Real estate brokerage fees in Japan

When renting or buying a property in Japan you may have to pay brokerage fees, or agent fees, to your real estate agent. The brokerage fees are defined under the Real Estate Transaction Business Law. Under this law, real estate agents cannot charge fees in excess of those specified.

In most property transactions there are two agents – one who represents the landlord/seller and the other who represents the tenant/buyer. Each agent will charge a brokerage fee to their client.

Sometimes one agent will be lucky enough to represent both sides which means they will collect brokerage from both parties, but on some occasions they may offer half or zero agent fees to one side. Some agencies will advertise low or no brokerage fees, so it pays to look around.

If you are buying or leasing directly from the developer’s appointed sales office, you generally do not have to pay any brokerage fees. You can also use an intermediary agent to lease or buy from a developer, but check in advance whether they will charge you brokerage or not.

Almost all private property owners in Japan will use a real estate agent to lease out or sell their home, so there are very few opportunities to contact the owner directly. This means brokerage fees are usually unavoidable for at least one party.

Renting:

Brokerage = 1 month’s rent + tax

Current consumption tax in Japan is 5%. If the apartment rent is 100,000 Yen/month, the maximum brokerage fee will be 105,000 Yen.

A number rental agencies may have properties with half or zero agent fees, so ask your agent about these deals.

If you own an apartment and want to rent it out, the real estate agency you entrust the listing to will typically charge you an agent fee once they find a tenant and sign a rental agreement.

When to pay:

When renting, the brokerage is usually paid on the same day as the signing of the lease contract.

Buying and Selling:

Brokerage = 3% + 60,000 Yen + tax

What is the 60,000 Yen for?

The quoted brokerage fee of 3% + 60,000 Yen + tax is an easier way to explain the real calculation for brokerage fees which is as follows:

The first 2,000,000 Yen        = 5% + tax
2,000,000 – 4,000,000 Yen = 4% + tax
Over 4,000,000 Yen              = 3% + tax

For example, the brokerage on a property purchased for 50,000,000 Yen is broken down as follows:

2,000,000 Yen x 5% = 100,000 Yen
2,000,000 Yen x 4% = 80,000 Yen
46,000,000 Yen x 3% = 1,380,000 Yen

Total Brokerage = 1,560,000 Yen + tax
This is the same as 50,000,000 x 3% + 60,000 Yen.

When to pay:

Brokerage can be paid to the real estate agent on the day of settlement, or half can be paid upon the contract signing with the remaining half paid at settlement.

If a client does not pay their agent, the agent can sue them for the brokerage fee.

How to avoid or negotiate agent fees:

When buying a house or apartment, it is a little more difficult to find places offering no-agent fees. Negotiating on the brokerage fees is not customary and not all agencies are prepared to lower their agent fees. If you do intend to negotiate, please check with the agent at the very beginning and do not waste their time by viewing properties over several months before telling them you will not pay any brokerage.

There is a small selection of agencies that advertise reduced or zero agent fees, although their services are usually only offered in Japanese. These agents will usually be collecting an agent fee from the seller, or they may be the seller themselves.

Beware: while you may be saving money on agency fees, if the agent is representing the seller, or is the seller, they may not be working in your best interests and you may end up paying more for the property than if you had used a buyer’s agent who negotiated more strongly on your behalf. Also, the properties that they can show you may be limited to properties on their books, which means you have a smaller selection to choose from.

Buying a house or apartment is a big decision and a very expensive one, so you want to make sure you find the right property – not necessarily the one with the cheapest agency fees.

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