Steps to Buy a House in Hokkaido

Buying a house is an exciting time and can be one of the biggest and most important decisions of your life. Japan is very friendly to foreign ownership of property. And while the process can be similar to what you may know from other countries, understanding the procedure for how to buy a home in Hokkaido can make your experience less stressful and help you find an ideal place to live. At Find Hokkaido Agents we have extensive real estate contacts and can help at many stages of this process.

In this guide to buying a house or condominium in Hokkaido, we provide a detailed explanation of each step in the process to complete the purchase of your home in Japan.

STEP 1: How Soon Do You Need to Buy a House?

While a lot of potential buyers are eager to look at properties, the first step to find a house in Hokkaido is deciding your timeline for making a purchase.

It is common to have some questions before you are ready to buy. We can help you talk to local real estate agents in Hokkaido that can answer your questions about buying property in Japan.

Typically speaking, most active buyers are ready to make a purchase within 30 – 90 days of choosing an agent. When you can provide a practical timeline for your purchase you will improve your relationship with your local Hokkaido agent and you will be a more successful buyer.

STEP 2: Preparing Your Financing

As you begin to talk to a real estate agent, you will be asked for the approximate budget you want to spend to buy a home in Hokkaido. The agent can tell you if your budget is realistic for the current real estate prices, but knowing where your purchase funds will come from and what you can afford to spend is part of being prepared as a buyer. In some specific cases, even non-residents can find real estate loans in Hokkaido.

For some examples of home prices in Sapporo, see our post about real estate data for the wards of Sapporo.

Whether you find the funds to buy a house in Japan or in another country, getting your finances prepared takes time. If the property you want is in demand, you don’t want to lose the deal because you couldn’t remit payment quickly enough. Being prepared can help you close a deal as you eliminate those complications.

Take care of financing early – it has a big impact on the rest of the process. Any proof you can provide of financing (bank statements, etc) can be helpful to gain trust with your agents and with the seller.

STEP 3: Find A Real Estate Agent in Hokkaido

Once you have picked the location where you want to buy and have funding and a timeframe for your purchase, then you’re ready to begin working with the local Hokkaido real estate agents.

As you choose an agent, you’ll want someone that can help you understand the prices for houses in Hokkaido, navigate the local laws, provide translations (if necessary), research property for you on REINs, take you to look at houses, negotiate with the sellers’ agents, and help you complete the legal documents and processes at closing.

If you’re buying a house in Hokkaido as an expat, an additional challenge is finding an agent that speaks your language. While we have hundreds of relationships with local agents that speak Japanese, at Find Hokkaido Agents we are particularly focused on finding real estate agents in Hokkaido that speak English and other languages. We offer free introductions to pre-screened agents that are ready to answer your questions about buying real estate in Sapporo, Niseko, Asahikawa, Otaru and all populated regions of the prefecture.

It is interesting to note that you can (and often will) get excellent help reviewing and looking at property from a real estate professional that is not technically called “an agent.” An “agent” is someone that has passed the licensing examination and belongs to one of the two Japanese real estate associations. In Hokkaido, you might be served by a team at a company that has a licensed agent, and also receive help from staff members working under that agent’s license. One licensed real estate agent can have up to five team members working under that license. You need a licensed agent on your deal and only a licensed agent can help you complete the transaction (and will speak to you face-to-face as you sign closing documents), but these other staffers will often do a lot of the initial work with you.

It is also true that most real estate agents in Hokkaido that can help you buy a house can also help you rent an apartment in Hokkaido.

Another important note about real estate agents in Japan is that as the buyer, you will pay your agent (up to) 3% of the purchase price when the deal is completed. The seller also pays an additional 3% to their agent. This is in contrast to places like the United States, where the total commission is typically 5% (split evenly between buyer’s/seller’s agents) and is paid entirely by the seller at closing.

While it is possible to use one agent that both helps you buy, and also represents the seller, that (dual agency) is typically a bad idea. You will want an agent that is specifically working for your interests as you buy property. Some seller’s agents may pressure you to use their services (which is not illegal in Japan), but it’s highly recommended that you get an independent agent of your own so there is no conflict of interest.

Find Hokkaido Agents can quickly and easily find an agent for you. That is our specialty. Contact us and we’ll help.

STEP 4: Discuss the Desired Property

Your agent will consider your budget, the location of where you want to buy, and the type of property you are interested in, then they will begin to help you determine what you want or need in a property. This will include the size of the house, number of bedrooms, features like parking or a yard, nearby amenities like schools, access to a train station, shopping, etc.

When those details are determined, the agent can search for properties on REINS (the national real estate listing service in Japan) that meet your buying criteria. The vast majority of properties for sale in Hokkaido will be listed on REINS, and only an agent can access that system.

As you search for property in Hokkaido, you may see Hokkaido property listings from various real estate companies or other third-party websites on the internet. These listings are very limited, and do not begin to show you the range of available Hokkaido properties for sale that are included on REINS. It is a legal requirement for most real estate contracts that agents list their clients’ properties on REINS. Individual real estate companies in Hokkaido can list their own properties on their websites, but are not typically allowed to list properties they do not represent (at least not without specific permission). You want to work with an agent so you can get access to REINS. That is a normal, expected part of the process.

Your agent will help you find some properties available for sale in Hokkaido that are within your budget and meet your needs.

STEP 5: Choose Properties

Your agent will take your criteria and search for available listings of houses or condominiums for sale in Hokkaido. Hokkaido has a lot of housing for sale, and your agent should be able to identify several properties that meet your needs. You can look at those properties online, view pictures, and often see the floor plan and layout of the house.

Viewing the listings online, and looking at their location on a map (how far they are from a train station, etc) will save both you and the agent a lot of time. This work with the agent can often be done online and via email.

