Become an owner! Learn the process to buy an apartment

- From purchase to financing -

In the previous article, we talked about the property we found after 3 months of property searches and on-site inspections. We are just a few steps away from purchasing the property!! In this article, we will talk about the specific steps you should know when purchasing a property. Based on our experience, we will also tell you the points you should be careful of!!

Please read to the end!!

Once you have decided on the property you want to buy, you need to issue a "Purchase Certificate": How to create it and its importance

Once we found the perfect apartment and received preliminary financing, we made an offer to buy it from a real estate company.

When you make an offer to purchase, a "purchase certificate" will be issued. This is a document that shows the seller your intention to purchase the property. It is also officially called a "purchase offer" or "purchase certificate." This document is not legally binding, but it is considered an important document for the seller to confirm the "seriousness of the buyer."

The contents of the purchase certificate that we actually submitted

When I checked the copy of the purchase receipt from that time, the following was written on it:

• Purchaser's address and name

• Detailed property information (location, land area, land rights, building area, building structure)

• Purchase price (tax included)

• Payment terms (deposit → negotiable, interim payment → none, remaining payment at time of settlement)

• Schedule (Desired contract date → Consultation, Desired settlement date → Consultation) Expiration date of this document Other desired conditions (loan special provisions available)

The format and contents of the purchase certificate vary depending on the real estate company.

How to decide the desired purchase price: Criteria based on market price and financial plan

If you think that the price (bid) offered by the seller is higher than your desired purchase price, the market price, or your financial plan, you can make a purchase offer at the amount you want. If the purchase price you wish to purchase written on the purchase certificate is lower than the bid, it becomes a "limit price" and becomes the basis for negotiations with the seller.

Points to note when purchasing

• A deposit is required

A deposit is money paid at the time of signing a real estate purchase and sale contract. It is generally 5 to 10% of the purchase price. For example, if the purchase price is 45 million yen, 2.25 million to 4.5 million yen is paid at the time of signing the contract. This means that you need to "prepare cash" before the loan is executed. The amount can be changed depending on various conditions, but it depends on the seller.

We were able to make a contract with an exceptionally low deposit of 1.5 million yen for a purchase price of 65 million yen. However, I think it is better to have a larger deposit. This will give the seller peace of mind and will reduce the repayment amount and the associated interest. Prepare a deposit of at least 5%.

• To make you a priority for the seller as a potential buyer

If the property's conditions are good, there will be more buyers. Purchase certificates will not necessarily be issued on a first-come, first-served basis. The important thing is to show the seller that you are a "guaranteed buyer."

For example, those who offer conditions such as cash purchase or "no loan clauses (no clauses that allow the purchase to be canceled if the bank loan is not approved)" are more likely to be given priority. Also, having social credibility such as being a doctor or lawyer can be an appealing point to sellers. Differentiating yourself from your rivals with your conditions is the key to success.

In reality, most people buy properties with a loan .

However, I think that for most part-time landlords like us, it is rare to purchase a property outright with cash, and most often we take out a loan to buy.

We asked for a pre-approval for a loan for the property we wanted the day after we submitted our purchase certificate. I can say this because we were able to purchase the property successfully, but it is actually not a good idea to proceed with the purchase in this way. If another potential buyer passes the bank's preliminary screening and makes a bid, the seller is likely to give priority to that person.

Have your loan approval and proof ready in advance so that your bid will be given priority over other potential buyers.

• Try to avoid cancelling purchase orders as much as possible.

Please note that purchase offers are not binding, so you can cancel midway through. However, unless you have a very good reason, it is best to avoid canceling for personal reasons. This is because it will cause you to lose credibility with the seller and the real estate company. Please be extremely careful when canceling.

Procedures to be followed after submitting the purchase certificate

After submitting the purchase certificate, we will finally begin the process of entering into a contract. The general process is as follows:

① Preparation of the Contractor and Important Information Explanation Document (usually prepared by the real estate company)

② Fill out a loan application

↓

③ Real estate purchase and sale contract (signature and seal of contract holder and important matters explanation document)

④ Monetary lease contract (also called a "kinsho contract"; sign and stamp the "kinsho contract")

↓

⑤ Settlement date (The remaining balance is settled in the bank's conference room. The ownership transfer registration is completed, including the rental contract and key handover.)

When we bought the apartment

During August: Preparation of contract and important information explanation documents (①)

↓

9/1 Real estate purchase and sale contract (③) Deposit payment General agency contract

↓ During this time, submit your loan application to the bank (②)

9/18: Money consumption lease contract (④) at the bank, settlement date (⑤)

That's how I signed the contract.

What to check in a real estate purchase contract

It is important to understand the sales contract thoroughly before signing it.

Unlike a purchase certificate, a real estate purchase and sale contract has legal effect. It is a very important document, so be sure to check even the small details. Be sure to check any points you don't understand before signing, so that you don't end up saying "I didn't know" after the contract is signed. It is important not to be vague.

The details of the loan agreement are particularly important

If the loan amount isn’t specified in the contract, you may not be able to back out of the contract if you are approved for a loan that is less than what you want.

For example, if you were hoping for a loan of 50 million yen but were approved for a loan of 40 million yen, you would have to make up the difference of 10 million yen with your own funds. Even if you were able to cancel, you would have to forfeit your deposit. It is important to check the contract contents before signing and negotiate additional terms if necessary.

There are two types of financing provisions

Termination condition type: If financing is not obtained, the contract will be automatically terminated.

Cancellation right reservation type: If financing is not obtained, the contract will be cancelled at the buyer's request.

To avoid any trouble after signing the contract, be sure to check carefully which type your contract is.

If the terms change on the day of the sales contract, you need the courage to reschedule the contract date.

When you think you will soon be able to purchase a property, you may be tempted to accept the terms. However, once you have signed the contract, there is no turning back. If the seller changes the terms or you find something negative about the property, continue to negotiate until you are satisfied.

Even if the negative aspect is something as trivial as "not mentioning that there will be a monthly charge of several thousand yen," don't just leave it at a verbal agreement, but be sure to get the correction made in writing.

Our story of failure: After purchasing, we discovered that there was no history of exterior wall renovations

Our property was 23 years old when we purchased it. When we went to see it on site, we thought the exterior looked nice, so we didn't check the details of the property when we signed the contract. If we had known about the renovation history at that time, we might have been able to negotiate the price...

What happened up until the date of the loan agreement and settlement

We were just about to purchase the property. We were really excited. It's nerve wracking to start something you've never done before. We checked carefully to make sure we hadn't forgotten anything.

Since we received a loan from a non-bank bank, we do not have a branch office. We were given a bank branch to hold the corporate account where the loan amount will be deposited.

• Seller

• Buyers (my husband and I)

• Real estate company

• Employee of the borrowing bank

• Judicial scrivener

The funds were raised and the loan was executed. After the settlement procedures were completed, the ownership was transferred by a judicial scrivener, and I became the proud owner! It was about half a year from the property search, and it was a valuable experience that seemed long but was short.

summary

In this article, we have provided a detailed explanation of the process of purchasing an apartment, from submitting a purchase certificate to signing a contract and executing the loan.

In order to avoid trouble when purchasing real estate, it is very important to prepare in advance and check the documents. We understand that you want to become an owner as soon as possible, but please do not rush.

In the next article, I will talk about the management company I looked for and the various procedures I went through immediately after purchasing the property. Please look forward to it!