Tag Archive for agent

Safeguard Your Investment: Understanding Bait Listings in the Japanese Real Estate Market






Do you know ‘Otori-bukken’ ?


Truth be told,


We have to admit there are a number of


shady and dishonest real estate agents in Japan.



As a foreign investor considering investment opportunities


in the Japanese real estate market,


it’s crucial to be aware of the tactics some unscrupulous agents



employ to lure potential clients.


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Real estate investment in Japan : Beautiful Stories, Hard Realities

Beautiful Stories, Hard Realities

Real estate agents/realtors are always holding seminars in Tokyo, Osaka and elsewhere, luring in amateur investors (for Japanese investors so far)

and telling them beautiful stories of how this person or that person got rich in the property market.

I never exaggerate such successes in my seminars, although of course they do exist.

Instead, I always tell the audience true stories from my experience and those of other clients and inexperienced investors, and in particular about the mistakes made.

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Buying a house in Japan ? Here’s all-too common mistakes to avoid

We don’t need to tell you about the brilliance of Japan quality: detailed, good service and competitive price etc etc.  
But for how good Japan quality in general is, it’s equally easy to screw up. Badly.
Japan’s real estate industry and construction industry are full of fraudulent companies.
A number of them are rogue (of course, there are good and trustworthy companies, too.)
You need to be very careful to deal with them.
When you build your brand-new house in Japan, you must be extra mindful because it could be a disaster if it goes wrong.
It is widely known to the industry professionals that the laws are not necessarily protecting the consumers
Why is the owner (consumer) in so disadvantageous position ?

There are five main reasons.
1.The industry is not seeking a repeat business so they don’t look after customers well
2. High overhead cost
3. The related laws have many loopholes
4. The owner(customer) trusts the contractor  (real estate agents and builders included) too much
5. Victim’s tragic stories are not widely reported in the media.

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Now, the real truth about the real estate investment in Japan : Kabocha no Basha and Suruga Bank scandal

In today’s uncertain economy, dynamic growth potential with low risk is tempting.
Real estate companies are constantly manufacturing the opportunities to captivate the naive investors.
Kabocha no Basha was one of them.

Suruga Bank Scandal background
Japan’s Financial Services Agency has launched an emergency inspection into Suruga Bank over investment irregularities involving women-only shared houses.

Suruga Bank extended over 100 billion yen ($915 million) in loans to about 700 people, mainly middle-aged salaried workers, to invest in Kabocha no Basha — or “Pumpkin Carriage” ; women-only shared houses operated by Smart Days.
Tokyo-based Smart Days also worked as a middle man between Suruga and investors and solicited investment from salaried workers, pledging to pay them rents for 30 years.
But Smart Days struggled with low occupancy rates and stopped paying the rents to owners they promised in January 2018.
Smart Days filed for bankruptcy in April 2018.

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Are you interested in buying kominka (traditional Japanese folk house, 古民家)in Japan ?: Tips for buying and renovating kominka


(kominka  in snow)

* Foreigners can buy a property in Japan without having special qualification.

Do you want to be close to beautiful Japanese mountain with your pet ? Or you love skiing ? Want to spend your weekend in real Zen(禅) surroundings with onsen(hot spring 温泉) within 15 mins drive ? Living in kominka could be a good choice.
The term kominka (古民家)refers to traditional Japanese houses, especially ones built a long time ago.
Kominka are not defined by the period they were built or how old they are, but usually the term is used when referring to houses built before the World War II, and especially to those built before the Taisho Period.
We have recently made the strategic collaboration agreement with a renowned kominka renovation specialist(工務店) in Nagano prefecture.We will find an appropriate kominka for the investors or conventional home buyers and renovate outside and inside the house into the pristine condition. We have a list of 100+ kominka properties for sale/rental.

If you want to buy kominka,  it is essential to pay attention to what you are doing as you purchase a very unique Japanese traditional house. You want to get this right.
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How to avoid buying a house with problems in Japan : Tips for detecting a malicious defect in your property

While inspecting any property is important, it becomes even more uppermost to check for defects found in second-hand property especially akiya (空き家abandoned houses)
In Japan’s real estate industry, it is generally assumed that there are four types of risks of ‘defects’ (瑕疵)the industry professionals usually recognize.
They are physical defects, psychological defects, environmental defects
and legal defect (issues).

