Selling A House in Japan? 3 Agency Agreements You Should Know About
When selling your property in Japan, there are three intermediary agreements you can choose to enter in. Because a seller alone has difficulty finding a buyer, real estate companies will intermediate for a seller to find a buyer. Law requires that a seller and real estate company enter into a contract or an intermediary agreement before a real estate companies start looking for a buyer on the seller’s behalf. The contract document contains what kind of agreement the customer chooses, duties of the real estate companies, valid period of the contract, registry of REINS, and commission fees. REINS is a computer network system administered by the Real Estate Information Network to exchange real estate information. Members of real estate companies can research whether properties are still available or not, and properties registered on this network will be known widely.
This detailed agreement is meant to prevent any misunderstandings between a seller and companies throughout the transaction.
What kinds of intermediary agreements are there?
Exclusive right-to-sell listing agreements, exclusive agency listing agreements, and open listing agreements are the three intermediary agreements you can choose from. The first one and second one are agreements with only one real estate company, while the last one is an agreement with multiple companies.
１．Exclusive Right-to-Sell Listing Agreement
This agreement is closed between a seller and a single real estate company. If a seller makes a sales contract with a buyer without getting the help of an intermediary company, he will have to pay a penalty fee since the seller must make a deal through the company under the agreement.
On the other hand, a real estate company has to register at REINS within five days after making an intermediary agreement and must inform the seller of how the sale is going once a week.
・Knowledgable about the market with frequent reports from verified sources
・Able to spend money on advertising because a seller needs to pay a contract fee to only one company.
・Easily consummate the deal with a buyer due to the active sales activity
・Have to sell a property via real estate company even if you personally find a buyer or your acquaintance who wants to buy your property
・Cost and time depends on a real estate company’s ability and time of sales
２．Exclusive Agency Listing Agreement
The content of the intermediary contract is similar to an exclusive right-to-sell listing agreement, but the difference is a seller can also look for a buyer on his or her own. The real estate company must register at REINS within seven days and is required to let the seller know the sales condition once every two weeks.
・Able to know sales condition with frequent reports from real-estate company
・Able to spend money on advertising because the seller has to pay the contract fee to only one company.
・If a seller finds a buyer on his own, he can sell the property to a buyer without selling it through the real estate company he signed the contract with
・Time and cost depend on a real estate company’s ability and time of sales.
３．Open Listing Agreement
An open listing agreement is the only agreement that enables a seller to engage multiple real-estate companies to find a buyer, not to mention the fact that a seller can find a buyer him or herself. However, companies are not required to neither report how the property’s sales are going nor the registration at REINS.
・Able to select a buyer from a wide range of customer
・Sales agent will work hard because real estate companies have to compete with one another.
・Unable to get information of sales conditions because companies do not have to let the sellers know
・The information of property will not be widely known because it will not be registered on REINS.
|Type of Agreement
||The number of possible Intermediate Agreement
||Whether a seller can find a buyer by himself
||Register for REINS
||Valid Period of the contract
||Duty to Report
||Within 5 days
||Once a week
||Within 7 days
||Once in two weeks
It is hard to say which intermediary agreement is the best, but you should carefully choose the agreement most suitable for you based on the difference that I mentioned above!
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