Transcript
Speaker: Today, we have an interview with Kendall Barroth, a real estate agent from Remax Kyo -e up in Hokkaido, Japan. In the episode, we discuss the snowy upper region of Japan, specifically asking about snow in the area for skiing and snowboarding. We then take a super deep dive into closing costs, specifically analyzing one 10k condo in Asahikawa.
Speaker: Unfortunately, since recording this, Kondo has now sold, but we have linked another one in the show notes. Also, please stick around till the very end where Kendall adds a closing cause he actually missed. Hope you enjoy the episode. It's definitely an informed one. Excited today. We have a guest on the line, Joey, who we got.
Speaker: We have Kendall Barath. Sorry. I hope I said your last name correctly. Real estate agent based up in Asahikawa Hokkaido. Kendall, would you like to maybe give us a little bit of an introduction for yourself? Who are you? Hello. Good morning. Thanks very much for having me on. So yeah, my name is Kendall Barath. So you nailed the pronunciation, Joey. Very nice. And I'm a real estate agent with Remax QA, which is part of Remax Hokkaido.
Speaker: And the office is up here in Asahidawa. We also have a branch in Sapporo. So we do business all around Hokkaido. And we have some agents that are like scattered around places like BA, Obihito. If anyone listening has heard of these places, good for you. You're a Hokkaido master. Hey, Tendo, where are you originally from? So I'm from Canada, specifically small town in Eastern Ontario. Right.
Speaker: And I moved to Japan about 10 years ago. I started off as an ALT, which is a kind of English teacher here. And then I did that for about seven, eight years before making the change to real estate. That was up in Hokkaido as well. Like why, how did you get 10 years in Hokkaido under your belt? So for the whole time it has been in Hokkaido.
Speaker: Most of these English teaching gigs, you get sent somewhere against your will. Okay. I was, I was in a, a little fishing town and population, 6 ,000, 6 ,000, 6 ,000. Yeah. Okay. And yeah, mostly fishing. They're also some farms, but very little in the way of industry or was there like a restaurant?
Speaker: Oh, yeah. Yeah. It was restaurants. A good thing with Japan is they love to eat. Yep. So there's restaurants everywhere. Um, places, fishing towns, like fishing towns, like where I was placed, of course, the restaurants, they push out the seafood specialty restaurants. So it was one really nice sushi restaurants. Okay. In my town, it was.
Speaker: Very good. And also surprisingly expensive. It was just a small town, like a full dinner there would cost like a mon. Okay, okay. That's expensive. $20 for anyone listening in US dollars. Yeah, that's pretty high for a rural restaurant. It must have been bomb though. It was good.
Speaker: Gendo, what kept you in Hokkaido after? Was it real estate? What, yeah, you could be anywhere in Japan or anywhere in the world, but by Wai 'a Sahikawa. I think most people, I should say most people who come to Japan already were interested in Japan. It's not very good to be like, Oh, I wonder what this Japan thing is all about. No, people already liked Japan and that's why they came. And then those people also.
Speaker: Your local area really grows on you. Joey, I know you spent a lot of time high school and university in Shizuoka. High school Shizuoka and then university was Tokyo. Okay. But yeah, and you really loved Shizuoka, I'm guessing. Yeah, I do. We were looking at some other houses there not too long ago, actually. Yeah. So your local area really does grow on you. You make friends, you get integrated into the community.
Speaker: So there's that aspect, but also Hokkaido is great. It is really special. If you love snow. Okay. There it is. It snows here like nowhere else I've ever been in the world. Yeah. And this guy's Canadian, Ontario. Both the frequency, the depth and the quality of snow are astounding. Wow. Okay. I don't know. I don't know how much I should.
Speaker: I don't know how much, but it's great skiing, snowboarding, both are very popular here in Hokkaido. I do both, but I stick 90 % of the time on snowboard. Okay. Let's go. Honestly, I'm not that good at skiing.
Speaker: Yeah. Kendall, I'm curious for the viewers and listeners, most people know Niseko. I think if you think Hokkaido, how far away are you or just proximity wise, where is Asahikawa compared with Hokkaido or Niseko and Sapporo? So Niseko was on the Western sort of squiggly peninsula of Hokkaido and Niseko was about two hours drive from Sapporo, Sapporo, which is the main city.
Speaker: I know now a second dollar is two hours again further to the north. Okay. So if I were to drive to Nisico, it would be about four hours. I would drive to support would be about two hours. They call it North Hokkaido, but it's really pretty center Hokkaido. Okay. It's an inland city. No, no access to water instead of that really good access to mountains.
