Disclaimer – the below is written for owners of traditional residential property that are either looking to sell or rent. If you own commercial, retail or niche real estate then most of the below will not apply. An example of niche real estate is looking for rental data on short term furnished properties which is mainly proprietary data.
Imagine this; you’re an owner looking to either sell your property or rent it out. You choose an agent that looks like they are the largest in the market and therefore must be the best. You have received some advertisements in the post touting that said agent has a wondrous track record renting & selling in your neighborhood.
When the time comes for you to pull the trigger on hiring the agent, you want your unit sold or rented in the fastest time possible at the best possible price.
It is important to know that from your agent’s point of view, the fastest way to rent / sell isn’t the most profitable. To understand this further, the fastest way to transact your property is to leverage buyer & renter agents networks and allow them to introduce their clients.
Why this isn’t the most profitable for the agent is because in Japan it is possible for the agent to represent both buyer & seller; renter & owner. In these cases then one agent will be able to bill both sides for the trade.
However, finding both sides of a deal as one agent takes considerable more time than working with other agents. In this case then your property takes longer to sell or rent.
In theory, regulations stipulate that your property should be listed on the Real Estate Information Network System (REINS). REINS is a broker accessed only MLS-like system that advertises to other brokers what units are available for buyer / renter introduction.
The spirit of the system is to facilitate faster trades for consumers while giving real estate agents of all sizes the ability to faster analyze current pricing and to a limited capacity, transaction records for properties across the country of all shapes and sizes.
However, as the below case studies outline, there are ways that less than scrupulous seller’s agents & property managers can block counter party agents from being able to introduce their clients to advertised property on REINS.
Both the below sales and rental situations follow the same pattern but to avoid confusion, I’ll keep the two situations separate. Names are changed but the companies spoken of are very well known Japanese operations in the Tokyo market.
In a sell scenario, let’s look at ABC Real Estate. Our buyer’s agents know this company well not because of their advertising or market size, but because of how notoriously difficult it is to view their advertised listings.
For example, when we call asking if the property is still available as we have a buyer interested in taking a look, we will be told that said property is currently under application and is heading to contract so no viewings allowed.
A couple of weeks pass and we see the same listing on REINS advertised by the same ABC Real Estate. We will call again and ask whether the property is available for viewing and will be told the same story we were told weeks prior; there is an application and the deal is heading to contract so no viewings allowed.
While deals fall over for a variety of reasons on any given day, over the years ABC Real Estate has displayed a pattern of behavior outlined above the make it seem there is a pattern of intentional behavior aimed at blocking buyer’s agents from introducing their clients.
Switching to a rental scenario, take XYZ Real Estate. Using the exact same style as the above example, whenever renter agents call asking for availability, XYZ Real Estate will say that the unit is under application and no viewings are allowed. This is followed by us on REINS seeing the same unit still being advertised and a follow up call weeks later that ends with the same result.
With the two above examples, from the owner’s standpoint, ABC Real Estate and XYZ Real Estate are following regulations. They are indeed listing your property on REINS.
However proving the blocking of buyer & renter agents from viewing your property can be impossible for an owner. You are away from the fray when it comes to the day in and day out of real estate and the above situations play out over the telephone, leaving no record of inquiry at all.
From what we have heard from owners who contact us, their broker is usually trying to say that the price / rent is too high and should be lowered; hence why the unit hasn’t sold or rented.
Owner expectations regarding rent or sales pricing plays a large role in whether a property trades fast or not. That said, these expectations can be reasonably countered by your broker showing information from REINS that outline what other, comparable properties are currently on the market for. Since data from REINS is compiled from different real estate companies advertising their listings, the data can be seen as reliable and fair.
The bottom line is providing information of condos and land currently on market in central Tokyo is very easily done with REINS data; free standing homes and whole buildings can be more complicated depending on the age and type of the structure.
Price levels sourced from REINS is also very easily verified by another broker as we all have access to the same system and the same data. You can take the data you received from your broker and ask for a comparable list from another agent. If the data looks similar, then that will tell you whether what is being given to you is accurate or not.
However, if the data your agent is showing you is sourced solely by “ABC Property Company’s Internal Database” without reference to any other sources, then that should be a warning sign you might be working with an agent thinking about their maximum upside rather than yours.
While there are companies that do have extensive internal data, most will source REINS in some element of their work when compiling price / rent data.
Trust but verify is the name of the game, especially in an opaque market like Japan’s that doesn’t publish transaction records like one would find in Canada or the United States. Also, whether agents should be allowed to bill both sides for a trade can be debated endlessly but at present, it is a perfectly legal practice in Japan.
Regardless, at the heart of it all, your representative real estate company needs to work with other brokers in order to trade your property at the best possible price in the most efficient time frame possible. Your representative real estate company needs to also provide objective data backing up their price and rent recommendations.
If your real estate company finds a buyer or renter due to their own marketing efforts then so be it as both sides of every trade have two different fiduciary responsibilities as outlined by my colleague Shirley Yan in an article published last year.
But what should be looked out for by owners is working with companies that make it a habit to not co-operate with counter party agents. Hopefully the above has illustrated how to spot these types of companies before signing with them.
For those interested in learning more, please contact the Adam German at firstname.lastname@example.org.
Editor’s Note: Adam German is Vice President of Business Development at Housing Japan and a well-known figure in both the marketing and sales side of Tokyo real estate. Originally from Canada, Adam has been behind some of the most successful international residential property services in Tokyo.