Difference in the Home Buying Process between Japan and the US
If you’re thinking of buying property in Japan, you’ll be pleased to know that the buying process is almost similar to buying real estate in the US.
However, there are a few differences you need to be aware of to make the whole process straightforward.
Major differences in the home buying process between the two countries relate to how to research for properties, the sale and purchase agreement structure, and how to obtain financing.
Notably, buying a home in Japan can be extremely difficult, especially if you’re a foreigner who needs financing. Many Japanese banks will only provide mortgages to permanent residents. However, with the guidance of a trusted home mortgage advisor buying a home will be easy, no matter if you are in the USA or Japan.
Buying a home is a big financial decision, which is why you should never do it alone. Seeking help from professionals such as mortgage brokers and real estate agents can save you lots of money and time.
So, what are the differences in the home buying process between Japan and the US? Let’s find out.
1. Where to Research Homes
The US has Multiple Listing Services (MLS) that list all the available properties in given locations and the estimated prices. This makes it easy for buyers to gain access to a large pool of properties in the market. Real estate information is also readily available on the internet, and as a buyer or seller, you can view this information at no cost.
On the other hand, when you want to buy a home in Japan, you search for listings on magazines, real estate agents, or listing websites. Most of the listings are under the Real Estate Information Network System (REINS), a service that is only available to real estate agents. This means there is less transparency when it comes to information available to buyers. Most of the information on homes available for sale can only be obtained from real estate agents. This lack of transparency also extends to the homeownership information.
2. Structure of Sale and Purchase (S&P) Agreements
Sale and purchase agreements in the US are often detailed and complex. The documents, which can run ten pages or more, cover legal aspects of dealing with any eventuality that might come up when you’re buying a property.
S&P agreements in Japan are short documents that only cover the basics. Some of the details in this standard form include:
- The property description
- The name of the buyer and the seller
- The sale amount
- Handover information
- Special terms
Any other important information related to the sale is found in the Explanation of Important Matters. This is a legal document prepared and read to the buyer by the seller’s real estate agent before executing the purchase agreement.
Moreover, all the purchase and sale documents in Japan are written in Japanese. Documents translated to English aren’t legally enforceable and can only be used for reference purposes.
3. Getting a Mortgage
It’s difficult and more expensive for banks to give you a mortgage if you aren’t married to a Japanese citizen or aren’t a permanent resident. Besides, you can’t open a bank account in Japan if you aren’t a resident. This means that you’ll have to rely on a real estate agent to transact on your behalf when buying property.
Foreigners in the US are also required to meet certain requirements if they want to secure a mortgage. But foreigners in the US can qualify for government-backed mortgages such as the Federal Housing Administration (FHA) loan. Besides, cross-border mortgages are common in the US market. For instance, Canadians seeking mortgages on US properties can approach Canadian lenders who deal with cross-border mortgages.
In closing, the home buying process in Japan is a bit different than in the US. It’s advisable to have a reliable advisor during your home buying process to make sure you’re aware of the real estate standards in Japan. Such guidance will also ensure you find a good home that meets your expectations.