Speaker: Kendall, jumping into a little bit of real quick real estate question. We get a lot of people from warm countries like Singapore, Philippines, interested in Hokkaido specifically because of the cool climate. But you mentioned the snow is like nothing you've ever had to deal with. Potentially, are people biting off a little more than they can chew with like a remote Hokkaido property? It's hard to say. I can't really put myself in the mindset of someone who hasn't grown up with snow.
Speaker: because my entire life has just been part of what you do. Like in summer, you mow the lawn in the winter, you shovel.
Speaker: Never shallow snow in my life. We have a lot of Filipinos actually to ask. They want to move to Hokkaido for the snow. And obviously they don't have too much snow in the Philippines. Would you, Joey's point, would you like to say, maybe this isn't a good idea or people just take the jump? Say a remote property. Remote. I would say it is very likely that someone does bite off more than they can chew. Okay. Like when it comes to property management in Hokkaido.
Speaker: It's basically just a war with all the things that probably many of you deal with here are like snow related. The basic just clearing snow, your car can pass and clearing access to your house. It can actually walk in. So that's like the everyday thing. Okay. And on top of that, you have to clear snow off of your roof. Yeah. Make sure that you don't get crushed. Yep.
Speaker: And if you leave snow there for too long, it starts making weird shapes and overhangs. And on a single -story building, it's not so bad, but on a two -story building or three -story building, these overhangs can be dangerous and lethal. I see. Okay, literally biting more than you can chew here. Yeah, if it falls and someone's standing underneath, like we're talking definite hospital visits,
Speaker: Okay. You're listening. Be warned. Snow is no joke for us, soft Californians or warm climate folks who have never dealt with snow. Kendall's spot is awesome, but it seems like there's also some risks. Kendall actually question for you. I know people are going to be thinking this. Do you have the same quality snow or mountains as Niseko? Would you put Asahikawa in that same category or as Niseko is like different or better for some reason? Personally, I would. Okay. Uh, I've, I said before, but.
Speaker: snow quality gear is amazing. Now, Misako and the Misako area, it is one of the special parts of the island. It is a pocket, a region of snow that just sees constant storms and even just slow accumulation. They get both. So they get like a little bit of snow like every day and they get big storms that throw like 20, 30, 40, 50 centimeters at a time.
Speaker: Yeah. That's 20 inches for the Imperial was moved. Uh, so would you say a style gets that same geographic location? Is it similar or is it, how's it different from like snowfall perspective? So it does get consistent snow, like lots of days with a small amount of snow. Now for small, I say five to 10 centimeters, uh, three to six, three, three to five inches. Okay. It's more than I've ever had anywhere.
Speaker: But the quality is very good. I would say the quality is. If you're too close to the ocean, the snow gets really thick and heavy, but moved away further from that. So snow here is nice and dry and airy. Okay.
Speaker: Kendall, we really brought you here today because we wanted your real estate agent opinion specifically to ask about closing costs. So Joey and I, we've talked to a hundred plus people. They're looking at this $30 ,000 cheap Akia. What's the cash? How much is it going to cost to close? We have our numbers, but wanted to get a quick pulse from you. Actually, before going into it, Joey, do you mind giving the details for our house down in Beppu and what those closing costs look like? Sure. Our closing costs came at
Speaker: came to 11 % of the purchase price. So our house was about 600 months, so 6 million yen, and then closing costs were about 11 % of that. And some of the breakdown of those costs were a little bit of property tax, stamp duty registration fees, and then the fee paid to NTI who helped us purchase the house. Does that 11 % Kendall? Is that in the right ballpark? Yeah, 11%. That is the ballpark that we're dealing with.
Speaker: I should start off with a disclaimer and and say that if you show me a property listed for let's say six million yen and ask me oh what's what are the closing costs going to be the best thing that I can say the most accurate thing I can say is I don't know got it because there are so many things that I don't know about the property
Speaker: And many things that could even change depending on when you sign the contract and what happens with the tax situation. So the real answer is I don't know. What are some of the, sorry. And the closer or the more accurate number I give, the more sure I will know that it's not correct. Oh, no. Okay.
Speaker: Like, what is it? Heisenberg uncertainty. Exactly. The uncertainty principle, a nice organic chemistry reference. Okay. The more precise number I give them, the more I know that it won't be right. From a perspective percentage perspective, what has been like the highest and what has been the lowest, if you don't mind, like rough. Have you seen something a hundred percent of the closing costs for a thousand dollar or something like that? We do not deal with.
