Real estate transactions involving foreigners in Japan are increasing, but for many real estate companies the hurdles remain high. Language barriers, cultural differences, and uncertainty about legal systems — attempting full-scale operations right from the start is not realistic.
The key is to build experience gradually. There is no need to aim for sales transactions from the beginning; there are ways to progress step by step starting from familiar situations.
Step 1: Receive Consultations from Foreign Tenants
For companies engaged in rental brokerage or management, the number of foreign tenants is increasing. The number of registered foreign residents continues to reach record highs, particularly in major metropolitan areas.
Some of you may have experienced explaining important matters and reviewing contracts with foreign tenants in rental situations. By receiving consultations about daily life challenges as an extension of that experience, you can gain opportunities to understand the thinking, culture, customs, and lifestyles of foreigners.
Even if it does not immediately lead to sales transactions, building a foundation of mutual understanding is the first step.
Step 2: Refer Properties to Agencies Specializing in Foreign Transactions
When receiving requests to sell real estate, certain properties may attract stronger purchase interest from foreigners than from Japanese buyers, depending on the area and type of property.
In a split-commission transaction (wakare), it is effective to have an agency specializing in foreign transactions act as the buyer's agent. You can learn the practical aspects of foreign transactions firsthand as a party to the transaction. Ask the other agency questions freely — there is much to be learned through transactions.
Step 3: Connect with Agencies Specializing in Foreign Transactions at Industry Networking Events
If you do not have contacts among agencies specializing in foreign transactions, try attending networking events and social gatherings held by real estate associations.
One noteworthy recent statistic: approximately 20% of newly registered real estate companies have foreign nationals as their representative or equivalent. Many are highly proficient in Japanese, and new business owners actively participate in networking events to expand their contacts.
Building personal connections at such events leads to future business opportunities.
Step 4: Gradually Learn Language and Culture
Many people may feel apprehensive about English or Chinese, but language is a means of communication — and the culture of that country itself.
Today there are many affordable and accessible services available, such as YouTube, podcasts, and online lessons. Simply taking a peek or giving it a small try is more than enough. Even a modest understanding will definitely increase your future opportunities.
Challenges to Know About in Foreign Transactions
Real estate transactions with foreigners present unique challenges from the perspective of Japanese real estate agencies. Understanding these in advance makes it easier to develop countermeasures.
Language
- Difficulty explaining contracts and important matter disclosure statements
- Difficulty verbally explaining general matters
- The burden of creating documents in foreign languages
Differences in Contractual Practices
- Differences in real estate terminology and transaction customs
- Different styles of price negotiation
- Cases where buyers try to negotiate directly with owners without using an intermediary
Financial Matters
- Difficulty selecting appropriate transaction banks
- Issues with overseas remittance fees and processing time
- Different awareness of taxes and various fees
These are "challenges" but at the same time "areas with room for improvement and adaptation." Many foreigners who wish to purchase real estate in Japan hold a certain level of understanding and respect for Japan. Supporting these individuals presents an opportunity for new business expansion.
Risks of Refusing Transactions Based on Foreign Nationality
One important note: refusing transactions based on foreign nationality carries legal risks.
Japan is a signatory to the International Convention on the Elimination of All Forms of Racial Discrimination, and the Supreme Court has ruled that the principle of equality under the Constitution applies by analogy to foreign nationals (1964 ruling). Through indirect application in the interpretation of civil law's good faith principle and tort law, transaction refusals based on discrimination can potentially be subject to claims for damages.
The Ministry of Land, Infrastructure, Transport and Tourism also calls for heightened awareness of human rights issues and the elimination of discrimination in its "Guidelines for the Interpretation and Application of the Real Estate Transaction Business Act."
Frequently Asked Questions (FAQ)
Q. Can I be involved in foreign transactions even without any foreign language ability?
Yes. Starting with a split-commission (wakare) transaction with an agency specializing in foreign transactions, the other agency will cover the language aspects. A practical approach is to gradually build your capabilities by learning the business firsthand.
Q. What are the most common consultations from foreign tenants?
Common topics include questions about residency status, confirmation of life rules (garbage disposal, noise, etc.), lease renewal procedures, and restoration to original condition upon move-out. Experience handling these matters becomes a bridge to sales transactions.
