In Japan, it is widely said that the other costs will be 6-8% of the property price when purchasing a property.

We would like to see if this is truth or not, comparing with a simulation of the cost estimation.
The following is the example of the cost estimation that we similarly provides to our clients.

Property: Condo in prime area
Property price: 160,000,000 yen

Brokerage fee for this property
‐ At typical agents : 5,346,000 yen (3% of price + 60,000 yen + tax)
‐ At REDS : 2,673,000 yen
‐ You will save 2,673,000 yen at REDS 【50% discount】

Cost estimation (in case of loan)
・Brokerage fee (above) ・・                       2,673,000 yen（To REDS）
・Fixed asset tax ・・・                 approx. 　 90,000 yen（from Oct1 to Dec31)
・Repair reserve fund ・・・        approx. 　 30,660 yen（from Oct1 to Nov30）
・Common area management fee approx. 　 21,650 yen（from Oct1 to Nov30）
・Stamp duty・・・・・・ 　                          60,000 yen（To government）
・Housing loan handling fee         approx.  3,520,000 yen（To bank, 2.2% of 160 mil loan)
・Bank administrative fee             approx.        55,000 yen（To bank)
・Stamp duty for housing loan                        60,000 yen（To government)
・Property Registration                 approx.   650,000 yen（To Lawyer / Judicial Scrivener）
・Fire insurance・・・・             approx.   350,000 yen（To insurance company, depends on the option you will choose）

Total cost estimation: approx. 7,510,310 yen  (at 50% discounted brokerage fee)

 *Please understand that this is a simulation and may differ according to actual conditions.

 *After few months from the property ownership registration, there will be a payment for “Real Estate Acquisition Tax” to government which is not included to this estimation.

If there is no discount for brokerage fee, then the total cost will be 7,510,310 yen + 2,673,000 yen = 10,183,310 yen, which is approx. 6.4% of the property price if you purchased this property from other typical agents.

For this property, we REDS can make 50% discount for brokerage fee, therefore the total of other costs is 7,510,310 yen, which is approx. 4.7% of the property price if you purchased from REDS.

There are properties that we REDS can offer 100% discount for brokerage fee, which depends on the type of the property. If this property was so, the total cost will be 7,510,310 yen – 2,673,000 yen = 4,837,310 yen, which is approx. 3% of the property price if you purchased at REDS.

As a result, the rate of other costs for this property can be said as,
At REDS (50-100% discount) : 3 – 4.7%
At typical agents (no discount) : 6.5%

Since the property price is very high, t is obvious that you will save a big cost when you chose REDS.

For your reference, here are the characteristics of each cost.

・Brokerage fee
Brokerage fee is the biggest occupancy of the total costs, so it is important to choose reliable agent but saving the brokerage fee as much as possible. All other costs are mostly same wherever agent you choose.

・Fixed asset tax
This is going to pay to the seller, since the seller had already paid the annual amount. So the date when you become the owner until the end of the year (December 31) will be calculated and paid to the seller.

・Repair reserve fund
Normally, the seller already paid 2 months ahead beforehand. So this amount will be also calculated and paid to the seller from the date you become the owner.

・Common area management fee
Normally, the seller already paid 2 months ahead beforehand. So this amount will be also calculated and paid to the seller from the date you become the owner.

・Stamp duty
The stamp should be purchased and attached to the original of the sales contract, which amount depends on the property price.

・Housing loan handling fee
This is only needed when you purchased using a housing loan. The cost depends on which bank and plan to choose, but 2.2% of the property price is one of the standards. There is an option that this amount can be lower but the interest will be higher.

・Bank administrative fee
This also depends on the bank, this fee will not be charged at some banks.

・Stamp duty for housing loan
The stamp should be purchased and attached to the original of the loan contract.

・Property Registration
This is to register your ownership, including tax and the fee to the layer who register the ownership.

・Fire insurance
It depends on the option you will choose. Generally 5 years fire insurance and add earthquake insurance as an option.

If you have any questions or want to know more details, please contact to the following e-mail address.

【REDS】Real Estate Distribution System (REDS) Japan

Hiroki Kano (Mr.)

mailto: hi.kano@red-sys.jp