Speaker: Property is such a low price. The thousand dollars is lower than anything I've seen. Okay. At this office right now, the lowest property we have listed, I think is $10 ,000. Okay. And I should be very candid and say, it's very unlikely that it will sell in the future as well. Okay. These properties sits, these cheap properties, they sit for a long time.
Speaker: Okay. Our ears are perking up here. And I think people who listening, their ears are perking out. We just sold them on how awesome the snow is on a Sahikawa and they've, we've given them the disclaimer that the snow is crazy in a potential hard way. But tell us a little bit about this $10 ,000 property and what would you say the rough closing costs would be? Okay. So this $10 ,000 property.
Speaker: is a single room in a building downtown. Okay. Sounds appealing. And the, that's the first reason why it's cheap, single room. It's quite an old building, which or one bedroom. When you say single room, if memory serves, it is a single room. Okay. Like a studio. One, one, yeah, studio, just one big room with a little kitchenette. Okay. The building itself is old, which Japanese customers do not like. All right.
Speaker: How old is old? Oh, I would have to check the details, but let's say seventies, built in the seventies. So about 50 years old for the building. Our house is 50 years old in Bethwood just for a comparison point. So we're not out yet, Kendall. What else has got going for it? Going against it. So these.
Speaker: I'll call them condominiums. The shared buildings always come with monthly fees for the repair fund and maintenance. Now, these buildings also get stuck in a spiral of it being old. No one wants to live in them. The buildings need to be maintained. Monthly fees go up. And then other people are like, oh, these fees are expensive. I don't want to stick around here. They move out. We need more money. We got to raise the fees.
Speaker: Okay. That's back relative to its size. Cause its size is tiny. It's a one room. Its fees are quite high. We're probably only talking like $200 a month. Okay. But if you just look at that number, why don't you just buy a cheaper place somewhere else? Okay. Because we.
Speaker: Most markets in Japan do have a glut of supply. There's hundreds and hundreds of rooms of vacancies in the city. If you're a domestic client looking to buy, why would you bother in this place that is smaller than average, higher fees than average, more quality than average? There's really no reason for someone to move into this
Speaker: It's $10 ,000, though, Kendall. I'm still not unsold. I'm still not interested. I realize I'm being pretty mean about the property that we are supposed to be trying to sell. We're excited. Can we pause just for a second? I remember I just left my notepad. I left it out at my desk. I'm going to leave my notepad.
Speaker: Okay. I like this deal analysis. Continuing the conversation a little bit as Kendall grabs his notepad, like how much would a Niseko Hokkaido ski vacation cost someone coming from America, right? $5 ,000, like $6 ,000.
Speaker: All right, Kendall, we're still doing this deal analysis here, right? Yeah. We need, so we got it. So we're looking at $10 ,000 apartment downtown studio. The apartment, the building is old, which is driving up costs, which are about what, $200 a month right now. Yes. How big is the place in meters or feet or whatever metric? I remember correctly. It's 20 square meters.
Speaker: So like I said, just a single room in square feet. We're talking like 180 or 200, I think. Okay. That's not bad. And what's the risk of the entire building being torn down or sold? I know that's a concern sometimes for investors. Okay. That is very hard to say. Okay. Market that has a lot of activity and seeing a lot of redevelopment. I would say that is pretty high.
Speaker: But we are in Asahikawa, which is a mid -sized Japanese city, population of 320 ,000 in the city itself, probably 400 ,000 if you add in the suburban towns that are around it. So 400 ,000 people living in this city.
Speaker: Okay. And there's not a lot of redevelopment activity going on. Okay. And if you go downtown, you will see a lot of buildings that you're like, does anyone live there at night? There's very few lights on. And then in the day, it looks pretty haunted. Okay. Really selling it. That's twice the size of Beppu. I didn't realize that.
Speaker: Um, it's the main city in the north. I'm thinking about buying this place and having it be my retreat. I want to go. I like to snowboard for the season. Hotels probably add up in costs over time. And I figure I love a Sahikawa from that spot to the slopes. I'm going to want to snowboard on the winter. How do you get there? Or what's, is it like a pain in the butt? Is there a bus that goes from downtown to the slopes or how would you.
Speaker: Yeah. Yeah. So the property, um, the property I'm speaking of is located right downtown. Okay. Uh, I believe it's about 15 minute walk to the station. Okay. Pretty good. In the snow or sunny 15 minute walk. A normal 15 minute walk. Okay. The, and the great thing about a site fella is the access that it provides to.
