5. What Is a Brokerage Agreement? | Understanding the Three Types in Japan

This post is a practical guide for foreign property owners selling property in Japan, explaining the differences between Open Brokerage Agreements, Exclusive Brokerage Agreements, and Sale and Exclusive Brokerage Agreements, along with the key points to consider before choosing the most suitable option.

What Is a Brokerage Agreement?

After determining your property's market value and deciding on an appropriate asking price, the next step is to formally appoint a real estate company to handle the sale.

When asking a real estate company to sell your property, you will sign a Brokerage Agreement.

A Brokerage Agreement is a contract under which a real estate company acts on behalf of the seller to find prospective buyers and conduct sales activities.

Once the Brokerage Agreement is signed, the real estate company carries out marketing activities, negotiates with prospective buyers, and supports the seller toward the signing of the Sale and Purchase Agreement.

In Japan, Brokerage Agreements are generally divided into the following three types:

·       Open Brokerage Agreement

·       Exclusive Brokerage Agreement

·       Sale and Exclusive Brokerage Agreement

Because each agreement has different features, it is important to choose the type that best suits your ideal selling schedule and preferred level of support.

Differences Between the Three Types of Brokerage Agreements

REINS stands for Real Estate Information Network System. It is a network used by real estate companies throughout Japan to share property information.

By registering property information with REINS, real estate companies across Japan can view the listing, which may increase the opportunity to introduce the property to a larger number of prospective buyers.

The sales method, REINS registration requirements, and frequency of sales activity reports differ depending on the type of Brokerage Agreement.

Features of an Open Brokerage Agreement

Under an Open Brokerage Agreement, the seller may ask multiple real estate companies to sell the property at the same time.

The seller may also find a prospective buyer independently and enter into a Sale and Purchase Agreement directly.

While the ability to work with multiple real estate companies can be an advantage, the content and level of sales activity may differ depending on each company.

Features of an Exclusive Brokerage Agreement

Under an Exclusive Brokerage Agreement, the seller may appoint only one real estate company.

The appointed real estate company is required to register the property with REINS and provide regular reports on sales activities.

The seller may still find a prospective buyer independently and enter into a transaction.

This type of agreement makes it easier for the seller to understand the progress of sales activities and proceed with the sale in a planned manner while consulting with the real estate company.

Features of a Sale and Exclusive Brokerage Agreement

Under a Sale and Exclusive Brokerage Agreement, the seller may also appoint only one real estate company.

The major difference from an Exclusive Brokerage Agreement is that even if the seller personally finds a prospective buyer, the transaction must be handled through the appointed real estate company.

In addition, sales activity reports are provided more frequently than under an Exclusive Brokerage Agreement.

It is important to fully understand the terms of the agreement and the sales policy before choosing the type of Brokerage Agreement that best suits your situation.

Points to Check Before Signing a Brokerage Agreement

Before signing a Brokerage Agreement, it is advisable to confirm the following points:

·       Details of the planned sales activities

·       Method and frequency of sales activity reports

·       How the sales process will proceed

·       Approach to setting the asking price

·       Support system provided by the real estate company

The most suitable Brokerage Agreement depends on factors such as the type of property, the selling schedule, and the seller's preferred sales method.

Before signing, it is important to fully understand the agreement and confirm whether the real estate company is one you can confidently entrust with the sale of your property.

Summary

A Brokerage Agreement is an important contract when proceeding with the sale of real estate in Japan.

Open Brokerage Agreements, Exclusive Brokerage Agreements, and Sale and Exclusive Brokerage Agreements each have different features, sales methods, and levels of support.

Choosing the agreement that best matches your preferences and selling plan can help ensure a smoother property sale.

Dana Estate Proposes the Most Suitable Brokerage Agreement for each client

At Dana Estate, we carefully listen to each client's objectives, property characteristics, and selling schedule before proposing the most suitable Brokerage Agreement.

For foreign owners and clients residing overseas, we explain the contents of the agreement clearly in English so that you can proceed with the sale confidently and with peace of mind.

If you are considering selling property in Japan, please feel free to contact Dana Estate for professional advice and personalized support.