1. What is a physical defect?
Physical flaws are situations where the building leaks, termites occur, and the earthquake resistant strength is insufficient.
Some common physical issues
For example, with 8 million akiya (Abandoned house, 空き家),
old houses are usually very affordable in Japan these days. However, those old houses could also come with a lot of issues that you may not be prepared for.
What seems like a great deal at first may ultimately cost much more than you originally thought.
It is always recommended to do your research before investing in real estate, particularly when the property in question is old property.
The following checklist will give you an idea of what issues to watch out for when buying a second-hand property especially an older home.
Due diligence always pays off.
You want to avoid common physical defects, problems with the construction structure. 

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How to avoid mistakes when choosing a real estate agent -Perennial Ryote-torihiki(両手取引) and Kakoikomi(囲い込み) problem-


As the book ‘Freakonomics’ (2005 by Steven Levitt and Stephen J. Dubner.) describes

“information is a beacon, a cudgel, an olive branch, a deterrent―all depending on who wields it and how.

It is common for one party to a transaction to have better information than another party.

In the parlance of economists, such a case is known as an information asymmetry.

If you were to assume that many experts use their information to your detriment, you’d be right.

Experts depend on the fact that you don’t have the information they do.”

A real estate agent may see you not so much as an ally but as a mark.”

Too fazing?

Like in the US, many Japanese people believe that the real estate industry in Japan is quite shady.

All the real estate agents are strictly regulated by Building Lots and Buildings Transaction Business Act for both

rent and sales.

The regulations say ‘a Designated Examination Body must appoint examiners to administer qualification Examinations for Real Estate transaction specialists

(hereinafter referred to as “Examiners”) from among persons satisfying requirements as specified by an Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism and have Examination questions prepared and marked.’

To become a licensed broker, one needs to pass the exam.

Some specialists call themselves ‘real estate consultant’ because they are not licensed.

They are not unlawful, but unlicensed brokers are not allowed to lure any investment and not allowed to become the intermediary

for the transaction.

In the meantime, technically speaking, listing agents could control all the information in multiple offer situations.

Efforts by regulators to increase transparency in the real estate industry have been made continuously and every year regulators issue

the new legislation.

With greater transparency, consumers theoretically can also be more confident of their decision to engage agents, and be able to select the agents who best meet their requirements.

How transparent is the industry in Japan now?

Do you think big names like Mitsui or Sumitomo will see you

as an ally?

The short answer is ‘no’.

In general, buyers have one representative in the transaction and sellers have another.

The sides negotiate back-and-forth towards a deal that would be acceptable to both principals but whose outcome depended on the quality of their representation and negotiation.

Representing both sellers and buyers of the property at the same time is called a double agent in real estate parlance,

it is called a dual agent.

It is called in Japanese 両手取引(ryote torihiki) or ‘double-handed’ transaction by the industry jargon.

If your agent is representing either side only, it is called 片手取引(’katate torihiki’ or ‘single-handed’ transaction)

Dual agency is not illegal in Japan but highly controversial.


Dual agents are supposed to protect the interests of both parties.

The buyer and seller have diverging goals and are both represented by the same agent or brokerage firm

(who has a great incentive to see the deal completed).

Imagine what would likely to happen?


Conflict of interest.

It is very common in this type of deal.

Obviously, the buyer wants as low a price as possible, and the seller wants the opposite.

Like all other developed countries,  real estate agents in Japan, including myself, work on the commission basis for the transactional business.

(I often work as a real estate consultant who is based on a fee)

The statutory rate for the transaction is maxed 3%(of the property price)+60,000 yen.

The problem is that the agent only stands to personally gain an additional $300 (3%) by selling your property for $10,000 more,

which isn’t much reward for a lot of extra work.

It is not solely the fault of the agents, but I venture to say it is a system failure.