Speaker: snowboarding and skiing and all kinds of outdoor adventures. There are about a half dozen little ski areas within let's say 45 minute drive. The closest one to downtown is only 15 minute drive from downtown. Okay. They also have a shuttle bus. It leaves, I think there's four buses per day.
Speaker: that go to this closest one. And the bus, I think, takes a bit longer, maybe about 20 minutes. And if memory serves, the bus costs 500 yen, which is $3. So I'm sold. Joey, how are you feeling on this? Let's hear the closing costs. What do you expect us to close on a place like this? Yeah, so I'll park if you can or whatever you can tell us.
Speaker: So a really good number to ballpark is 10%. If this place is listed at 10 ,000, I would say 11 ,000 is a safe bet to go with, but I'd like to offer you. Okay. Here we go. Deal or no deal. I'm ready. So I started off with the disclaimer saying, I don't know.
Speaker: Okay. But let's walk through what some of these closing costs would be. And I'll use this cheap $10 ,000 property as an example. And I'll also provide some reference for a larger, let's say 10 million. Should we go with 10 million? Okay. Which is how much in US dollars? That is $70 ,000.
Speaker: Yeah. 70, 70 ,000 us dollars. So still cheap by American standards, but closer to what the average deal is in a second column. Okay. Okay. So the first number I'll go over, which is the biggest number is the commission you pay to the broker. Got it. And this is calculated on a industry standard government mandated
Speaker: industry standard of 3 % plus 60 ,000 yen plus tax. So for that $10 ,000 place, it would be 3 % of $10 ,300 plus 60 ,000 yen, which is about 400 bucks, plus tax on that. So we're only looking at about $770. And that would be about 100 ,000 yen.
Speaker: And is that being paid by, so the buyer is paying for the, there's a seller pay or who pays what commission in this situation? Let's say you're the buyer's agent and we're going, I guess you're also the seller's agent, but how does that kind of work in Japan? Yeah. So I should clarify that this property, this cheap one downtown is a property that we are trying to sell, which means that we are acting on behalf of the seller. If someone approaches us and says, Oh, that looks good. I'd like to buy it.
Speaker: We would also try and act as the buyer's agent. Okay. And this in Japan is termed a double -handed deal. Okay. The whole day for the good, those who understand Japanese. Yeah. It is a double -handed deal. So we've got one hand extended to the seller saying, give us 3%. We've got our other hand extended to the buyer saying, give us 3%. Okay. And what we're trying to do is get 6%.
Speaker: Got it. It's property. Now that might seem shady to a lot of people listening. It's pretty often too. Okay. Taking money from both sides. Let me assure you, it is perfectly legal. Whether or not is something you want to go through with as a buyer is up to you. Okay.
Speaker: Personally, I do recommend trying to find a separate agent and avoid this double hand transaction. Okay. If you find your own buyer's agent and you say, Oh, can you please go find that? Can you please go after that property that I was looking at? Then they would be part of a single -handed tatate transaction.
Speaker: Got it. They can only take money from their buyer. Okay. And then the seller would be stuck with another single handed transaction only taking money from the seller. Okay. And does the seller pay the seller's agent and the buyer pays the buyer's agent? Is that kind of how it works? Okay. In case of, in the case of this single handed transaction, each side is responsible for each agent.
Speaker: Okay. Got it. There's no overlap fees. Buyer pays, buyer is agent 3%, seller pays, seller is agent 3%. Got it. In the US, there's been a lot done on the buyer side. You probably are aware, Kendall, is this percent negotiable or do you think this is going to change in the future? Or yeah, I know that's going to be a top question people ask. The short answer to whether it's negotiable is yes. Okay.
Speaker: whether you can negotiate it is a different story altogether. Yeah. So like I said, this is an industry standard rate. Every real estate agent in the country knows that and is mandated to follow it. And that also provides them or destroys their incentive to try and compete. Okay. Since they know that
Speaker: If their buyer comes and says, Oh, I'd like to pay less on this commission. They know that any other agent they deal with would be asking for the same thing. Okay. Now I don't want to say collusion, but I just did. Okay. If an industry standard and they're sticking with it. Okay. And I do also want to add, I imagine most of the people listening to this will be foreigners.
Speaker: Yes. And if I'm being brutally honest, there is already a lack of incentive for agents to deal with foreign clients. We've seen this. They, the paperwork is more confusing. There's also a communication barrier. They don't act like the clients that real estate agents are used to. Yep. So there's a wall.
Speaker: between the two. And if you ask, yeah, I am a more difficult client than usual, but can you also take less money? Do you take less money to do a harder job? Yep. Please. On a cheap property. It's a very, it's a very weak negotiating position.
