Specializing in Tokyo home for sale and the Central Tokyo real estate market, you have found your resource for buying or selling your next Tokyo home. With expertise in realty for both purchasing and listing properties in Minato, Shibuya, Shinagawa, Meguro, Setagaya and Oota wards, you have found the right resource for all of your real estate needs. Whether you are looking for a new Azabu home or land in Yoyogi Uehara or are in the preliminary stages of a Tokyo estate search, you have found professional English service.
Through my real estate web site, you will find useful information and the tools necessary for your Tokyo property purchase. In addition, my web site features community information for Central Tokyo areas that can help guide you in making the right buying and selling decisions.
- Application to purchase a property is submitted
- Unless this application is submitted, sellers are seldom open to negotiate.
- If the property purchase will require financing, sellers will often require loan pre-approval before taking the property off the market. Loan pre-approval is recommended to get an idea of how much can be borrowed and also helps with setting a realistic budget. Having the option to move quickly once a suitable property has been found is a great advantage.
- When filling out the application, a date to sign the Sale and Purchase Contract will also need to be selected. This is generally a week or less from when the purchase application is submitted or the time it will take to prepare the earnest money required for the contract signing. The earnest money is generally 10% of the property price or a maximum of 10M yen.
- Signing of the contract
- Explanation of the property
- Explanation of the terms of the Sale and Purchase Contract
- Buyer pays seller earnest money, seller issues a receipt to buyer
- Securing finance
- Ideally, loan pre-approval should be completed so a formal application with the bank is the next step to proceed with financing.
- The Explanation of the Contract and Important Matters, the signed Contract are amongst some of the required documents the financing company requires.
- A personal seal (hanko, inkan) and seal registration (inkan shomei) are also required.
- Once the formal application has been approved, the terms of the loan contract are gone over with the bank. At this meeting, particulars such as floating or fixed interest rates are selected along with bonus payment options and loan terms. After this meeting, the loan will be prepared for the closing of the property and the title transfer.
- Closing & Title Transfer
- Buyer pays the remaining balance to the Seller once the judicial scrivener has confirmed documentation for safe title transfer
- Any mortgages / liens are removed from the title
- The judicial scrivener goes to the ward office to immediately register the property to the buyer's name
- This is a good time to insure the property against fires and earthquakes
This concludes a quick overview of the process to a Tokyo Property Purchase.
Applying for a loan and the items and documents involved in the property purchase process can be quite overwhelming.
The necessary items include annual taxable income statements, registered seal, seal registration certificate, Alien Registration Card, Certificate of Alien Registration and Health Insurance Card. Documents regarding the property include Sale and Purchase Contract, Explanation of the Contract and Important Matters, and others such as schematic layout of the property, building approvals, surveyed land and boundary confirmation. There are a lot of items that need to be prepared for a housing loan and gathering them all can get quite overwhelming!
There are several reasons why going through an estate agent for financing can be beneficial.
- SPEED - this can mean this difference between getting approval quickly and securing the ideal property or missing out to another buyer because it took too long. If it's a good property, chances are that other buyers are interested as well, Japanese nationals and expatriates alike. It's a speed race at that point and expatriates take just a little more time than Japanese nationals for securing a housing loan.
- EXPERIENCE - the estate agent knows what the necessary documents are, already have the necessary documents or can have easy access to them. Estate agents also know what to show the banks and what not to. Supplying unnecessary personal information or regarding the property can complicate things, making the approval process take longer or sabotaging all chances altogether for securing a housing loan.
- CHEAPER - a simple introduction from a real estate company that has many transactions with the same banks over the years can get better interest rates for the buyer seeking a housing loan. A small deduction in interest rates can make a big difference over the course of 35 years and it also makes a difference for monthly repayments.
- EASY - an estate agent can apply to multiple banks simultaneously. Estate agents also go through the loan agents directly minimizing the steps involved to secure financing.
- LATEST INFORMATION - the estate agent stays in touch with the loan agent directly and gets updated information regularly, including outside of bank operating office hours.
The estate agent can also push the loan agent to get a quicker response. The loan agent contacts the estate agent when any additional property information is needed. Working on the financing can get quite time consuming. This can be inconvenient for the client while at work but it is part of the estate agent's job to do this. It is in the best interest of all parties, whether it be the seller, buyer or estate agent to secure financing as quickly and as smoothly as possible. Without a housing loan, a lot of times there is no sale.
If the property purchase will be financed, the closing costs generally are about 7% of the property price. Below is a list of all the separate taxes, fees and commissions that make up the closing costs of a Tokyo Property Purchase.
PROPERTY TAXES & INSURANCE
- Stamp Duty (Inshi-zei) - a stamp (looks like a normal postage stamp) which is placed on the Real Estate Sale and Purchase Contract. This is a national tax of Japan. Stamp Duty varies, incrementally increasing by bracket with the property sale price.
- Property Taxes / Urban Planning Tax - is based on appraisals of the property, land and building, by the government. This is an annual tax. The amount due is calculated based on when transfer of ownership occurs which the new owner will be responsible for the remainder of the year.
- Fire Insurance - self explanatory; earthquake insurance is optional. Banks usually require the house to be insured for at least 1 year. Premiums are calculated by size of the building and whether it is wood, reinforced concrete or a steel and glass structure.
BANK
- Stamp Duty (Inshi-zei) - a stamp (looks like a normal postage stamp) which is placed on the formal housing loan documents. This is a national tax of Japan. Stamp Duty varies based upon loan amounts.
- Loan Processing Fee - varies depending on which company a housing loan is obtained. Generally this fee is 31,500 yen.
- Loan Guarantee Fee - also varies depending on which company a housing loan is obtained. This can range from zero to about 2% of the loan amount.
REGISTRATION
- Mortgage Registration Tax - only applies if the financing company will use the property as collateral for the loan. This tax varies by the loan amount.
- Judicial Scrivener Commission - commission paid to judicial scriveners, also known as "shiho-shoshi lawyers", one of the legal professions in Japan. Judicial scriveners are authorized to represent their clients in real estate registrations and filings with the legal affairs bureau. Judicial scriveners must pass an examination administered by the Ministry of Justice; the overall pass rate just 2.8%.
REAL ESTATE COMPANY
- Real Estate Agent Commission - three percent of the property price plus 60,000 yen and consumption tax on that sum.
[(3% + 60,000 yen) X 1.05] = real estate agent commission
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