If the thought of a 35 year loan to pay for a house gives you the shivers but you want to put down roots and have your own home here in Japan then you could do worse than consider 'keibai bukken' (foreclosed properties) which allow you to purchase properties at a great price. Houses regularly sell at half their market value or less.
Keibai bukken are the seized assets of companies and individuals who have gone bankrupt. At every local court there is an office which deals with the auctioning of these properties. The court produces a file about each property which includes a comprehensive report by a local real estate agent detailing the condition and value of the place with photos and maps. The files on a given property are available for anyone to view for a period of 4-6 weeks. Those who wish to bid on a property must then fill out the application form and pay a deposit of round 10% of the value. In the event that your bid wins this money goes towards payment. If you lose, the money is returned. If you win and are then unable to come up with the funds within a given time frame you must forfeit your deposit.
The bids are sealed and read out one by one on a set date at the court. From there if you are lucky enough to win and can organise a loan you can be in your new home within four to six weeks. The court takes two weeks to change names 'meigi henko' and finish all the paperwork, payment goes through after that and when payment is completed the property is yours.
It sounds easy but there is are risks involved and pitfalls to watch out for. As with any auction it pays to watch what kind of prices the properties go for over a period of time before rushing in and making bid which may be over/under priced. Once you get a feel for the figures be aware that more often than not the bid which wins is not a round figure. For example the house we bought went for 9,160,000. The competition in most cases is local real estate companies who are very astute at estimating the re-sale value of any property. Watch what kind of bids they put in on other properties before making your bid.
Because the properties involved were seized by the courts it is very possible that the person to whom the house belonged is not at all happy about it. This can be the biggest stumbling block; for example if the previous owners have nowhere else to go they may still be occupying the property. In such a case the court can issue an order asking them to leave but in many cases it has little effect. You may have to get the 'professionals' in to evict them. The previous owners of the property we bought had thankfully moved out. It is also possible that the previous owners are no longer living there but have sabotaged the place out of spite. You might not find out about this until it's too late. The keys for keibai bukken are held by the lawyers of the people who went bankrupt and nobody is able to view the inside of the property until after the money is paid and the sale has gone through. You have to have a vivid imagination and like the floor plan to be confident that you will like the inside. We bought home design software and made a 3D model from the floorplan which was a great help. If, like us, you are planning to spend some of the money you saved on renovating it's not such a big issue.
Organising a loan can also be a little complicated depending on your situation. Banks view keibai bukken differently to ordinary home loans. In our case they were willing to lend the money we had paid for the property but were very hesitant to lend extra for renovations. The lending rate may also differ from that of a normal home loan. If you are seriously considering buying a keibai bukken talk to your bank manager about it well in advance so you know where you stand before putting down a deposit.
What kind of properties are available? Car parks, shops, office space, houses, any property which has been used as collateral. It may be something you would like to consider if you were opening your own English school? Houses tend to fall into two categories at either end of the scale; the ones sized from people on very low incomes who were unable to pay their city taxes for example, and the grand swanky houses of company presidents.
According to the office where we bid there is such an increasing amount of properties coming up for auction that they can't keep up with the paperwork. This gives anyone interested a chance to choose carefully. The whole process of keibai bukken is little known and little used by regular people looking to buy a house. It is mainly used by real estaters. Why not get in at this level and buy your house for a reasonable sum rather than what the agents sell them for after they have cleaned a place and put in new tatami? You could save enough money to make your new place into your dream home.
By Sam Perry. Copyright 2005.