Speaker: Okay. Speaking of being a cheap American here. So let's say we came to you and we're like, Kendall, we want to buy this apartment. You would be more or less double handing it, right? Could we go, Kendall, can we lower our buyers commission? Cause you're double handing it. Is this common or what would you, how would you react to that?
Speaker: I would say it would run into the same sort of industry standard practice. For some background, like every week at the meeting here in the brokerage, we go through all the sales that we've made in the past week and all the sales we're looking towards in the coming month. And in the time that I've worked here, I have never seen a commission that's not the standard rate.
Speaker: Until this is this one, Kendall, here we go. This is the, uh, the momentum or momentum. This is the history we're talking about here. And this is how rare these lowered commissions are. Got it. Now I would say that you do have more bargaining power. If it's a two handed, if it's a two handed transaction,
Speaker: I would say that yeah, you do have more sway, more force to put down, but not on a $10 ,000 property. Okay. Cause we're still only talking about maybe $1 ,500 for two handed. Yeah. Small transaction.
Speaker: Totally. So commission, yeah, like we're going back to the example, this $10 ,000 property, just the closing costs alone would, I think you added it up after taxes is close to $700. Is that right? Okay. What remaining costs in there? So after that, the biggest cost after that would be a Scrivener fee. Okay. Now, for those who have been looking around at the Japanese real estate market, you've probably seen the word Scrivener a lot.
Speaker: yep and immediately went to google and said definition scrivener that was our first interview we got what the hell is a scrivener and i still google it yep and yeah the word scrivener doesn't help the word in my mind that i use is special bureaucrat
Speaker: Special bureaucrat. And are we talking about, there's two, right? There's a gyose shoshi and a shihou shoshi, right? Yeah. The one I am referring to now is shihou shoshi. Okay. One more time. What, what do you call it? Special bureaucrat or something? Another way of thinking about it is a property registration lawyer. Okay. Yep. But it is a special job.
Speaker: Yeah. That you'd only find in Japan. That's why it's so hard to translate it into English. We don't have the equivalent position in the, in the Western markets. So that's why there's no real good word, but what he does or she may be nice and fair. What this person does is handle the registration of the property in the central registration database. Okay. So.
Speaker: this to be to put your name. So Joey and Taki, you can have a two person registration. Okay. Joey and Taki own this building, which they have taken ownership on April 24th, 2024. And this building is located here. This building is this big. It's located on this land is this big. Yep. And this provides a chain of ownership.
Speaker: which both ensures your rights to use this property and offers you a basis to fight anyone else who says that they own it. Yeah. Someone comes in and says, actually, this is my building. And then you say, I don't see your name on it. I got this paper right here with my name on it. From the Gyoce or Shiho Shoshi. Yeah. Say no, it's my name on it. This is my building.
Speaker: Okay. That's the benefit that he's offering you. Now in America, you would purchase title insurance to protect yourself. Yes. If you're an American looking at the Japanese market, think of this Scrivener as a kind of title insurance. He's protecting, he's protecting your asset. He's protecting your ownership. He's transferring your title. I think that's the way I see it. Yes. And he's doing so
Speaker: by registering it in the central database managed by the legal affairs bureau. Okay. So the amount that he takes is between five mon and 10 mon. So we're talking 300 to $600. And that's a flat fee. Yeah, it doesn't matter how big or it doesn't matter how expensive or how cheap this property is. Okay. It's a pretty flat fee. I should also say that
Speaker: If the property you're purchasing is more complex, say multiple plots of land or multiple buildings, or there's some other feature that makes it a difficult transaction, he might charge more than the standard amount. But if you're buying one house sitting on one square of land, charge about $300 to $600. Okay.
Speaker: Now, also to register your ownership, he has to pay taxes on your behalf, paying taxes to the central government, in this case, the Legal Affairs Bureau. And this amounts to approximately 2 .5 % of the tax appraised value of the property. So if it's a cheap property,
Speaker: We've been talking about $10 ,000 that it might be only $200 in taxes. Okay. Small amounts for most places. This ends up being a bit more, uh, about 10 to 15 mon in most of the about thousand dollars and most of the transactions that my company deals with. So 2%. Is that what you said? Yes. Two, two and a half percent. Okay. This number also changes based on the type of property on the size of property. Okay.
