How to Be More Successful Buying Property in Japan

In every market, there are certain best practices that may help a buyer to complete a real estate transaction with more success and less stress. While many of these principles are the same regardless of the location of the property, for foreigners buying property in Hokkaido (or other areas of Japan), there are some specific local recommendations to help you buy property here in Japan.

In this post, we draw on our experiences across hundreds of clients and provide specific suggestions on how to be prepared as you buy property in Japan as a foreigner.

Some topics for this post:

– Visa Considerations for Foreigners
– Choosing a Location to Buy Property in Japan
– Determining Your Budget
– Use a Buyer’s Agent for Transactions
– Find a Local Buyer’s Agent in Japan
– Plan to Visit Japan to Look at Property in Person
– Foreigners Should Plan to Pay Cash
– Move Your Funds to Japan in Advance
– Some Responsibilities After You Buy Property in Japan

Visa Considerations for Foreigners

Question: Do I need a visa to buy property in Japan?

It is not required to have a visa to buy property in Japan. However, before you buy property in Hokkaido, you should be certain you understand how long (and how often) you can stay in the country to enjoy it.

If you have a steady job with a Japanese company, you likely have an ongoing right to live and work in Japan. If you’re married to a Japanese citizen, a spousal visa could give you long-term rights to stay here as well. It is also possible to set up a business manager visa, and run a business that would allow you to work and live in Japan.

It is also possible to earn a long-term visa as you start a property investment business in Hokkaido, and employ (and pay) yourself in an ongoing capacity. That kind of plan typically requires large amounts of capital to buy enough property to generate cashflow that not only covers expenses, but also includes a respectable monthly salary that you pay yourself. Owning a modest building is generally not enough; the business must show enough profit to support the owner financially.

Many owners and investors buy property in Japan, and use that property on a tourist visa, while they live in their home country. In those cases, they enjoy the property (perhaps during the ski season in Hokkaido), but due to visa restrictions, those owners do not live in Japan year-round.

There are Japanese immigration attorneys in Sapporo that can help you review your options to live in Japan.

Choosing a Location to Buy Property in Japan

Question: Where should I buy property in Japan?

If you want to buy property in Hokkaido, or anywhere in Japan, you should spend some time and visit some cities before you make decisions about real estate.

Once you know what you’re interested in, I would recommend you walk around in the area and feel the atmosphere. Do you like the area? Why do you like the area? Could you live here? We are all different people and are looking for different things.
— Anton Wormann, from Free Houses in Japan

Hokkaido is a big place, and while there are several wonderful cities in this prefecture, they are not particularly close together. The most popular cities for investors in Hokkaido are Sapporo and Niseko; both those cities (and perhaps Otaru, as well), can be visited in one trip to Hokkaido. Once you have visited cities like Sapporo and Niseko, your decisions about buying real estate will be more realistic.

There is no substitute for an in-person experience, but the internet can help provide some basic facts about various cities in Japan. Some real estate buyers in Hokkaido use the internet to do basic research, narrow down their choice of cities, and then make in-person visits. As a general rule, we recommend the internet for research, facts, and information. But always have your own buyer’s agent before you contact a property, or begin a real estate transaction in Japan.

It is difficult to find a real estate agent that can help you before you choose a city. But once you have done some basic research on where you want to buy, contact us and we’ll help you find a local agent in that city that can make recommendations and help you complete a transaction.

Determining Your Budget

Question: How much does real estate in Japan cost?

The price you’ll pay for real estate in Japan varies by location, by the age and condition of the land or property, by the type of structure, and other factors. As you consider your budget to buy property in Japan, you have to first choose a location (a city, and usually a specific location within that city), and then the type of property (land, condominium, detached house, or larger building), and then you can search some Japanese property listing websites for some examples of property that meet those specific criteria. After you look at several similar properties in the same area, you can estimate a range for purchase price for property that meets your needs.

There are several websites that list property for sale in Hokkaido, and those websites can help prepare a foreign buyer with examples of prices for property. Before you try to make contact with the owner of a particular property you find online, we highly recommend you contact a local Japanese buyer’s agent (more about this topic below).

For introductions to local Japanese real estate agents (and other real estate professionals in Hokkaido), contact us. We are happy to help.

Use a Buyer’s Agent for Transactions

Question: Do I need a real estate agent to buy real estate in Japan?

Working with clients here in Japan, we see the temptation to find Japanese property on an online listing, and engage the seller directly to buy the property. For anyone looking to buy property here in Hokkaido, we always recommend you form a relationship with a local real estate agent before you make contact with any particular property for sale.

When you have your own agent as the buyer (not the same agent that is representing the seller), that agent can give you general guidance, unbiased advice about the value of a particular property, and access to more property listings.

A good buyer’s agent can not only help you buy property, but they will show you more property listings than you can find on commercial property listing sites in Japan. A buyer’s agent can help you see listings on REINS (the Japanese multiple listing service), which has more property than 3rd party real estate sites. More than that, a local Japanese agent that represents you as the buyer can advise you not to buy a given property (which the seller’s agent will never do), showing you better alternatives for your specific goals as a buyer.

