Selling a Property in Japan
Information on how to sell a house or apartment in Japan, with details of processes, documents and taxes...
The first step in selling a property is to assess its value, which can be done with the assistance of an estate agent. Once the selling price is set, it is necessary to put the property on sale and to bind a mediation agreement with an agent who intermediates to sell the property.
There are three types of mediation contracts:
- Non-exclusive agency listing: multiple agents for an effective period of three months. The seller may sell to a buyer that they find themselves. Optional registration with the Real Estate Information Network System (REINS). Reporting client responses is not required
- Exclusive agency listing: one agent only for an effective period of three months. The seller may sell to a buyer that they find themselves. Registration with REINS required within seven days of signing the mediation contract. Client responses must be reported every two weeks at least
- Completely exclusive agency listing: one agent only for an effective period of three months. The seller may not sell the property to a prospective buyer they find themselves. Registration with REINS required within five days of signing the mediation contract. Client responses must be reported more than once a week
Real Estate Sales Contract
When a buyer is found, the seller receives an offer to purchase or application form from the real estate agent. This form states the buyer’s desired price, schedule for signing the contract, payment method, desired hand-over schedule, and other conditions.
Once the seller and the buyer come to an agreement, a sales contract is drafted stating the agreed selling price, payment method and other agreements.
The seller needs to notify the condition of the property when preparing the Real Estate Sales Contract. It is essential to report the present condition clearly and properly and have the buyer understand it fully in order to avoid any troubles throughout the transaction. It is required to hand-over the property in the condition that is reported to the buyer in the contract.
Any leakage or damage caused by termites or the surrounding environment will be reported in the Confirmation Note of Inspection of the Premise.
When both the seller and the buyer sign and seal the contract and the buyer remits the down payment to the seller, the contract is binding.
Penalties may occur if any of the conditions of the contract are violated.
The following are required in order to sign the sales contract:
- Registration certificate
- Jitsuin: officially registered seal (If a foreigner doesn't have one, it can be substituted with a registered signature)
- Original copy of seal registration certificate (issued within three months)
- Stamp duty
- Photocopy of ID such as a passport and driving licence
- List of facilities: Any defects or malfunctions of the equipment included in the property such as the kitchen, bathroom, air conditioning, water heaters are reported in this list
- Confirmation Note of Inspection of the Premise: Any leakage or damage caused by termites or the surrounding environment is reported in this note
Costs and Taxes
In addition to the moving costs there are a number of costs and taxes involved when selling a property, which may include the following:
- Stamp duty: documentary stamp tax required for the contract
- Income tax: residential tax arising from the profit of the sale
- Agent commission: 3% of the sales price + 60,000 yen + consumption tax in accordance with property transaction regulations
- Disposition of mortgage fee: required if the mortgage has not been paid off. This is approximately 15,000 yen per mortgage
- Commission for the legal scrivener
- Surveyor's commission: the fee for land surveying to determine the boundary points
Delivery of the Property
The property, along with all keys, is delivered once the remaining balance is settled. If there is an existing mortgage such as a housing loan, it is necessary to arrange to pay off the mortgage in a lump sum prior to the balance settlement day.
A legal scrivener checks all the necessary documents to apply for the registration of ownership transfer. Once the payment is complete, applications for ownership transfer and disposition of the mortgage are conducted, generally by the legal scrivener.
The seller is responsible for the payment of fixed asset taxes and any property management fees (if the property is an apartment) up to the delivery day.
Once the keys have been handed over, both parties are requested to sign the delivery confirmation note and exchange a copy, which confirms that the process of closing the sales contract is complete.
The seller pays the commission fee to the real estate agent and legal scrivener, and the sale of the property is completed.
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