After you have done the legwork and research, inspected, and obtained the general details of the place you want to purchase, it’s time to submit a written offer to the seller. This indicates that you intend to purchase the property under the conditions you have outlined.
Your agent cannot start any serious negotiations with the seller until you have presented this document. The offer letter is not a legally binding document, but it does indicate that you are serious. The general etiquette is that you should not submit an offer unless you are genuinely interested in purchasing. Obviously it is acceptable to back out if anything comes up during the due diligence reporting that is a deal breaker. Backing out because you simply changed your mind is also legally allowed, but your agent is less likely to continue to work with you in the future. You will also risk burning bridges with whatever agency is representing the seller – if it’s a major brokerage firm you might have difficulty getting offers accepted on other properties in the future. The real estate industry, even in Tokyo, is tightly connected.
Upon request, your property broker will provide you with an offer form to fill in. Each brokerage uses their own format, but here are the main items that you will need to consider:
- Price you want to offer
- Deposit you are prepared to pay (usually 10% of the purchase price)
- When you want to sign the contract*
- When you want to settle and take delivery of the property*
- Whether you are paying by cash or requiring finance. If finance, how much you plan to borrow, how much you can put down in cash, and which bank/s you plan to apply to
- Your name, address, signature etc
- Term of validity: Usually up to 2 weeks
Once you have submitted the signed offer to your agent, they will go to bat for you with the seller’s side (assuming you are using an agent that is representing you and not the seller).
*Sellers prefer buyers who can sign a contract sooner rather than later. Usually it can be a couple of weeks from submitting the offer. Any longer and the seller is likely to tell you to come back when you’re ready.
*Settlement depends on each situation. In some cases, it can be a same-day contract and settlement. In other cases, it may be 1 ~ 2 months from contract signing, especially when the seller needs time to vacate the property. Your agent can advise on this scheduling.
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