Speaker: But two and a half percent is a good ballpark. OK, does this change from prefecture or municipality or is it this kind of a nationwide percent that people can expect? It is nationwide, but it is subject to many reductions, deductions, certain special cases which, to be honest,
Speaker: I don't know myself, like trying to track down all these special cases. It would just be better for me to become a Scrivener myself. You should do it, Dandel. So most real estate agents, they don't bother. It's not worth their time trying to study the tax code to become a tax expert. In addition,
Speaker: do their current job as a real estate agent, right? Leave the tax stuff to the tax experts. I'll stick with real estate. So most people here, they just say, I'll ask the Scrivener and whatever number he gives me, that's the number it's going to be. That's how we've been operating. Yeah.
Speaker: Handel, you mentioned before we jumped into the podcast that something about the shape of the parcel of land sometimes complicates things. Is there anything, is that correct? And are there any other things that like can seriously complicate the closing costs? When I was referring to the shape, I was more talking about whether or not the land is cut into weird angles. So in Western markets, what I'm used to is lots are usually
Speaker: like centrally planned. They just draw a bunch of boxes for when they make a new subdivision, they just draw a bunch of boxes. And the developer builds on those and you get nice, even squares. Now, there are these things in Japan, the translation is Catastral Map, but
Speaker: That's a very, another strange term. So it's not always, it's not always a good idea to translate using Google translate, but it is a land parcel map. Okay. Understood. A map of how the land is cut up in every neighborhood. So if you look at one of these Japanese land parcel maps in newer parts of the city, they will be squares, rectangles that look very regular and everything will be very simple.
Speaker: older parts of the city, it looks like a stained glass window. Now, I'm lucky to be in Asahikawa, which is relatively new. But when I say older parts of the city, I'm specifically referring to like down in Honshu, where land has been changing hands for centuries. And people have also been cutting their land up
Speaker: to sell it two pieces or one piece. And the result is, like I say, it looks like, yeah, stained glass window. If your property sits on one of these weird plots of land, then you have to register each plot and you have to find out exactly how big each one is. If they're already registered, you already know how big they are. It just multiplies the work that's being done by the Scrivener.
Speaker: Got it. So are we at the total cost? So again, just going off the top. So we have commissions from the sale. We have property tax. We have the shiho shoshi or judicial scriveners. What other things are we missing, Kendall? So the other thing that would be included is stamp duty.
Speaker: Okay, now stamp duty is relatively small. And in the larger picture of the transaction, it's basically not even worth thinking about. Okay. Especially on a cheap property. These things are, it's a it's a stepped cost or a stage cost. The higher the price goes, the
Speaker: When the property price goes into a different bracket, it's charged at a different stamp rate. Off the top of my head, I think a $10 ,000 property would be 500 yen in stamps, which is three bucks. Like I said, it's not worth worrying about. On a more normal sized house, 10 million, I believe it goes up to a mon, so that's $67. Again, not much. It's basically a rounding error.
Speaker: If you go really crazy into the millions of dollars, it can start to be like thousands of dollars in stamp duty. But again, now you're comparing it to a million dollar purchase price. Totally. Okay. So we got the stamp costs. Anything else? I know there's probably small things here or there, but any like common, common fees. Yeah. So again, now we're moving into the.
Speaker: The details of every single transaction based on the details and the parameters of the transaction, these little fees could just spring up. Okay. Sort of surprise fees. So settlements. If there are fees, if you're buying a, if you're buying a condominium or apartments, building usually has shared fees. And you are responsible for that as the new owner of the unit.
Speaker: So mostly these are handled monthly. And you just pay for whatever the seller has already paid for. Okay. Calculated on a prorated day by day basis. So if you're taking ownership for 12 days out of the month, you're going to pay for 12 days. Okay. If the owner has already paid for two months in advance, then you have to pay for whatever portion of ownership that you are taking on.
Speaker: And this is the same way that the property tax is calculated. Okay. Now, usually this also doesn't add up to very much monthly fees are in the area of 200, $300. So if you're responsible for a month of that, then it's about $300. Is this the same as HOA fees? I know there's like a building repair cost or in the U S yeah, we have our HOA fees. Does this include utilities typically or does this exclude utilities?
Speaker: Again, that depends completely on the property involved. Okay. So these shared ownership buildings have a management association and what the management association is covering depends on the management association. So the big ones are the maintenance fees that keep the lights on in the hallway to keep the elevator running to keep the snow clear in, if you're in Hokkaido and all the stuff like that, just related to the general upkeep of the building.
Speaker: And then repair fund, this is a pool that you pay into and it builds up over time. And then when a large capital expenditure is needed, such as you need to completely replace the elevator because it's getting old or you need to, you need to replace all of the windows in the building, or you need to redo the roof. It would be a multimillion dollar expenditure, capital expenditure.
