Brand new condos offer buyers a unique opportunity when compared to second hand condos.

First is that if you purchase off plan, then you are locking into today’s pricing while taking delivery a year or two later when the development is finished construction.  

In a rising market, this can mean by the time you receive your keys your condo value has risen without even living in it. 

The opposite can be true too however; if the market drops, then you could be in negative equity from the day you move in. 

Speculation aside, brand new condos are very popular in the domestic market due to their sparkling newness as well as the developer and manufacturer guarantees that each condo comes with.  These guarantees are much longer and more comprehensive than those that come with second hand condo purchases. 

The trouble is finding a bilingual realtor to assist you with the purchase.  Japan real estate practices prevents realtors from brokering brand new condos and therefore they can not charge a brokerage fee like they can with other property types.  

In most circumstances, the sales contract is between the buyer and the developer directly with no brokerage firm in the middle.  No brokerage firm means that it is illegal to charge a broekrage fee.

In other words, unless the developer of the condo you want pays the realtor an introduction fee, then there is no money for the agent ergo, they will not be incentivised to service you.  

Alternatively, they might only introduce condos that pay an introduction fee thereby severely limiting your selection.

Important to note is this fee restriction only usually applies to brand new condos and not brand new freestanding houses; these types of properties the realtor can charge a brokerage fee so it is business as usual here.

For brand new condos, some realtors offer their clients a consulting agreement to source and assist with purchases.  This consulting agreement comes with a fee, usually similar to a 3 percent brokerage fee.

This is not simply the same fee by a different name.  A brokerage fee puts your realtor's name and chop on the sales and purchase agreement which brings with it their legal responsibility for the safety of the deal.

The consulting fee does not.  For brand new condos, the sales contract will be directly between you and the developer, eliminating the legal responsibility of the realtor altogether. 

However, since most off plan condos are not delivered until well after the contract is signed, should you enter into a consulting agreement with a realtor then they will be translating and interpreting a lot of documentation not only for the sales contract itself but for things like the establishment of the homeowner’s association and the repair reserve fund, other endless updates on construction timelines and even down to what specific layout and kitchen cupboard colours you would like.

This type of consulting agreement does not need a realtor’s licence to execute however it is highly recommended that you engage a realtor.  These professionals are well versed in real estate law and technical language that would leave the average native speaking layman struggling to understand unfamiliar concepts in Japanese first and then trying to explain it to you in efficient English.   A tall order for the uninitiated and not exactly a recipe for success.  

Bilingual licensed realtors on the other hand are used to translating and interpreting complex property language and know what legal danger signs to look for.

Simply put; the consulting fee is for handholding you safely through what could potentially be a multi year transaction from joining you to visit model rooms through to the sales contract, condo delivery and everything in between.

The consulting fee can be negotiated to whatever you and the realtor decide; however realtors usually approach a reduced fee with a reduction of services offered.

One example could be half of 3 percent but the realtor will only work with you on the sales contract and not until delivery, leaving it up to you to understand update emails from the developer or to attend owner meetings by yourself. 

Additionally, some developers will be hesitant to sell to a non-Japanese speaker unless they know there is a licensed and bilingual real estate agent assisting the buyer throughout the process.  Ideally for the developer, the bilingual realtor would be someone they have worked with in the past however this isn’t a hard and fast condition.

If you are interested in purchasing brand new condos then best to understand that unless you offer your agent something financially to help you, the selection they (or any agent) will send will only be projects where the developer will pay an introduction fee to the agent. 

Introduction fees are paid to agents only in a minority of projects, usually in the higher priced luxury segment.  Non-luxury projects rarely pay intro fees unless in a down market so best to assume if you don’t speak Japanese and want to buy a brand new condo then you are better off discussing with your realtor the possibility of a consulting fee to open up the full selection the market has to offer.