When you contact a property you found on the internet, the agent you talk with will be representing the seller of that property. An agent that tries to help both the buyer and the seller has a conflict of interest (this is called dual agency in Japan). While this practice is not illegal, buyers (and the sellers as well), we be better off when they have their own agent, that can represent their own side with no conflicts.

For local buyer’s agents in Hokkaido that speak English, contact us; we can provide introductions and recommendations.

Find a Local Buyer’s Agent in Japan

Question: How do I find a local real estate agent in Japan?

Japan is a highly developed country, and there are many agents and brokers working in real estate. The challenge for most foreigners buying real estate in Sapporo (or other cities) is finding an agent that can communicate in English (or other languages).

Language is the first stumbling block to buying property in Japan as all legal documents are in Japanese.
— Neo Cheung, from Winning Strategies for Japan Real Estate

Not only are most of the real estate contracts and legal documents in Japanese, but most real estate company websites in Japan are in Japanese as well. Even when buyers complete a form on a real estate company’s website (or make a phone call to a local Hokkaido real estate office), the person receiving that inquiry is likely to speak Japanese only. Communication from foreigners is often ignored, as the person receiving the message cannot understand it. Foreigners buying property in Japan face communication problems at each step of the process.

Find Hokkaido Agents specifically helps foreigners to sell and buy property in Japan. We can introduce you to a local Hokkaido real estate agent that speaks English. Contact us for help.

Plan to Visit Japan to Look at Property in Person

Question: Do I have to be in Japan to buy property?

You do not have to be in Japan to buy real estate. If the buyer resides outside of Japan, it is possible to have a real estate agent provide pictures and video, so that the buyer can see more of the property. It is possible to have an affidavit prepared in your home country, that can be used by the judicial scrivener to complete the sale and registration of the property in Japan. Buying property without being in Japan is possible, but is not recommended.

Most buyers will make better choices when they have in-person experience with the location where they are buying, and when they see property in person.

The easiest path to explore property in Japan is to be in Japan, and make appointments with local agents. For foreigners that are not visiting or living in Japan, they can sometimes make an appointment with an agent in advance, go online to prescreen property provided by that agent, book a trip to visit, and then come visit to see their favorite properties in person.

Foreigners Should Plan to Pay Cash

Question: Can foreigners find loans for property in Japan?

There are some cases where foreigners can find a loan to buy property in Japan, but in almost every case, you must be living in Japan to qualify for that loan. Generally speaking, the borrower must live in Japan for Japanese law to be enforced, so banks and other institutions will not lend to borrowers living outside of the country, as they cannot enforce contracts with those individuals.

Unless you live in Japan, and can document income and assets in Japan, loans to buy property in Japan are highly unlikely.

Foreigners should plan to pay the full purchase price (plus fees, taxes, and agent commissions) at the time of the transaction.

Non-resident buyers should also be prepared to have their funds in Japan in advance of the closing date.

Move Your Funds to Japan in Advance

Question: Can I pay for real estate in Japan via international wire transfer?

You can pay for real estate in Japan with an international wire transfer from your home country. But because international wire transfers take time (typically a few days), foreigners will typically remit payment in advance to an intermediary, so the funds are available to the seller on the day the sale closes.

The actual process of paying for property in Japan is typically done via a domestic wire transfer, from a Japanese bank account to the seller’s account. That transfer is sometimes initiated in real time during the closing, with the seller receiving the funds nearly immediately.

Because there is an expectation that the payment will be made immediately as ownership is transferred, foreigners should expect to wire their funds to a Japanese bank account in advance of the transaction.

Since foreigners cannot usually establish a bank account in Japan without a local address, non-resident foreign buyers typically wire their funds in advance to the account of their real estate agent as an intermediary. While real estate escrow companies in Japan are less common than in other countries, those services do exist, and can sometimes serve that intermediary function.

If the buyer’s funds are already in Japan on the day the property closes, the agent (or escrow company) remits the funds to the seller’s account – allowing the transaction to take place in real time.

Some Responsibilities After You Buy Property in Japan

Question: What do I need to do after I buy property in Japan?

There are several additional steps you can take as a foreign owner of property in Japan after the sale closes, including some responsibilities for taxes related to real estate in Japan.

If you live in Japan, you can be prepared to pay the real estate acquisition tax that comes soon after you buy your property. You can think of this tax as part of the closing cost, but you will receive this bill a few months after the sale is complete.

For foreign buyers that do not live in Japan, some choose to appoint a tax representative to receive tax notices and make other ongoing payments for services. That function may be done by a property management company in Hokkaido. There may be ongoing payments to be made for services like internet access, electricity, gas, and water service. Annual tax payments in Japan need to be paid. Property management companies can take care of these payments and other needs for foreigner that live abroad, rent out property, or only use the property occasionally.

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 collection of articles on real estate in Sapporo
— Some details on buying a house in Niseko and more
— Research on buying property in Otaru
— More general articles about Hokkaido real estate
— Some particulars on Sapporo Tax Offices and real estate taxes in Japan
— Our article on How to Buy a Home in Hokkaido