In economics parlance, it is called the ‘agency problem’.

Particular incentives and incentive structures explain a very great deal of the financial world which swirls around us.

In capitalism, people respond to incentives and to their opposite, disincentives.

You can’t blame people who are acting very human.

Therefore when you are selling or buying the property, you need to understand the incentive structure which swirls around the industry.

In this sense, you may want to be extra careful if you wish to negotiate the brokerage rate with your agent.

By hammering their brokerage (by giving disincentives),  your property would promise the detriment.

Again it is human nature.

One article in the magazine called ‘ZAI’ in November 2017 by renowned Japanese Diamond publishing company actually

grabbed the media attention by revealing the estimated double-handed transactions.

According to the estimate, the prominent

names like Mitusi,  Sumitomo, Tokyu, Nomura are apparently engaging very actively in the double-handed transactions.

Please see the numbers below. (I listed only 10 companies out of 20 companies)

These are the estimated commission rate which each prominent real estate company generated between 2014 and 2016.

Mitsui Fudosan Realty Network 5.39%

Tokyu Livable 4.15%

Sumitomo Real Estate Sales 5.23%

Nomura Real Estate Group 3.74%

Mitsubishi UFJ Real Estate Sales 3.67%

Century 21 Group 4.40%

Mitsui Sumitomo Trust Real Estate 4.04%

Mizuho Real Estate 3.33%

Daikyo (a part of ORIX group) 4.69%

Odakyu Real Estate 4.43%

* Estimate is based on real estate distribution data of the Real Estate Distribution Promotion Center (They serve as a public interest incorporated foundation)

The estimated commission rate is based on the fee income

announced divided by the transaction volume (sales volume).

I don’t have access to the information source of Real Estate Promotion Center but tried to verify the commission which ZAI magazine released

by analyzing the financial report announced by a few of these companies.

And I landed at 5.1 % for Sumitomo, 4.5 % for Daikyo and 6.5% for Century 21.

And yet, the controversial article by ZAI looks reasonably accurate.

As you can see from the estimated commission rate of the major real estate companies are exceeding 4%, and a few companies are enjoying more than 5% commission rate.

This is most probably because they boast the relatively high commission rate working as ‘dual agents.’

It is illegal if a real estate company intentionally crafts two-hand transactions by concealing the property information without any prior agreement with the seller.

Unfortunately, in Japan’s real estate industry, you often encounter dubious double-handed transactions.

How can they craft such dubious deals?

As a matter of fact, their method is very simple and classic.

The industry has the database system called ‘REINS’ where all the agents list each property when they enter into the intermediate agreement with the seller or buyer.

Once the property is listed with REINS, all the

licensed brokers can access the database and look for a property they seek.

However, even the property is registered with the REINS system, the current rules allow the space for manoeuvring by the seller’s agents.

When sellers agents receive an inquiry from a potential buyer, they can they simply say

“The property has been already closed or under negotiation”.

It is very difficult for the principal parties to know the actual dialogues between sellers agents and buyers agents.

It is called 囲い込み (kakoikomi or boxing)

Kakoikomi by intentionally concealing the information is a violation, but sadly such kakoikomi is common.

The rogue real estate companies consistently disregard the inquiries from buyers agents and wait until sellers compromise the price.

For the seller, kakoikomi creates a significant opportunity cost.

Sellers miss opportunities to sell early.

Also, even they could be left only with the option of lowering price.

Remember the agents can gain only an additional $300 as a brokerage even they work hard and manage to sell your property $10,000 more.

Here classic ‘agency problem’ can be seen on a flip side as well.

The agents do not lose much money by lowering

your property price by $10,000.

Moreover, sellers agents can gain more by crafting the double hand’s transactions even the price is lower.

Unfortunately, the double-handed transaction is extensively practised in Japan.

Why do we have controversial double-handed transactions even though they look so dubious?

First,  dual agencies are not prohibited by law.

And I said earlier the dual agency is very prone to

the conflict of the interest.

Second, it is almost impossible for the consumers to verify if competing offers are actually registered or not if agents are divulging offers to their clients.

