Bargaining

[dna]

We're considering buying a used house in the suburbs of Tokyo.

Bargaining: 1. Is it done?
2. Do you have experience?
3. Any advice?

We obviously want to get the best deal possible.

Thanks.

DnA

[RetireJapan]

I've heard many stories about people putting in lower offers in real estate negotiations in Japan. The worst case scenario is that the seller becomes upset and refuses to deal with you any more. Best case is they accept your offer.

Anyone else?

[7-seasons.com]

Yes, I have a friend who had made a lower offer on 2 different occasions and got a discount.

In most cases the agent will say they have someone else who is interested to try and pressure you to buy, and that is true in some cases but many times is a bluff.

[mighty58]

Absolutely. All the factors that would go into a potential negotiation in any other country apply here in Japan. How in-demand is the place? How motivated are the sellers? How fair is the asking price? etc. etc.

Some general advice: make a good impression on the seller, don't even begin negotiations unless you're serious about buying, be sincere, and have solid justifications for why you believe it should be X amount cheaper.

In my case, I demonstrated my seriousness by commissioning an inspection on my own dime (150,000yen) and then used the findings, plus my research on what the market price should be, to propose a price almost a full 1,000man lower than the asking price. I laid out my justification in detail. As this is usually done though the agent, they will know immediately if you're being fair or going too far, and will tell you if you're being unreasonable. I asked him to take my offer and reasoning to the buyer, and after a counteroffer that was very close to my offer, we split the difference and came to an agreement. So yes, it can be done.

[jcc]

Absolutely. All the factors that would go into a potential negotiation in any other country apply here in Japan. How in-demand is the place? How motivated are the sellers? How fair is the asking price? etc. etc.

Some general advice: make a good impression on the seller, don't even begin negotiations unless you're serious about buying, be sincere, and have solid justifications for why you believe it should be X amount cheaper.

In my case, I demonstrated my seriousness by commissioning an inspection on my own dime (150,000yen) and then used the findings, plus my research on what the market price should be, to propose a price almost a full 1,000man lower than the asking price. I laid out my justification in detail. As this is usually done though the agent, they will know immediately if you're being fair or going too far, and will tell you if you're being unreasonable. I asked him to take my offer and reasoning to the buyer, and after a counteroffer that was very close to my offer, we split the difference and came to an agreement. So yes, it can be done.

This is really good information.

Can I ask for more detail? What were some of the issues that were present and what was the process of getting it inspected like? Also, how big a drop was the reduction? Are we talking 3000->2000(33%) or 10000man->90000(10%), those two scenarios seem very different to me

[DragonAsh]

Yes, you can bargain, but as mighty58 points out, how successful it is depends on having a justification for your lower offer vs simply fishing for a lower price.

The first house we purchased, we negotiated the price down from the original offer of Y28 million to Y25 million.
I'm purchasing a second house, and we've negotiated the price down from Y23 million to Y21 million, and will probably be agreeing on that price next month.

The first place we were able to negotiate a pretty good deal (the Y28 million was a reasonably fair price, maybe a tad high?) by being willing to close the deal almost immediately as we paid in cash. Note that it wasn't the 'pay in cash' bit that helped (makes no difference to the seller) it was the 'don't have to wait to see if a loan comes through' etc.).

The second house is almost the exact opposite, the seller is in no hurry! The Y23 million itself was already a reasonable price, but we pointed to some recent deals in the area, plus noted that the house itself is very old and worn down (nobody's lived in it for quite a while), isn't remotely earthquake proof etc, really needs to be knocked down etc. Plus there are more costs involved since the seller (actually a neighbor) is going through some type of family court since it's three brothers selling their mother's house and there's inheritance etc. involved. We spoke to them on and off over the entire summer - they never put the house on the actual market, since they weren't in any hurry, and were happy to give us as much time as we wanted to discuss, their mother and my wife's mother were neighbors for 40 years, so that helped I'm sure.

This second house is actually a bit annoying. Could pay cash but don't really want to sell off current investments to do so, I don't like the idea of taking out debt for no reason, but even if this was maybe a reasonable exception, a home loan isn't an option since we're not planning on living in the new place, which makes the interest rate go from sub-1% to over 3%, which is infuriating. If it wasn't a very good price on valuable property - it's a huge corner lot, right next door, which means we'd own a 150 tsubo (almost 500 sqm) lot, I wouldn't bother....

[RetireJapan]

If it wasn't a very good price on valuable property - it's a huge corner lot, right next door, which means we'd own a 150 tsubo (almost 500 sqm) lot, I wouldn't bother....

My in-laws' place has one adjacent house, the road, and a park on the other two sides. Really hoping we can buy out the other house at some point and lock down our private estate

[dna]

We didn't end of bargaining because the place we wanted had already dropped in price twice and because we really wanted this place (and wouldn't have been able to find a similar place easily // if at all)

[DragonAsh]

Thought I'd give an update on the ongoing saga of the lot next door. We noted that the banks we initially spoke to would only give us a regular bank loan of over 3% since we had no plans to live in the house (for the foreseeable future, it's basically going to be a garden for the dog). We then spoke to Resona, who offered a rate of 1.9%....but then said they couldn't offer the loan due to 'illegal construction' (which was not surprising, we suspected the additions made some years back might not be kosher). So we were able to negotiate the price down a bit more. Was about ready to simply pay cash, when - pretty much on a lark after lunch one day - we stopped by the local branch of a small trust bank. Since we already own one house, they agreed to a loan at 1.3% using our current home as collateral, no penalties or fees for making extra / early payments, and we got a break on bank & insurance fees. Not too long afterwards we received offers from a couple of other smaller banks in the area, but none quite as good as the trust bank.

Moral of the story - go talk to your local banks! In general the smaller banks were all far more flexible and seemed happy for our business. In contrast, none of the major banks were that helpful (which is crazy given that I used to work at two of them).

[Roger Van Zant]

I bargained.
Last owner wanted 16.7 million yen.
I offered 10 million. He said "no" in not such polite terms!
I then offered 12.5m and he finally accepted at 13.5m.