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【STEP3】Guide to Buying a House in Japan

Step 3: Complete Application to Purchase or Letter of Intent and Get Pre-Approval of Loan

Buying a New Condo or House

If you are buying a new condo or house, you will need to fill out an application to purchase (購入申込書 or kounyuu moshikomisho) put together by the developer or real estate company. For new properties, there is oftentimes a lottery carried out depending on the number of applications received, so please keep in mind your offer to purchase may not be accepted even after applying.

There will also be an application fee that is usually between ¥20,000 and ¥100,000 that will be returned if your application is not accepted. In the event your application is accepted, this money will be allocated to the earnest money that you will pay at the time of executing the purchase agreement.

If you are thinking of buying a condominium, please see: Questions to Ask When Buying a Condominium in Japan

Buying a Pre-Owned Home

If you are buying a pre-owned residence, you may want to submit a letter of intent (買付証明書 or kaitsuke shoumeisho in Japanese) to the seller. The reason to use a letter of intent is to inform the seller that you are seriously considering purchasing the property. There are a lot of possible contents in a letter of intent, but its real purpose is to serve as the beginning point for your negotiations. We will cover the key contents in a typical letter of intent in a follow-up article.

Pay Earnest Money/Deposit

Earnest money (手付金 tetsukekin) is a deposit that the buyer pays to the seller to demonstrate the seriousness of the buyer’s intention. It is usually 5-10% of the total purchase price, and generally it will be counted as part of the total purchase price when the deal is completed.

Get Loan Pre-Approval

At the same time you are submitting your letter of intent or application to purchase, you will need to begin the loan pre-approval (or pre-screening) process by talking with your lender. At this point, you will be asked to submit copies of (1) identification documents such as your passport and local driver’s license, (2) a recent health certificate, and (3) your annual tax receipts (源泉徴収票or gensen choushuuhyou).


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