On the other hand, even if it is an intermediary company on the side of the buyer, even if it is registered in REINS and looking at the information and applying to the real estate brokerage company on the seller side, he could say, the property has already entered into contract negotiation.”

It is easy to imagine that a strong incentive to do kakoikomi for real estate companies and salespeople who want to increase commission income.

The transparency is a huge issue.

To avoid such kakoikomi, what can you do?

Is it a good idea to go to a small to medium-sized real estate agents?

In my experience, it is not really a matter of

credentials of the company but who your agent (salesperson) is.

The real estate industry often is regarded as the

bunch of small non-corporate shops.

The business model of the agency is so simple, and once you gain the skills of sales and communication, they can enjoy the freedom in corporate life.

What matter is the individual performance, not the brand of the company?

What about medium and small-sized real estate brokerage companies?

The size of the company does not matter much.

Even if it is not a major real estate brokerage company, by posting the property information on the internet,

there is a good possibility of finding a seller.

Also, there are local and small real estate agents that are strong in certain areas, and they tend to have a lot of property information and information on local buyers.

They have a strong connection with the landowners and landlords of the areas.

The most important thing you need to remember is that the sellers (and buyers) should ask agents a few questions including double-handed transaction

to assess the integrity and attitude of real estate brokerage firm or sales representatives.

You do not know if their answer is genuine; however, at least, by asking such questions you will look sophisticated and don’t look like a mark for the agents.

In conclusion, here are some tips about how you can avoid pitfalls in Japan.

・Notable brands are not the guarantee of the quality of the service.

When you choose the agents, you also need to choose a person in charge of your property.

If you are not happy with a person for some reason, please ask the manager to change the person.

・Try to avoid a salesperson who is overly pushy.

They may keep sending information of the properties even if they don’t match your criteria.

He or she may just be desperate to make a transaction.

・Internet is the currency of the internet. It compresses the gap between experts and consumers.

Please do your homework by studying the relevant information on the web sites service like

AT HOME or SUUMO before you choose your agents.

It is recommended that you interview a few agents before choosing your agent.

Each agent should have strengths in their sales and marketing.

Please ask your agents if they are willing to make a deal by the single-handed transaction.

They could try to craft the double-handed transaction, but your question will give them good pressure.

・Choosing agents who offer the lowest commission rate is not a necessarily good idea.

By choosing such an agent, your property could lose priority in their mind. Reduced commission means reduced marketing effort.

It will negatively affect your agents.

・Look for someone who is committed with integrity.

Integrity is always a key for success from a business perspective.

・Make sure your agent is focused on the value, not just the price

Your real estate agent should be able to accurately estimate the value of your property and set up a price that accurately reflects the value.

Moreover, when you are briefed the estimated price, please ask them the logic and story they sell.

両手取引 (ryote torihiki, in Japanese)

囲い込み(kakoikomi , in Japanese)

(Shimanto river in Kochi pref)

Toshihiko Yamamoto
Real estate investing consultant and author.
Toshihiko is currently writing a book about real estate investing in Japan
for foreign investors.  About the book
Founder of Yamamoto Property Advisory in Tokyo.
International property Investment consultant and licensed
real estate broker (Japan).
He serves the foreign companies and individuals to buy and sell
the real estates in Japan as well as own homes.
He holds a Bachelor’s degree in Economics from
Osaka Prefecture University in Japan
and an MBA from Bond University in Australia 



(Breaking news) New mortgage loan for the rental investment by a Japanese bank for foreign nationals

Just a quick breakthrough note :
Last week,  we have managed to establish the strategic alliance with one of the prominent Japanese banks who can offer foreign nationals loan for the investment property in Japan.
There are three categories.
1. Foreign nationals who reside in Japan with the permanent  residence
(Individuals who live in Japan without PR could be also eligible)

2. Foreign individuals who reside in Hong Hong (Hong Konger)

3. Foreign nationals who do not live in Japan

Category 2 and 3 are the breakthrough products.
No Japanese banks have been willing to offer the loan for foreign nationals who do not live in Japan but the window has just opened.
Obviously there are certain conditions such as down payment and taking out the mortgage.
And the approval is subject to the valuation of the property by the bank and financial status of each investor.
In addition, you need to carefully select a property which the bank is likely to offer the loan by meeting their criteria.

