Real Estate Japan recently sat down with Add Value, a bilingual Tokyo real estate brokerage, to ask for their insight and advice to foreigners who are looking to buy or rent property in Japan.
Q1. What do you think about the transaction flow for buying and selling real estate in Japan, with respect to interactions between agents and foreign clients?
I feel that there are some agents who don’t deal with foreign clients kindly or fairly, especially when they think they won’t make much commission. There are features of Japanese contracts and some legal grey areas, which may be difficult for foreigners to understand, and I personally think the law needs to change to keep up with the current state of the real estate market.
Q2. Do you have any advice for foreigners who are trying to choose an agent?
I recommend that you choose an agent who has a professional attitude, good communication skills and integrity, and who will do their utmost your behalf, rather than simply choosing a company based on its size or how well known it is.
Q3. In general do you think that foreigners are treated unfairly by people in the Japanese real estate industry?
I don’t think that foreigners are treated unfairly but that there are many agents who are not accustomed to dealing with foreign clients, and who do not make the extra effort to accommodate their needs. It might take three to four times the time and effort and some agencies do not want to make this investment. There are things like arranging a guarantor company or setting up a local bank account (for a foreigner client) that can be difficult for an inexperienced agent.
Q4. Do you have any advice for clients regarding how to choose a good property?
With respect to buying a property, if you only focus on yield, you may miss out on the opportunity to find a “diamond in the rough”, which could greatly increase in value. If you are buying a property to lease out, try to view the property as a potential tenant would. The best strategy is to choose a high quality property, but it’s also important to add value to your investment.
With respect to renting a property, it’s best to talk to two or three agents before you decide which agent to go with. Some agents will only show you properties that will earn them a high commission, not necessarily places that suit your needs. If you work with a trustworthy agent, you’ll be able to find a place that’s right for you. If not, you can ask another agency for a second opinion.
Q5. Do you have any other comments or advice for your readers?
The Japanese real estate market has positive long-term prospects. However, we always advise our clients to take their time to avoid the risk of buying a bad property. The most important factor in this is finding an agent you can trust and who will work with you through the entire process.
At our agency, we have more foreign clients than Japanese who are repeat customers. I believe this is due to our friendly and trustworthy staff. The real estate business involves big sums of money and high commissions, and unsuspecting people can easily be targeted by frauds.
I also feel that the quality of salespeople and services provided by the real estate industry overall has declined compared to what it was years ago. I think that the industry is struggling with high turnover due to the stressful working environment. Young motivated employees end up quitting their jobs before they can acquire deep experience and knowledge, and this results in a lower level of service.
We, as real estate agents, have to make a serious commitment to improving working conditions for young professionals so that they will continue working. At our agency, we don’t encourage people to overwork, and we ask people to use their vacation days, but in this industry, there are many companies where employees have no choice but to work in stressful environments.
I always want everyone at our agency to our best on behalf of our overseas clients because they’ve come all the way to Japan to do high-value transactions. Overseas buyers and investors bring a lot of benefits to Japan. In Japan, we face a long-term decline in domestic consumption. I’m afraid that Japanese families and domestic investors will continue to tighten spending. In general, Japanese people are willing to buy high-quality products that are inexpensively priced, but real estate doesn’t fit this model or spending habit. Buying real estate is not like buying food or clothing.
It’s natural for sellers to want to sell high and for buyers to want to buy low. Japanese real estate companies should move forward and try to accommodate more opportunities from outside Japan.
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