You are about to sign a contract worth tens of millions of yen. The person guiding you through it is paid by commission. That is not a problem by itself. It becomes a problem when you do not understand how they are paid, by whom, and what behavior that payment structure rewards.
Japan's brokerage system has rules that look familiar to buyers from the US or Europe — and details that do not. The gaps are where misalignment lives. This guide walks you through the incentive math, the legal cap, the practices that bend it, and the questions you should ask before you sign anything.
The legal frame: what brokers can charge
Broker fees in Japan are capped by the Building Lots and Buildings Transaction Business Act (宅地建物取引業法), administered by the Ministry of Land, Infrastructure, Transport and Tourism (国土交通省).
For a transaction above 4 million yen, the simplified cap is:
- 3% of the sale price + 60,000 yen + consumption tax
So on a 80,000,000 yen condo, the maximum fee one side pays is roughly:
- 80,000,000 × 3% + 60,000 = 2,460,000 yen
- Plus 10% consumption tax → 2,706,000 yen
That is the cap per side. The seller pays their broker. The buyer pays their broker. If one brokerage represents both sides, that brokerage can collect from both.
This is the first concept you need to internalize.
Ryōte vs Katate
- Ryōte (両手) — "both hands". One brokerage represents both buyer and seller and collects commission from both. On the 80M yen example: up to ~5.41M yen in total fees to one company.
- Katate (片手) — "one hand". Buyer's broker and seller's broker are different companies. Each collects from their own client only.
In the US, dual agency is restricted or banned in many states. In Japan, ryōte is legal and common. That single fact reshapes the incentive map.
Why ryōte changes the broker's behavior
Put yourself in the broker's seat. You list a seller's condo. Now a buyer's agent from another company brings a qualified buyer at full price. You earn one side: ~2.7M yen.
Alternatively, you wait a few weeks, market the property only through your own channels, and find a buyer directly. You earn both sides: ~5.4M yen.
The math is obvious. The behavior it produces has a name.
Kakoikomi (囲い込み)
Kakoikomi literally means "fencing in". A listing brokerage receives the seller's exclusive mandate, registers the property on REINS (the national listing database, 不動産流通標準情報システム) as required, but then discourages or refuses inquiries from other brokers — saying the property is "under negotiation" or "pending" when it is not. The goal: keep the deal in-house and capture both sides.
Effects on you, the buyer:
- Listings you see may not reflect true availability.
- A property "just sold" might still be open if you approach the listing brokerage directly.
- Sellers get worse outcomes too — their pool of buyers is artificially shrunk.
The Ministry has issued guidance and tightened REINS reporting rules, but enforcement is uneven. Treat kakoikomi as a structural risk, not a rare abuse.
The buyer-side incentive: not what you think
You might assume your buyer's agent is on your side because you pay them. Partially true. But look at the cash flow more carefully.
Scenario A: You buy an 80M yen condo through a buyer-side-only broker.
- Their fee: ~2.7M yen, paid by you.
Scenario B: You buy the same condo, but the broker is also the listing broker (ryōte).
- Their fee: ~2.7M yen from you plus ~2.7M yen from the seller.
- Same property. Same work. Double the revenue.
Now consider how brokers source inventory for buyers. A broker who can steer you toward their own listings earns more than one who shows you the open market. This does not mean every broker is dishonest. It means the system rewards a particular kind of curation.
Questions to ask a buyer's agent before you engage:
- "Will you show me listings from other brokerages on equal footing?"
- "If a property is your own listing, will you disclose that in writing?"
- "Do you accept buyer-side-only mandates?"
The third question filters fast.
Hidden incentives beyond the commission cap
The 3% + 60,000 cap is a ceiling on brokerage fees. It is not a ceiling on what a broker can earn from a transaction. Other revenue streams include:
- Referral fees from developers for steering buyers into new-build (新築) condo projects. These are paid by the developer and not always disclosed.
- Mortgage referral fees from banks when the broker arranges your loan.
- Renovation referrals to in-house or partnered construction companies.
- Insurance commissions on fire and earthquake policies.
- Furniture, moving, and utility setup kickbacks.