My bank is very picky about the location.

The property must be in the metropolitan cities where reasonable rental demand can be expected.

These cities are specifically Tokyo 23 wards, Yokohama, Kawasaki, Chiba, Nagoya, Osaka, Kyoto, Kobe and Fukuoka.

The property must be within 10 min walk distance from the nearest train station.

Airbnbs and hotels are excluded (meaning it must be a property to rent or your own house)

Interest rate is attractive enough to create the good cap rate.
Japan’s interest rate is historically low due to the quantitive easing by the central bank.
Anyone who is in interested in such loan, please send us a direct message via
contact us.


Toshihiko Yamamoto
Real estate investing consultant and author.
Founder of Yamamoto Property Advisory in Tokyo.
International property Investment consultant and licensed
real estate broker (Japan).
He serves the foreign companies and individuals to buy and sell
the real estates in Japan as well as own homes.
He holds a Bachelor’s degree in Economics from
Osaka Prefecture University in Japan
and an MBA from Bond University in Australia

Toshihiko’s book, “The Savvy Foreign Investor’s Guide to Japanese Properties: How to Expertly Buy, Manage and Sell Real Estate in Japan”is now out on Amazon, iBooks (iTunes, Apple) and Google Play.
About the book 
Amazon.com Link

Our YouTube channel



High yielding, guaranteed rent should be too good to be true ?: ‘Kabocha no basha’ subletting problem in Japan

Pitfall of sub-leasing(sub-letting) real estate investment

High yielding, guaranteed rent(sub-leasing)  should be too good to be true ?
Recently one of the scandals which rattled the industry is KABOCHA-NO-BASHA
(Pumpkin Carriage) problem.
The background of the scandal is as follows.
Investors were guaranteed a fixed monthly amount over an extended period if they invested money by contracting with a real estate company called Smart Days(Tokyo)
that used the funds to set up and manage share house facilities under sub-leasing agreement.
Since 2015, Smart Days, operator of women-only share houses called Kabocha no Basha (Pumpkin Carriage), has promoted high yield investments through the media and has mainly acquired customers of office workers. In the sub-leasing contract, rent payment collected through the sub-leasing is sought to pay back the debt for a long period plus small profit.
For example, suppose you borrow 100 million yen from a bank and the monthly repayment amount is 500,000 yen, if you earn rental income of 550,000 yen a month, it will generate 50,000 yen a month profit. This system is typical leveraging in the real estate investing and there is no red flag about it.
In an ideal setting, Smart days as the sub-leasing company would rent out rooms to tenants and bring in a steady and continuous supply of rent, a portion of which would go to the investors.The shared house with shared toilets and bathrooms is not as wide as 7 m² in living space, but the initial cost of moving in is kept low (so they say), and it was expected that more women moving into Tokyo from rural cities will choose to stay in these share houses.Smart days also promoted the business to support tenants finding a job (This is an alarming part)

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Are there any rogue real estate agents in Japan ?

The real estate trade can be stressful in any country.
The financial commitment is substantially large, the regulations and laws are complex
and the market risk is high.  Average Japanese people share the same concern.
Another problem is a large part of consumers’ assumption that all estate agents, letting agents and
landlords are all regulated. In Japan, all the agents who actually arrange the real estate transactions
(including rental contract) 
must be licensed.
Engaging in the marketing activity to lure the investors without holding a license is against the
Building Lots and Buildings Transaction Business Law. If your consultant or agent do not hold
the license, your contract is not completely protected by the said law.
It would be treated more under civil law. But if your broker is licensed, they are regulated by the government
and thus your contract is 
eligible for more protection under the conditions set forth by the said law.
Nonetheless, there are some rogue agents or consultants who are not licensed in Japan.
For example, such rogue agents put up advertisements for properties on which they have not been
instructed to promote in an attempt to get a cut of the fees.

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