Osaka house hunting 4 (Contract)

TLDR: we sign a contract!

City Tower West Umeda

To recap, we had made an offer to a place near Umeda Station, which is about a 12 minute walk. The place is about 15 years old, however felt well maintained and would be only a few blocks from the new Umekita Park which will be completed in 2 years. We last left off with news of a competing offer that was matching the seller price and willing to concede on any seller requests, including a later transfer date in October. The October closing would be too late for us, but our real estate agent bumped our bid to the seller price and was going to see what they could do.

In Japan, negotiations are handled with one buyer at a time, but since our offers came the same day their agent knew about the details of the offers and could end negotiations with the current buyer and move on. Technically, we put our offer in hours before, so our agent spoke with theirs. After sleeping on it a couple nights, we let our agent know that we would consider a later closing date, but our strong preference was to be done in August. Another couple days go by, and later we understood that there were four siblings that had ownership of the place so things took time.

When we finally received a call from our agent, they were able to reach an agreement with an August closing date! We were quite happy to get the news, and it would take a few more days to get the contract drawn up, then we would meet up for to sign them. The process was a bit different in Japan, it turns out we would meet the sellers and their agent and sign the docs together. We would also bring the 5% deposit in cash, to the signing! I would also need a ‘hanko’ (family name stamp) for signing, and since my resident card has my name in English letters, I needed a stamp to match with English letters, which is pretty unusual in Japan.

Things we liked

Unfortunately, we didn’t take a lot of good pictures when we saw the place, but we’ll post more when we visit it next. The stuff we remember we liked.

• 45th floor out of 50 story building.
• Nice view of the Yodogawa river.
• Grocery store next door.
• 5 minutes walk to nearest train station.
• 12 minutes walk to Umeda station, the happening place in Osaka.
• Larger kitchen and ample storage.
• Lots of light with big windows.
• Lounge and guest (hotel-like) rooms on the 29 floor.
• Lobby on the 9th floor with a mini coffee bar.
• M liked it best, she probably has the best room.

The master bedroom balcony will take a bit of getting used to. It’s a bit scary this high up.

Contract Prep

Since we had a few days to prepare, we moved some money from US to Japan (using Wise for the first time), and the process went pretty smoothly since my wife already had a bank account in Japan. Unfortunately, it’s a bit hard for foreigners to open bank accounts here, so we had to jump through some minor hurdles moving money to the wife’s account here in the US, then sending it to her Japanese account (which is still under her maiden name) and using Wise to convert to Yen and pay some wire transfer fees. Wise currently charges about 0.5% which is not terrible, compared to a normal bank.

The stamp creation was a bit easier, we found a place at the mall that could make custom stamps for like 3000 yen ($25 USD) and we picked it up the following day.

Our agent prepared the cash at their bank, we just transfered the deposit to them for convenience. I have heard people going to their banks and carry envelopes of cash to the signing, I guess it’s safe?

We also booked a night at a hotel in Umeda Station, since the signing party was taking place at the seller’s agent near there.

One correction on the agent fees, we do pay half of it at the contract signing, but we only cover the buyer’s agent fees 3%. The seller handles their own agent, so they would receive slightly less than the 5% deposit.

Contract Signing Day

The wife, daughter and I dressed a bit nicer since we were meeting the sellers. 2 of the sellers (sisters) live in Osaka so they came, the 2 other sellers (all sisters) live farther away so they didn’t make it. The whole meeting took about 1.5 hours, and we walked through the contract and details about the property. This mainly included risks, known issues and a bit of history of the building. Since we had a copy prior to signing, there weren’t any surprises. Some highlights:

• Monthly building service fees include payment of the staff working (concierge, coffee bar, maintenance service). I imagine this is like HOA fees in the USA.
• Repair fees are also collected monthly, this is based on estimated costs for major renovation/repairs needed every 10 years, but collected monthly. There is a large balance of fees collected, and they do plan to spend it on upgrading common areas in the next couple of years. Think of elevators, furniture in the lobbies, exterior paint, etc.
• Repair fees are fixed for the next couple decades, and do go up a bit after each decade. They had decided for somewhat aggressive increases at the time the building was originally built, so they would have plenty in their coffers for repairs. They also understood that owners would be reluctant to fee increases in the future, hence the decisions made at the time of building.
• All appliances and bathroom/kitchen were in good working order. We just need to do minor repairs for a broken shower head holder.
• Prior owner was the eldest brother of the family, with 4 sisters. He was single and passed away last year, and left his place to his sisters. We guesstimate he was late 60s/70s.
• The seller sisters were very nice and polite, they also let us know that the brother (previous owner) never cooked so the kitchen should be clean.
• Obviously there are risks of fire, earthquake, floods… although there has never been an issue so far for that building.
• We presented the cash, they had a money counter machine and we all watched as it counted all the money in front of us.
• A lot of docs needed signing and stamping, and they provided us copies of all the docs and receipts.
• Breaking the contract from either party means forfeiting real estate agent fees and the 5% deposit. If the seller cancels, then they have to pay the buyer 5% in addition to returning the deposit. Acts of god like earthquakes or building being destroyed would return the deposit and cancel.

Contract Closing

We got an estimated closing date after Obon holiday, which would be around August 19th. We then have to move in and get furniture, so we will probably be living in a hotel for a week or two while we get a fridge, washing machine, beds, etc. It sounds like we will all go to the bank on closing day and withdraw the funds, and hand over a large stack of cash?! I guess we’ll get more details when we approach the date, I’m about 50% certain that’s how it will go down. But oddly, there are no escrow accounts and it sounds like a direct exchange. Interesting!

Summary

I always found it strange that we make large purchases like this with just about 15 minutes of viewing the place, looking over some documents/disclosures and then making an offer and signing a contract for huge sums of money. While the process is a bit different and there are peculiar customs/legal precedents, there are also many similarities to buying a place back home. It didn’t feel difficult ever, and the agents did a good job of moving things along and explaining each step. The wife being Japanese and having lived in Osaka before certainly helped immensely, however, we also worked efficiently on a limited schedule and narrowed our criteria quickly to find a place. It’s easy to get caught in details and spend months looking for the perfect home, but since it’s our second home, we were willing to be flexible and once we found 3 or 4 places we would be happy with, then things moved quickly. Honestly, we would have been perfectly happy with any or our top choices, it took the pressure off to get the highest on our list.