Speaker: this repair fund builds up and then when a big cost like that springs up they just take it out of the repair fund and they repair the elevator and fix all the walls all at once so that's the other big fund the other thing that management associations charge some of them charge separately for snow clearing some of them charge standard rate for providing water and sewage here in Hokkaido some of them also charge your kerosene
Speaker: They have a central kerosene system. They have a central tank somewhere downstairs and it pipes kerosene into every room. So they meter it at the units and they charge you based on how much kerosene you used. Understood. So all of these may or may not show up at the settlements. It really depends on each individual transaction.
Speaker: I think we got a pretty clear picture, Kendall. So again, I just have to keep repeating for myself. We have the agent costs, which would be in this $10 ,000 situation, what would be 3%.
Speaker: 3%, but then on top of that, there's the taxes, there's a fee, so about $700 US dollars in agent fee, stamp fee, I love it, the $3 stamp fee. We have the Shiho Shoshi, which is the judicial governor, that could be $300 to $500, let's say $300 for a cheaper one. So we're looking at $1 ,000 and
Speaker: $1 ,003 and then what else are we missing? Registry and licensing. That's the taxes that the Scrivener pays to register the property. Okay. How much was that again? For a cheap place, only $10 ,000, probably only $200. I think we're still up to $1 ,200 now. Okay. We're at $1 ,200 and then $1 ,203. And then any settlement, settlement money that the seller has already paid for, you need to settle. Okay.
Speaker: settle the imbalance and what the seller has paid for. Okay. So again, if it's a cheap place, we're not looking at very much that another $200. Okay. That seems pretty reasonable. 1400, 1400, 14%. Yeah. So like 12, 11, 12%. Does that number, would you expect that number to like the percent as a percent of the purchase price remains stable if you go and look at a $70 ,000 property as opposed to a $10 ,000 property?
Speaker: The percentage is a much better number to look at. Like I said, all of this stuff fluctuates, especially with the tax appraisal. It's really hard to tell just by looking at a listing how much each of these fees are going to be. So a good ballpark is 10%. Even if you're looking at a $70 ,000 property, just think, okay, 10%, $77 ,000 and all these fees.
Speaker: This doesn't include for us, I guess, one of the differentiators, we used a intermediary. We did this all remotely. So we paid a fee to, uh, NTI, Deep Bone Tradings International, uh, who helped us facilitate. So that's excluding this. And I think that would more or less change this closing percentage Kendall. If someone's listening and they're sold, which I'm sold on this, you know, I saw Hikawa kind of a getaway cabin. Could they go to you and buy directly? And is there an intermediary fee for translation work or stuff like that that you could foresee?
Speaker: As of this moment, I'm not charging any intermediary fee. I'm not charging anything extra for the work that I do now. I can't say that I'm doing this out of the kindness of my heart. Okay. All right. Understood. As I said before, 3 % plus six mon is an industry standard. Okay. If a brokerage tries to charge more than that, now they're in violation of the real estate brokerage act, which is.
Speaker: Big problem for brokerage like us. Doing anything to put our license in jeopardy is an idiot move. Don't do it. Don't do anything jeopardizes. We're not asking you to do anything shady here. That's why charging for
Speaker: extra services is a bit of a gray area. If this were a Japanese client and you said, oh, I'm doing these extra services for you, so I'm going to charge you a bit more, that would be illegal. We're not supposed to charge our clients anything more than the standard commission. Now for intermediaries,
Speaker: They do get around that by not being a brokerage themselves. They're not a brokerage. They're a business providing some other fee. And for example, let's just say translation. They're a company that provides translation services and they are billing for translation services. As a real estate brokerage, we are charging a commission and anything on top of that would be
Speaker: Highly suspicious. Okay. Do you do property management? Like how much would that cost? If let's say someone listening to this buys this place for 10 ,000, they understand the costs. How much do you typically charge just to shovel that snow or make sure the apartment's alive when they come once a season? Our company does not do property management. Okay. As time goes on, we may look at getting into it, but as of now, we do not.
Speaker: the for a shared building most of the property management duties are handled by the management association so like i said before making sure the elevators work making sure the snow stays out like those fees are what cover all those standard things okay and then on top of that if you wanted to live most of your year somewhere else
Speaker: And you wanted someone to take care of sure that the electricity is on when I want it to be, make sure the water is still running, make sure the house is warm. When I get there, like that kind of property management, you would have to find somebody else. Okay. The management association handles the building and the shared space. If you want to keep utilities on in your units and keep your unit clean and in a livable condition.
