real estate transactions

Seller beware

Posted on by catforehead

Everyone knows that it’s cheaper to buy a property directly from the owner than it is to buy one through a realtor. In Japan, the buyer usually pays a 3 percent commission to the realtor (plus consumption tax plus a ¥60,000 “handling fee” whose purpose has never been sufficiently explained to us), who also gets 3 percent from the seller. Many potential homeowners resent the commission, and for good reason. Often the realtor does nothing for the buyer and everything for the seller. If the price of the property is really low to begin with, it may seem as if the realtor is wasting his time by even showing it to a customer. We don’t know how many times we’ve gotten an agent to come a very long distance to show us a house that we probably knew we weren’t going to buy in the first place, but in any case even if we did buy it his commission would hardly mean much to him. But the main sticking point with regard to the realtor’s actual role in the deal is that, in Japan at least, he doesn’t do much in the way of negotiation.

We’ve heard of cases of real estate companies actually refusing to list a property by someone who wants to sell, for the simple reason that the realtor believes the property is unsellable; or if it is sellable, it would be at a price so low it’s not worth the realtor’s time and effort. But when they do list a property sometimes they will advise the seller of an appropriate price and even suggest remodeling work to make it more presentable. As the market has become glutted over the years such tactics become subject to scrutiny. How much improvement is enough? If the property is so difficult to unload that even extensive remodeling isn’t going to make it any more sellable, is it even worth it? These are considerations the realtor should help the seller understand, but occasionally we’ve met realtors who would just as soon stay out of it. Read More

Soft sell the hard way

Posted on by catforehead

The one that got away

Most of the properties we inspect we find over the Internet. Sometimes they’re on real estate portal sites like Suumo, which includes listings of multiple agents, and some are on sites run by individual real estate companies. If we want to inspect a property we find on a portal site, we usually call the real estate agent whose office is closest to the property itself, because we know what a pain it is for an agent to come a long distance just to open a house up for maybe fifteen minutes without much chance of a sale. Remember that real estate agents are salespeople, which means even if they know there isn’t much chance of selling a particular property they have to be polite, and we try to make their job easier.

So we were totally unprepared for the attitude we encountered last week when we called a realtor about a property in central Chiba. The house was 94 square meters on a piece of land covering 191 square meters. It was built in 1980, which is pretty old by Japanese standards, but it only cost ¥6.5 million. The picture of the exterior was impressive enough to make us think that it could be remodeled into something pretty good, since at that price we could afford to put more money into it. We found the property listed four times on one particular portal site and called the realtor whose office was closest to the house. Also, we were planning to be in the area to inspect another property, so thought we’d kill two birds with one stone. This is how the conversation went. Read More

Higher ground

Posted on by catforehead

Aobayama Park, overlooking Sendai

The land ministry has decided to monitor real estate transactions in the disaster-affected areas of the Tohoku region. As evacuees start moving out of temporary shelters and rebuilding their lives, many will likely seek new properties on higher ground, thus causing steep appreciation in land prices on elevations considered out of the reach of future tsunami. The ministry, along with the prefectural governments of Iwate, Miyage, and Fukushima, is afraid that real estate companies will try to corner the market on these tracts of land.

The ministry has already asked local governments to gather information about land transactions. The idea is for the local authorities to designate certain choice areas for monitoring purposes based on the Land-use Planning Law, which regulates the buying and selling of properties. Any transactions that take place within the monitored areas will have to be approved by the pertinent prefectural governor before any contracts are concluded in order to preempt deals deemed “improper” by the law. If the governor does not approve the transaction he can have it voided or ask that the terms be changed.

It’s obviously a necessary policy, but it may be difficult to carry out. Local governments are still hashing out whether or not to allow people who own certain low-lying properties to rebuild on the same land. Until they decide, those families are in limbo. Meanwhile, families who have already decided to move to higher ground may be in the process of looking for land and will thus get a jump on everyone else. The competition could end up being fierce, so it will be difficult to judge what constitutes an “improper” deal in some cases if the buyer and the agent come to an agreement. Also, if the local government decides that certain plots of land on lower elevations should be left clear, they will probably have to compensate the owners, something that could take time. And until those families receive their compensation they won’t be able to move. This will be particularly difficult for fishermen and other people in the seafood business, who want to live as close to the sea as possible.

According to the Tokyo Shimbun smaller, more isolated coastal communities aren’t waiting for the government. Some have already started rebuilding. Since tsunamis have been a fact of life in those villages for many centuries, a kind of lore has developed that instructs the villagers where it is safe to build and where it isn’t. After a tsunami, everybody moves to higher ground, and then over the course of decades they slowly work their way closer to the sea, since they’re all fishermen, until the next tsunami hits. It’s an inevitable, tragic cycle.