else – otherwise, in the vast majority of cases, they will simply not consider you as a buyer.

2. Reluctance to Work with Other Realtors

In Japan, realtor commissions are payable by both buyer and seller – and a realtor bringing a buyer to a seller’s realtor is entitled by law to the buyers’ side of said commission – which naturally means sellers’ realtors would always prefer to deal directly with buyers who are not represented by any additional realtor. It is therefore highly recommended that the person contacting the agency make it absolutely clear that they themselves are NOT realtors, and that the listing realtor can keep the entire sales commission to themselves — otherwise the realtor will shuffle their feet, stall and do their utmost best to find another buyer, to avoid having to share said commission. Only in cases where the property is difficult to sell for any reason will realtors consider such a sale – but then, you probably wouldn’t want to buy it — or at least not at the listed price (more on negotiation further down the track).

3. Wariness of Tire-kickers and Last Minute Cancellations

While it is legally and technically possible to back out of an offer made at any point up to the signing of the contract, when a non-refundable 10% deposit is usually paid — such behavior is unacceptable in Japan, and is usually the trademark of fast-talking (often non-Japanese) buyers who tend to “shoot in all directions”, or worse – dodgy, unprofessional business people and investors, only one step above “yakuza” (Japanese organized crime outfits). While it IS perfectly acceptable to pend an offer on particular due diligence items – meaning, to add a clause saying something like “this offer is pending tenancy, reserve funds and renovation history information”, for instance – it is considered very rude to back out of an offer without any such clause, due simply to a change of heart, lack of funds, etc. Therefore, it is important for the person contacting the realtors to clarify that the buyer is serious — WITHOUT sounding arrogant or show-offish. (Introductions like “I’m speaking on behalf of a serious property investor from Singapore who is very interested in property X” are acceptable – but introductions like “I represent a very rich American who has millions of dollars to invest” are NOT).

4. Aversion to Rushing, Pushy Buyers

It is a well-known fact that the Japanese take their time in all endeavors, both personal and business-oriented. Rushing or pushing a sale is seen as, again – rude, un-professional and amateurish. The person contacting the realtors must speak slowly, take their time to listen and, above all else, stress that they are looking to form a relationship with the realtor, regardless of the outcome of the particular potential transaction they are inquiring about. Which leads us to the next step –

1520209971681?e=1628726400&v=beta&t=EvDw cSylfp7UBxSkuf03WyQssuXt4DXBP 2IXJI1DA



If you’ve managed to receive a return call or email from any of the realtors contacted in step 2, above, (which will be, at best, about 50% of the agencies you attempt to contact, even if you’ve correctly followed the above tips) –  this means you’ve managed to locate a rare gem in the Japanese professional property sphere – an open-minded, foreigner-friendly realtor. These guys are rare and far between, so make sure to nourish the relationship.

Regardless of whether the deal you inquired about bears fruit or not, you’ll now want to make sure that realtor keeps you in mind for future listings as well. Remember, the market here is huge and moves very quickly, so it is in your best interest to make sure you get contacted first, along with the agency’s other active clientele, and, if possible, before the new listings make their way to the general public.

If you succeed in this step, you’ll be receiving an e-mail with potential properties that haven’t been published online yet, and will have the opportunity to make a move on them BEFORE the rest of the world and their dog do – and once that happens, they can be gone in a matter of hours, depending on how attractive they are.

So make sure to call or e-mail your new realtor friend regularly, every few weeks or so, to explain your purchase criteria clearly, and listen to any reservations they may have – just to remind them that you are still in the market for good deals, and that you’ll be overjoyed to receive any new listings they may have, as soon as they have them.

Once you start receiving these, even if they hold no interest to you whatsoever, make sure to thank them several times for keeping you in mind, tell them how interesting and valuable the information they have provided is, and only then explain why you won’t be purchasing those particular properties – so that they can better fine-tune their next listings forwarded to you.


Got all that? Great! You’re now ready to move on to the purchase process itself…

Related Articles

General, Holiday/Home Makers
These homes are packed with charm, full of history and quickly disappearing. Over the last 30 years, Alex Kerr has given 574 presentations on the cultural importance of Japan’s minka (traditional village homes). For the first 573, his audiences were filled with nothing but local bureaucrats skeptical about lifting a finger to preserve these striking properties. “They all had to be convinced that minka are not worthless but wonderful,” Kerr told the audience at the Minka Summit, the site of the noted Japanologist’s 574th such presentation. “The people who are coming to this conference are really doing (things with) minka. You don’t need to be convinced that minka are wonderful.”
General, Investors/Business
Imagine if you could put an ultra-thin, transparent solar sheet on your window to generate energy, not just from sunlight but also artificial lights from inside your room? Seen as the most promising next-generation solar cell, this technology, called perovskite, is exactly what Japanese start-up Enecoat Technologies is trying to develop. Start-ups such as this are called "deep tech". They are small firms who are merging high-tech engineering innovation with scientific discovery. The hope is that it will lead to the development of transformational products.
General, Investors/Business
Japan's former Prime Minister Shinzo Abe, who was assassinated on Friday, July 8th, had aimed to transform and revitalize the economy. When his government took office it was faced with the daunting task of revitalizing Japan’s once dynamic economy, which was still in the shadow of the major slowdown during the so-called “lost decade” from around 1991 to 2001. Abenomics did help drive growth, though not at the pace that the country had seen during its post-war boom.
General, Holiday/Home Makers
Information, News
We have been shifting and twisting and trying to adjust to a comfortable lifestyle under COVID-19. Part of that has meant getting away, even moving from crowded cities into more spacious areas. And for quite a few, Japan’s countryside has become more and more appealing. Imagine for a moment, retiring with Japan’s fresh air, greenery, rivers. Or that ideal environment to raise a family. Or imagine for a moment to generate an income on short-term rentals taking advantage of the country’s back on track campaign to boost tourism. Let’s look at how to make this dream more realistic.