5 Myths About Foreclosure Properties in Japan ? Real Estate Japan ...

Every industry has its myths and ?tall tales?. While often interesting and entertaining, when it comes to investing, it wise to know the difference between fact and hearsay. Foreclosures are no different so let me help you separate the fact from fiction.

Myth 1: The savings for foreclosures compared to a conventionally purchased property is only about 10% anyway so why bother.

For some reason, foreign people believe that one can only save about 10% off the market valued price for an open market property so why go through the hassle of getting a foreclosed property. ?
This is a myth on many levels but let?s start with what the Japanese RE industry believes. They feel that savings of 30% are the norm and won?t look at bidding on a foreclosed property unless there are savings like these to be had. ?This of course depends on the location and age of the building; for example typical savings as shown by winning bid listings illustrate that when all?s said and done, Tokyo?s 23 ward foreclosure market can save the winning bidder between 25 and 40% off the market appraised price for the same property.

We at Sleep Well Homes have a Foreclosure Savings Calculator you can use. ?Visit www.sleepwellhomes.jp to take a look!

Transaction and closing costs are less with a foreclosed property than purchasing through conventional means with flat rate agent fees and no conveyance costs. Taxes are the same for both.
Purchasing a property conventionally may save you the cost to forcibly evict tenants which can climb to around 1MJPY in worse case scenarios but you should?ve properly investigated what trouble if any to expect and how much it will cost prior to bidding thereby modifying your bid accordingly. If you don?t know how to do this, use the skills and knowledge of reliable foreclosure consultants to help you.

Myth 2: Tarnishing of the Property?s Title Deed

This one was a new one to me, but one can imagine it would pop up at some stage. The theory has it that the property is shown to be foreclosed on the title deed thereby forevermore burdening the property with a full bag of the usual omens: very low market value, difficult to re-sell or rent, etc.

It is true that lien is shown on the title deed along with the entire history of ownership, etc. It also shows that the lien has been removed after you buy it. But consider this, if the property was difficult to sell why would so many real estate companies purchase these properties for flipping or self management? These RE companies don?t have magic powers whereby they can wipe clean title deed which is kept by government registry. Companies exist for one reason only, to make money. If they couldn?t easily sell or rent out for a decent profit I doubt they would dabble in foreclosures at all. Incidentally the ratio of company foreclosure buyers to private individuals is currently 81%: 19% for buildings and 87%:13% respectively for apartments.

Myth 3: Foreclosure financing is impossible.

While still largely true, especially with the major Japanese banks, financing can be made available. The interest rate is more or less at a business loan rate but still available for up to 35 years depending on the applicant?s current age.

As is the case with Japan, this type of financing is highly dependent on relationships. ?Sleep Well homes, together with a certain bank in Tokyo (sorry ? trade secret), arrangements can be made for a 2 stage application process where the first step is the pre-approval ?personal? application. Upon success and when a suitable foreclosed property has been identified, submission of a ?property package? for final approval and loan valuation can be made.

Myth 4: Foreclosures are old, dirty and largely unmaintained properties.

Again true in some cases. We?ve all heard and even possibly seen places which are so full of rubbish/ and or personal belongings that doors can?t even be closed. And while these properties offer their own opportunity many foreclosures are still in excellent condition. Some are even relatively new and pristine inside.

To give you an idea log in to sleepwellhomes.com and check out this 2 year old, 51m2, freehold 2LDK apartment in Bunkyo Ku with a minimum bid of 13.5MJPY:
http://sleepwellhomes.jp/Listing_PropertyDetail.php?id=2521

Or this 105m2, 5 year old freehold, 4LDK house in Katsushika Ku for minimum bid of 17.86MJPY:
http://sleepwellhomes.jp/Listing_PropertyDetail.php?id=2394

Statistically, 137 freehold apartments out of a total 434, or 31% of props in the last 10 auctions, were 6 years old or younger. For whole buildings, the stats were 13 out of 168 or 8%.

Myth 5: The Foreclosure game is riddled with anti-social elements and the underworld

Not untrue but quite rare in my experience. In fact only 2 personal encounters to date. In general the larger the property, more so with buildings than apartments the opportunity to meet with one of these fellows increases. However rather than the underworld, greedy, shameless realtors, building managers and the like can be more prevalent. Again these issues should be identified prior to bidding to avoid disappointment!!

So while there is some truth to some myths they are by no means the norm. Still, while the risk exists it is best to know before you are the winner of the bid by doing your due-diligence pre-bid. If you don?t have the time, experience or just want a second opinion and someone to guide you through the entire process please use a foreclosure investigation agency such as SleepWell Homes. and Bid to Win!

Disclaimer: The above information is provided in good faith and is a reflection of our experience and knowledge and as such ?our opinion?. It is absolutely imperative that the prospective buyer undertakes his own investigation or requests the assistance of SleepWell Consulting in procuring this property for them. SleepWell accepts no responsibility for loss due to purchase or attempts to purchase a foreclosure.

Data supplied by SleepWell Data.

Photo Credit:?fractalznet?via Flickr Creative Commons

Tokyo Apartments For Sale | Tokyo Apartments For Rent | Real Estate Japan

Source: http://www.realestate.co.jp/2012/09/03/5-myths-about-foreclosure-properties-in-japan/

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