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How to Buy Budget-Friendly Homes

As mentioned in Part 1 of the article, rural Japan faces an abundance of neglected homes, largely due to factors such as population decline and tax policies. While these properties may initially seem appealing due to their low prices, they often carry significant risks and are not typically recommended for investment. However, for those willing to navigate the risks, purchasing such properties can present attractive opportunities.

So, how exactly can one go about acquiring them? And where can one find reliable information on these potential deals?

Typically, when purchasing property in Japan, you'll share your budget and preferences with a real estate agent, who will then present suitable options. Many real estate agencies now have websites listing some properties, making it convenient to search online. However, rural agencies might not update their websites frequently or list all available properties. Hence, it's worth contacting agents directly for more listings. While it's unusual for agents to handle very cheap properties, as their commission is based on property value, some homes priced below 2 million yen may still be available. This is especially true for sellers eager to sell quickly, leading to properties being listed for less than 1 million yen.

I was able to purchase a property listed by the real estate agent for over 2 million yen for close to half the price by negotiating. If the owner is keen to sell the house quickly, there's a good chance they'll be open to negotiating the price down. So, if you're in the market for a house, consider looking at properties slightly above your budget with the expectation of negotiating the price down.

By the way, according to Japanese law as of 2024, the maximum brokerage fee that a real estate broker can charge a buyer is regulated as follows:

  • If the sales price is 2 million yen or less: 5% of the property price excluding tax + consumption tax (10%)
  • When the sales price exceeds 2 million yen and is less than 4 million yen: 4% of the property price excluding tax + consumption tax (10%)
  • If the sales price exceeds 4 million yen: 3% of the property price excluding tax + consumption tax (10%)

However, it's important to note that fees for judicial scriveners and other related expenses, as well as the cost of revenue stamps for the contract, must be paid separately from the brokerage fee for the real estate transaction. If you request a translator or interpreter for your documents, it would entail an additional cost. Local real estate agents proficient in foreign languages are rare, so if you don't speak Japanese and require an interpreter, it's practical to hire one yourself and communicate with the real estate agent through them.

Additionally, in Japan, official documents must be stamped with a "Hanko" seal as per customary rules, so it's wise to factor in the time and cost required to obtain the seal. While there is an alternative option of using a signature instead of a seal, we'll delve into that later.

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Japanese hanko, or seals, are commonly engraved with either the family name or the full name of the individual. There are two main types of hanko: Jitsu-in, which are officially registered, and Mitome-in, which are unregistered. In real estate transactions, the buyer typically needs to prepare an unregistered seal, known as Mitome-in, which does not require a certificate.

In Japan, it's possible to negotiate directly with the property owner for buying or selling without involving a real estate agency. As mentioned earlier, properties available for free transfers or at low prices without brokerage fees are often not listed by real estate agencies. Hence, there are websites facilitating direct negotiation and contract signing between owners and buyers. If you search for the keywords "0円物件 (Free property)" in Japanese on a search engine, you'll likely come across several such sites. However, it's important to note that these sites only provide information, and any negotiations and contracts are undertaken at your own risk. Additionally, the properties listed on the internet represent only a fraction of the numerous vacant houses in Japan.

Many elderly individuals may feel uneasy about sharing information about their homes on the internet or may lack access to online resources. Additionally, numerous vacant houses remain unlisted for various reasons, leading to a lack of publicly available information. Even when individuals are willing to give up their houses for free, there's no platform to safely introduce such information. Some local governments have attempted to address this issue by offering services like "vacant house banks." However, due to inadequate awareness and staffing, the supply and demand for these services often fail to match up.

If you're currently residing in Japan or intend to search for a house after relocating, building relationships with local residents and tapping into your local network is crucial. Many individuals I know who have acquired homes for free or at discounted rates did so through referrals from others, bypassing the need for a real estate agent or reliance on the internet.

When finalizing a contract for the sale or donation of real estate directly with the owner, without involving a real estate agent, the following items are typically required. In some cases, additional documents may be necessary:

  1. Sales contract or Donation contract (Certificate of the cause of registration)
  2. Certificate of registered matters of the property
  3. Title deeds to the property
  4. Public map of the property (may not be necessary in some cases)
  5. Certificate of the property's assessed value for property tax purposes
  6. Seller's Hanko seal and certificate of seal impression
  7. Buyer's Hanko seal
  8. Buyer's Japanese certificate of residence
  9. Photo identification card

The seller typically handles the preparation of items 1 through 6, while you are responsible for preparing items 7, 8, and 9 on your own. If you reside in Japan and hold a "mid-to-long-term resident" or "Special Permanent Residence Certificate" status, you can obtain all three documents within Japan.

If you're in Japan, you can easily obtain the your Hanko seal, even without a special visa. However, if you're not residing in Japan or lack a visa permitting a prolonged stay, you'll need to enlist the help of a judicial scrivener. They can assist in preparing two documents to verify your address and signature, as alternatives to the “Your Japanese residence certificate" and "Your Hanko seal" (items 8 and 7, respectively).

In such a scenario, be prepared for a lengthy process. Initially, you'll need a judicial scrivener to draft the necessary affidavits to verify your address and signature. Subsequently, these documents will need to be sent to your country's embassy in Japan or your home country for notarization. Once notarized, they will be returned to you.

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Once all the documents are in order, submit the complete set of documents along with the application for registration of transfer of ownership to the Legal Affairs Bureau with jurisdiction over the house to be purchased, and upon receiving the registration identification information, the procedure is complete.

However, it will take some time for the registration to be completed.