A broker can be perfectly compliant with the commission cap and still earn an additional several hundred thousand yen per transaction from these channels. None of this is automatically bad. It becomes bad when it changes which property you are shown, or which loan you are pushed toward.
New-build vs resale: a different game
For new-build condos sold directly by a developer (e.g., the major names with sales offices on-site), there is often no broker between you and the developer. The sales staff are developer employees on commission. You will not pay a 3% brokerage fee. Instead, you absorb the developer's margin, which is invisible.
This matters for your math:
- Resale (中古) via broker: explicit ~3% fee, but price is more negotiable and benchmarked.
- New-build via developer: no explicit broker fee, but pricing is set by the developer and rarely moves.
Neither is universally better. They are different cost structures.
How this plays out for a foreign buyer
You are at a structural disadvantage in a few specific ways:
- Language: Most REINS data, registry documents (登記簿謄本), and management association minutes (管理組合議事録) are Japanese-only. You depend on the broker's translation and summary.
- Reference data: You probably do not have a feel for whether 1.2M yen per square meter is reasonable in that ward, that station distance, that building age.
- Process unfamiliarity: Earnest money (手付金), the importance reading (重要事項説明), the timing of loan approval — each step is a place where a rushed broker can skip nuance.
- Limited recourse: If something goes wrong, navigating the Real Estate Transaction Dispute resolution channels in Japanese is hard.
The combination means a broker's incentive to push you toward their listing or their preferred lender lands harder on you than on a domestic buyer who can cross-check.
A practical checklist before you sign a brokerage agreement
Before you put your name on a buyer's agency contract (媒介契約), get clear answers in writing:
- Which type of mandate? Exclusive (専属専任), semi-exclusive (専任), or general (一般). Exclusive locks you to one broker. General lets you work with several. For buyers, general is usually safer unless you have a reason.
- Disclosure of dual representation. Will the broker tell you, in writing, when a candidate property is also their listing?
- Source of all fees. Ask for a list of every party from whom they will receive money in connection with your purchase: seller, developer, bank, insurer, renovator.
- Property availability check. Ask them to verify REINS status on properties of interest in front of you.
- Independent property review. Confirm you can bring in a third party to check the property and the contract before you sign.
That last point is where a second-opinion service matters. RE : public exists specifically because the broker who finds you the property is rarely the right party to also tell you whether the price and condition hold up to outside analysis. The two roles conflict.
Reading the contract: numbers to verify
When the broker presents a property, do not just look at the asking price. Pull the following and compare:
- Asking price per square meter vs the ward's recent transaction tendency (the Land General Information System, 土地総合情報システム, publishes anonymized transaction data).
- Building age and structure — RC (reinforced concrete) condos in Tokyo typically follow a depreciation curve that is well-documented. A price far above the analysis result for that age band is a flag.
- Management fee (管理費) and repair reserve fund (修繕積立金) per square meter per month. Low numbers can signal an underfunded building, which is a future risk, not a saving.
- Land share (敷地権) — for older buildings, the land share value can dominate the long-term outcome.
- Planned large-scale repairs (大規模修繕) in the next 5 years and whether the reserve fund covers them.
A broker focused on closing will not always volunteer these. A second opinion will produce a reference estimate based on them.
What "good" looks like in a Japanese broker
Not every broker is gaming you. The good ones share traits:
- They volunteer the REINS status of a listing without being asked.
- They will represent you on a katate basis even when a ryōte option exists.
- They explain the重要事項説明 line by line, not just hand it over.
- They are willing to walk away from a deal that does not fit your criteria.
- They disclose every referral fee channel up front.
If your current broker hits all five, you are in a minority. Stay with them.
The summary
The Japanese broker incentive structure is legal, transparent in its rules, and opaque in its practice. The commission cap is fixed. The behaviors around it — ryōte, kakoikomi, undisclosed referral fees, steering — are where the real money moves. As a foreign buyer, you carry information asymmetry on top of all of this.
You do not need to distrust every broker. You need to understand the math they are running, ask the questions that surface conflicts, and bring in an independent check before you commit eight figures of yen.
This is not investment advice. The final decision is yours.
For an independent second opinion on a specific property, see RE : public.