Speaker: Yep. And you would have to find a property management to do that for your unit. Okay. Can we have a final question for you? Sorry. We got to run in a second here. Sorry to cut you off there. People are wondering this. Can we Airbnb this property in a Sahikala this condo shared building? The short answer is no. Got it. Okay. The,
Speaker: Now Airbnb is a touchy subject in many markets around the world. A lot of people blaming it for driving up costs, ruining neighborhoods. It is a bit of a war zone. We're setting up one in that spot. We're rejuvenating the community. And I think that's our perspective. Yeah. Yeah. And yeah, I'm not going to say how I feel personally about it, but
Speaker: in many markets around the world, it is a touchy subject. Okay. Now, when it comes to shared buildings, technically, it's up to the management association. And even more technically, it's up to every owner in the building, whether or not to allow short term rentals, the RBOs, Airbnb's. Yeah. Now, when it comes to these owners, is domestic owners,
Speaker: the vast majority of them are opposed. They do not want this in their building. You'll see it's usually listed in the management association protocols or rules for the building. It's usually explicitly listed. You cannot use your unit for short -term rentals. You cannot use your unit as an apartment. You can't use your unit as this. It's spelled out very clearly in those management rules.
Speaker: And then in addition to that, some of these places even like handout flyers every so often saying don't do it. Okay. So the short answer here, Kendall will link the listing, hopefully in the show notes, hopefully we can find an Akiya Mart and we'll check there, but Kendall, it's been great talking to you. Do you mind giving us one outro? Like how can people reach you? How do you want people to contact you?
Speaker: Yeah, so my name again is Kendall Barathe, but of course you can call me Kendall. Cool. And I'm located here in Asahikawa, which is in North Hokkaido. Now I can handle properties anywhere in Hokkaido, but my expertise, all of my experience is in this region of North Hokkaido. So when it comes to the
Speaker: most value that I can provide for you. It's right here in North Hokkaido. Now our company is called Remax Kiawe, which is part of the regional Remax Hokkaido. So, yeah, if you just remember Kendall, you'll find me eventually. My company is called Remax Kiawe, and I also am partnered with Remax Hokkaido.
Speaker: Cool. We'll put your information in the show notes. And if anyone has trouble finding Kendall, we're happy to make an introduction. Kendall, I have a good feeling someone's going to buy this apartment. I'm thinking about it. $10 ,000 closing costs 14%. Got to figure out the property management side, but not too far from good ski and snow. Yeah. I think I've been pretty honest about the prospects of the property, but of course, if someone's interested, the, if this is someone's dream to
Speaker: It's not to reside in Japan for the ski season. It's a pretty popular demand for incoming tourists. So yeah, I'll definitely help you out. Awesome Kendall. Hey, we got to jump now. Thank you so much for being our second guest here. We'll have you on again. This was really valuable and good to hear just from someone in the space. All right. Thank you very much. Thanks. Thanks a lot Kendall. So one thing that I left out is called the real estate acquisition tax.
Speaker: In some other markets, it's called the land transfer tax. But what this is, is a tax paid by the person who takes new ownership of a property and it's paid after the actual settlement. So you take ownership and then sometime after you pay this acquisition tax. Now, the amount of time after really does vary a lot.
Speaker: It's between three and six months. So even three months is kind of a long ways away, but also half a year it could take for this tax slip to be sent to you. Now the amount is three to 4 % of the appraised value. But as we've mentioned many times before, it's very hard to get an actual number.
Speaker: on this because of the deductions. Also, it's calculated based on the size, the total appraised value, the use, and it's also calculated by the regional government body. So it can vary from place to place depending on where you are. Most real estate agents don't get involved in this. They just tell their clients
Speaker: You'll get this tax slip in the mail sometime after now, maybe three months, maybe four months. You'll get this tax slip, so it's your responsibility to go ahead and pay it. I can refer them to a formula, a standard calculation formula, but as far as our job goes handling the transaction, we usually don't get involved in the calculation of the specific number.
Speaker: Now for a $10 ,000 apartment, 300, 400, that's a safe amount to estimate for let's say a bigger $70 ,000, $100 ,000 property. It could be a few thousand dollars, maybe $2 ,000 or so. So it is a large amount of money and you should be ready for it. If you're not ready, it could be a,
Speaker: quite a surprise to get that in the mail. If you're not planning on living here full time, it is something that I would help my clients set up just so that they're prepared for that tax flip to come.
