Building and maintaining a relationship with Japanese realtors is key to getting the best deals

Congratulations – you’ve followed the advice laid out in our previous article, sourced and recruited local Japanese representation, either in the form of a foreigner-friendly real estate professional or a direct Japanese assistant, and are now ready to tackle Asia-Pacific’s biggest property investment market!


The first step of your market research, and the most important building block of your future investment portfolio in the land of the rising sun, begins with what the Japanese value above all else – relationship building. As mentioned previously, while Japan has been trying to open itself up to the world, this is still very much a closed, ethnocentric market. And while the market, internally, is quite transparent, meaning that most property listings are available on the open market, with most of the relevant information readily available – there is still a huge gap between locating these coveted deals and actually getting someone to sell them to you.

STEP 1: Research

There are a great many multi-listing property websites (MLS) on the Japanese web, and a great number of properties appearing and disappearing on these websites on a daily basis. There is also a seemingly infinite number of individual realtor websites advertising the same properties, as well as a great many others, which never even make it to the MLS. Beyond these, there are also a huge number – much larger than in other developed countries – of realtors who do not use the Internet at all, and instead use “old-school” methods of printed or even hand-written flyers taped to their shop windows, for potential walk-in traffic to review while walking down the street.

j3Don’t let their old-fashioned methods fool you into underestimating these realtors, however. More often than not, these local agencies will have the best deals around – the reason they haven’t “made it” to the web being mainly that they never had the need to. The Japanese love paperwork, as previously mentioned, as well as old-fashioned window shopping, and place great value on local and reliable service. And beyond all of the above, the best way to get a good deal hands-down is to develop a relationship with good agencies, get on their active investors’ lists, then receive a call or e-mail when a new listing becomes available – BEFORE it ever makes it to the general market.

So your assistant’s or buyers’ agent first job, would be to actively, painstakingly search the Internet (or, if they live in an attractive investment location, walk the streets) and locate interesting listings, compile a list of interesting agencies, and write down a telephone scripted introduction, in preparation of contacting said agencies.

(Tip – when reviewing said listings, take care to differentiate between what the Japanese call “coupon yield”, which is the equivalent of gross or cap rates and “net yield”, which isn’t really net per se, as it still doesn’t include property management fees, insurance premiums, taxes and other similar smaller expenses, but is as close as you’ll get to the bottom line. The difference between the two can be huge, since the “coupon yield” doesn’t include building management costs, which can make a huge difference, particularly with well-maintained buildings which charge a substantial management fee, and older blocks, which carry higher contributions to the “accumulated funds” pool, known in other countries as the sinking fund, or reno-repair fund pool).

STEP 2: Initial contact

Once a list of potential listings and their corresponding agencies have been compiled, it is now time to make the first contact with the listing realtors. It is absolutely essential that this first contact be made via telephone call, and by a native Japanese person versed in “keigo” (Japanese “corporate speech”). ‘Flying under the radar’ is critical with the foreigner-shy and ‘proper-manners-obsessed’ Japanese, and e-mails will simply not be returned in the vast majority of cases, particularly if the e-mail alludes to the existence of a foreign buyer such as yourself. The person contacting the realtor must be polite, speak fluent business Japanese, and know how to present the case smoothly, immediately addressing all concerns the realtor might have. These concerns usually include:

1. Fear of foreigners

The realtor must be satisfied that no direct contact with foreigners will be required by either himself or the seller at any point in time. I have mentioned this several times before, but cannot emphasise enough how terrified a Japanese person can be at the idea of having to communicate with foreigners. The person making contact on your behalf must assure them that they will be representing the buyer in all matters relating to the purchase, have the legal, document-backed permission to do so, and that the realtor or his staff will not be required to deal with anyone else – otherwise, in the vast majority of cases, they will simply not consider you as a buyer.

2. Reluctance to work with other realtors

In Japan, a referring realtor bringing a buyer to another realtor is entitled by law to half of the sales commission – which naturally means the listing realtors would always prefer to deal directly with buyers who are not represented by such. It is essential that the person contacting the agency make absolutely clear that they are not realtors, and that the listing realtor can keep the entire sales commission to themselves — otherwise the realtor will shuffle their feet, stall and do their utmost best to find another buyer, to avoid having to share their commission. Only in cases where the property is difficult to sell, due to some problems will they consider such a sale, but then you probably wouldn’t want to buy it — or at least not without serious negotiation (more on that further down the road).

3. Wariness of tire-kickers and last minute cancellations

While it is legally and technically possible to back out of an offer made at any point up to the signing of the contract, when a non-refundable 10% deposit is usually paid — such behaviour is unacceptable in Japan, and is usually the trademark of fast-talking foreign buyers who tend to “shoot in all directions” (one of the reasons they prefer not to work with foreigners), or worse – dodgy, unprofessional business people, only one step above “yakuza” (Japanese organised crime outfits). While it is perfectly acceptable to pend an offer on particular due diligence items – meaning, to add a clause saying something like “this offer is pending on tenancy, building renovation and accumulated funds pool status information”, for instance, it is considered very rude to back out of an offer without any such clause, due simply to a change of heart, lack of funds, etc. Therefore, it is crucial for the person contacting the realtors to clarify that the buyer is serious — WITHOUT sounding arrogant or show-offish. (Introductions like “I’m speaking on behalf of a serious property investor from Singapore who is very interested in property X” are acceptable – but introductions like “I represent a very rich family from Malaysia who has millions of dollars to invest” are NOT — modesty and honesty are very important to the Japanese).

4. Aversion to rushing, pushy buyers

It is a well-known fact that the Japanese take their time in all endeavours, both personal and business-oriented. Rushing or pushing a sale is seen as rude, un-professional and amateurish. The person contacting the realtors must speak slowly, take their time to listen and, above all else, stress that they are looking to form a relationship with the realtor, regardless of the outcome of the particular property sale they are calling to enquire about. Which leads us to the next step –

STEP 3: Building & Maintaining Relationships

j2If you’ve managed to receive a return call from any of the realtors contacted in Step 2 above, which will be, at best, about 50% of the agencies you attempt to contact, even if you’ve correctly followed the above tips — you’ve managed to locate a rare gem in the Japanese professional property sphere – an open-minded, foreigner-oriented realtor. These guys are rare and far between, so make sure to nourish the relationship.

Regardless of whether the deal you enquired about bears fruit or not, you’ll now want to make sure that realtor keeps you in mind for future listings as well. Remember, the market here is huge and moves very quickly, so it is in your best interest to make sure you get contacted first, together with the rest of the agency’s waiting clients, and before the new listings make it to the general market.

If you succeed in this step, you’ll be receiving an e-mail with potential investment properties that haven’t been published online yet, and will have the opportunity to jump at them before the rest of the market does – and once that happens, they can be gone in a matter of hours, depending on how attractive they are.

So make sure to call or e-mail your new realtor friend regularly, at least once a week to explain your purchase criteria clearly and listen to any reservations they may have about them – to remind them that you are still in the market for good property investments, and that you’ll be overjoyed to receive any new listings they may have as soon as they have them.

Once you start receiving these, even if they hold no interest to you whatsoever, make sure to thank them several times for keeping you in mind, tell them how interesting and valuable the information they have provided is, and only then explain why you won’t be purchasing this particular property, so that they can better fine-tune their next listings forwarded to you.

Got all that? Great! You’re now ready to move on to the purchase process itself — watch this space!

zmZiv Nakajima-Magen, is Manager of Asia- Pacific, Nippon Tradings International (NTI), which specialises in assisting investors in capitalising on Japan’s vast property market.
0 Comment

Send a Comment

Your email address will not be published.