In our previous article, What to Check Before Buying Property in Japan, we discussed what buyers should consider before choosing a property, including its intended use, financing options, and potential issues with the building or land.
Once you have found a property that meets your requirements, the next step is to make an offer.
In Japan, this usually involves submitting a written purchase application (買付証明書), which outlines your proposed price and other conditions. However, there are a few things buyers should understand before submitting one.
1. What Is a Purchase Application?
A purchase application is a document expressing your intention to purchase a property under certain conditions.
It typically includes:
- Purchase price: The amount you are offering.
- Deposit: The amount you propose to pay when signing the purchase agreement, typically around 10% of the purchase price, to be paid at signing.
- Financing: Whether you intend to purchase with cash or a mortgage.
- Contract date: When you expect to sign the purchase agreement.
- Settlement date: When you expect to pay the remaining balance and take ownership.
- Other conditions: Any specific requests or matters that need to be resolved before proceeding.
Unlike the purchase agreement, a purchase application is generally not legally binding by itself. It is an expression of your intention to purchase, and the seller can accept, reject, or negotiate the proposed terms.
However, it should still be treated seriously. Withdrawing an offer without a reasonable explanation can damage trust with the seller and the agents involved.
2. How Much Should You Offer?
One of the most common questions we receive is whether buyers should offer the asking price or negotiate.
There is no single answer.
Some properties are priced competitively and attract multiple interested buyers. Others have been on the market for some time, giving buyers more room to negotiate.
Before deciding on an offer price, we recommend considering the property’s asking price relative to comparable listings, how long it has been on the market, its condition, special features (roof balcony, corner unit, penthouse, etc.), and any additional costs required to make it suitable for your intended use.
If the property requires significant repairs or renovations, these costs may provide a reasonable basis for negotiating the price. Properties with unique features may reasonably command a premium over comparable listings, making them appear expensive even when they are fairly priced.
However, offering a lower price simply because you expect negotiation to be part of the process is not always the best strategy.
For a well-priced property with strong demand, an unnecessarily low offer may result in losing the opportunity to another buyer.
The objective is not necessarily to obtain the largest discount, but to purchase the right property at the right price and on terms that make sense for you.
3. Price Is Not the Only Consideration
Sellers do not necessarily choose the buyer offering the highest price.
They may also consider how likely the transaction is to proceed smoothly.
For example, a cash buyer who can complete the transaction quickly may be more attractive than a buyer offering a slightly higher price but requiring uncertain financing.
Likewise, a buyer who can accommodate the seller’s preferred settlement date may have an advantage.
Therefore, if you require financing, it is helpful to establish your borrowing options before making an offer. Sellers are often reluctant to accept an offer without mortgage pre-approval, particularly when multiple buyers are interested in the property.
Other conditions can also influence the seller’s decision, such as requests for repairs, cleaning, or removal of furniture.
A competitive offer is therefore not always the highest offer, but one that balances price, conditions, and certainty of completion.
4. What Happens After You Submit an Offer?
Once the purchase application has been submitted, the seller will review the proposed terms.
They may accept the offer, make a counteroffer, or decline it.
If both parties agree on the main conditions, the next step is generally to prepare the purchase agreement and arrange the necessary documentation.
Although an accepted purchase application generally puts the buyer in the first position to proceed with the transaction, it does not guarantee the purchase.
Until the purchase agreement is signed, there is generally no binding sale contract. Depending on the circumstances, the seller may still consider other offers.
For this reason, once the main terms have been agreed, we recommend moving toward the purchase agreement without unnecessary delays, while allowing sufficient time to review the documents properly.
5. What Should Overseas Buyers Keep in Mind?
For overseas buyers, there are a few additional practical considerations.
If you will not be in Japan to sign the purchase agreement, discuss the signing arrangements with your agent in advance. Electronic signing is becoming increasingly common, although some agents and sellers still prefer traditional paper contracts and in-person signing.
You should also consider how you will arrange the deposit, particularly if funds need to be transferred from overseas.
The seller will generally expect the deposit to be received in the designated bank account by the time the purchase agreement is signed. International transfers can take several days, or sometimes even longer, so initiating the transfer on the signing date is usually not practical.
As escrow services are less commonly used in Japan, one practical arrangement for overseas buyers is to have the real estate agent receive the deposit in advance and transfer it to the seller when the agreement is signed. We can also coordinate escrow arrangements where appropriate, depending on the transaction.
These matters do not necessarily prevent an overseas buyer from making an offer, but they should be considered early so that the proposed contract and settlement dates are realistic.
6. What Comes Next?
Making an offer is an important step, but it is only the beginning of the purchase process.
Once the seller and buyer have agreed on the main terms, the next stage involves reviewing the purchase agreement, important property disclosures, and other documents before signing.
We will cover this in our next article: Reviewing and Signing the Purchase Agreement in Japan.