Once you see something you like, the agent can help you view properties for sale in person.

STEP 6: Visit Properties

This is a specific time in your search for a home in Hokkaido where the agent is doing a lot of work for you.

Your agent is coordinating with the sellers’ agents to set up a time for a viewing and to get access to the property. They may meet you at the property or pick you up and take you in there in their car. A good agent won’t just urge you to buy, but will help you critically evaluate the property (they may even give you reasons why you should not buy that particular house).

Your agent will help you to see several houses for sale, will keep the features that were important to you in mind, will help you determine if the price is reasonable, and when you’re ready, they’ll write a Letter of Intent – an offer to buy the house.

STEP 7: Make a Purchase Offer to Buy A House

When you have found an available property that you like, your agent will help you submit a “Letter of Intent” (LOI) to the seller. If you’re buying a brand new house in Hokkaido, this offer letter is called an “application for purchase.”

At this stage you are submitting an offer only, it has not been accepted and is not a binding contract. Your agent may help you determine what price to offer (which maybe at, higher, or lower than the asking price). You and your agent may issue contingencies that state the offer is only good for a stated amount of time (requiring a quick response from the seller) or that your offer is dependent on answers to important questions about the property.

Once the seller has your offer, you are considered a serious buyer. The seller and their agent will evaluate the offer and respond to your agent.

STEP 8: Negotiate/Counter-Offer

As your offer is received by the seller and their agent, it may be accepted, counter-offered (if you’ve been outbid by another buyer) or declined (if it’s below the seller’s minimum price). If additional negotiation is needed (about price, or about other features like move in date, items included in the purchase, etc), this is the stage in which those details are discussed and price adjustments to the offer are made.

Once the price has been agreed to by both parties, other details of the contract like payment methods and timing of the transaction are determined. These details take some time to process and may delay acceptance of the offer for a few days or weeks.

STEP 9: Offer is Accepted by Seller/Home Inspection

Once your offer is accepted you have additional rights as the buyer, and can have the home inspected as a contingency to the sale.

An independent, third party inspector can provide a thorough inspection of the property, and provide the buyer with a complete inventory of any problems with the property such as damage from termites, the existence of mold, structural concerns, the condition of the roof, etc. While many properties in Hokkaido are bought with the intention of tearing down the structure and rebuilding, for buyers that will utilize the existing construction, the inspection is an important step in understand the condition of the property and discovering any concerns that could impact the actual value.

Find Hokkaido Agents can provide introductions to licensed local building inspectors in Hokkaido. Contact us and we can provide you with several options.

After you receive the report from the building inspector, your agent can help you make any adjustments to your bid based on items discovered in the inspection that need to be repaired or accounted for. Once those items have been negotiated, the buyer will remove those contingencies (and any others) and the sale can proceed.

STEP 10: Sign the Sales Agreement/Pay Deposit

As the price is accepted and the contingencies have been removed, the sale moves forward.

The next step is the “Explanation of Important Matters.” This is a formal, required step in the process (performed in a face to face meeting) that is conducted by your license real estate agent. This explanation includes legal notices and other details and declarations concerning the rest of the transaction.

At this point the transaction is not complete but a contract for the sale of the property has been signed by both the buyer and the seller. A deposit is also paid by the buyer to the seller – usually 10%.

Escrow companies are not typical in Hokkaido, so the money will sometimes pass to the seller through the bank account of a real estate company, or through the judicial scrivener’s (more below) bank account.

Some other fees are paid at this time as well, including the “stamp tax” (which is an administrative fee to the local government, that fee varies according to the purchase price).

You will need some identification and a “seal” may be encouraged for the transaction. Your agent can prepare you for any necessary documents or identification.

You will be working with lawyer at this stage. You may work with a general purpose lawyer (弁護士) or a legal specialist like a local Hokkaido judicial scrivener (司法書士). Judicial scriveners are common and can do some (but not all) of what a general lawyer can do in real estate transactions. Your agent or the seller’s agent will likely bring the legal talent needed to complete this aspect of the deal.

We at Find Hokkaido Agents can also refer you to lawyers or judicial scriveners (including judicial scriveners that speak English and other languages). As always, we have extensive contacts and we are happy help.

The lawyer/scrivener will do the functions that a title company does in the United States, including all the details that become the public record of your taking title of the property, registering the sale with the local government, etc. These elements of the sale will conclude after the final settlement.

STEP 11: Final Settlement and Taking Ownership of the House

Buying a home in Hokkaido is concluded when the documents have been completed and you transfer the rest of the balance of the purchase price to the seller.

The seller confirms receipt of the rest of the purchase funds, and the judicial scrivener completes the transfer of the title (and other documents) for the buyer (sometimes received after the sale by mail). The seller give the buyer the keys.

The financial aspects due at closing include that remaining settlement of the purchase price (minus the deposit you paid when your offer was accepted), registration taxes, a consumption tax (sometimes included in the sale price), property taxes, fees to the judicial scrivener, and the fees paid to your real estate agent or broker.

There can be tax consequences for buying a home in Hokkaido, and having a local Hokkaido tax professional can help you prepare for real estate tax payments, management fees, and any details needed for your annual income tax work.

At Find Hokkaido Agents we also have pre-screened real estate tax specialists in Hokkaido in our database and are happy to make referrals to experienced tax consultants that speak Japanese, English or other languages. Contact us for more information.

We work for you, not the real estate companies.

We provide person-to-person introductions to prescreened agents that help you sell, buy, lease, or rent property in Hokkaido. We search our custom database to connect you to real estate professionals that speak your language, address your needs and are available now to help you find what you want.

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For More Information:

— Our How It Works page
— How to Find a Hokkaido Real Estate Agent
— Buying Property in Hokkaido as a Foreigner