What is real estate purchase and resale? An in-depth explanation from an expert on everything from how it works to its merits and demerits.

In recent years, the "purchase and resale" method has attracted a great deal of attention as an option for selling real estate. With prices of newly built properties soaring and demand for existing homes increasing, purchase and resale has come to play a very important role in the modern real estate market, as it is expected to be a solution to the problem of vacant homes.

However, few people still have an accurate understanding of its specific structure and how it differs from conventional "brokerage. In this article, as a real estate expert, I will thoroughly explain the whole picture of this "purchase and resale" in a way that is easy for the average consumer to understand and also from a business perspective.

We hope that this article will help those who are considering the sale or purchase of real estate or real estate investment to make the best possible decision.

Overview of the Real Estate Purchase and Resale Business

1. what is real estate purchase and resale?

As the name suggests, real estate purchase resale refers to a business model in which a real estate company purchases an existing property directly from the seller, enhances the property's value through renovation and remodeling, and then resells it to a new buyer. In other words, it is a business that is faithful to the basics of commerce: purchasing used properties, adding value, and selling them.

Through this process, we revitalize dilapidated properties into comfortable homes that meet modern needs and provide new value to the market.

The core of this business lies in the creation of added value through renovation and remodeling, rather than mere resale. For example, we maximize the appeal of properties by changing old floor plans to fit modern lifestyles, installing the latest equipment, reinforcing earthquake resistance, and improving insulation performance.

This "value enhancement" is the source of earnings for the purchase and resale business, as well as its social significance.

Thorough Comparison of Purchase Resale and Brokerage

Brokerage" and "purchase and resale," which are representative methods of real estate sales, may seem similar, but their mechanisms are very different. In order to determine which choice is best for you, it is important to first accurately understand the differences between them.

The following table compares the features of each.

As described above, while purchase and resale have great merits in speed,reduction of hassle, and a sense of security after sale, agency has the characteristic that it is likely to be advantageous in terms of price.

Neither is better or worse than the other, and the best option will vary depending on the seller's situation and wishes.

3) The Current Status and Future Prospects of the Expanding Buyer-Reseller Market

The buy-back and resale market has achieved remarkable growth in recent years. According to a survey by Yano Research Institute Ltd., the size of the buy-back and resale market for existing homes is growing every year, and this trend is expected to continue in the future.

Behind this market expansion are a complex combination of several social factors.

First is the rising price of new housing. Rising construction and labor costs are making new home prices unaffordable for the average consumer. As a result, people are turning to relatively inexpensive used homes.

Second, values are diversifying. More and more people are choosing existing homes that can be renovated to create a lifestyle that is unique to them, rather than uniform new construction.

Third, the problem of vacant houses is becoming more serious. The buy-back and resale business, in which abandoned and vacant houses are purchased, rehabilitated, and returned to the market, is being promoted by the government as one effective solution to this social problem.

We believe that these factors will continue to fuel stable growth in the buy-back and resale market, and that the importance of this business in real estate distribution will continue to grow.

The purchase-and-resale option for sellers

Advantages of using purchase resale

From the seller's perspective, there are four major advantages to purchase resale.

First, it enables a speedy turnaround to cash. Since there is no need to search for a buyer as in the case of agency, and the real estate company directly purchases the property, the period from appraisal to contract and settlement can be very short. This sense of speed is an enormous advantage when a large amount of cash is needed at an early stage, such as for a sudden transfer, inheritance, or financial planning for a change of residence.

Second, there is the peace of mind of being exempt from liability for non-conformity to contract. In the case of a private transaction, if the seller discovers hidden defects in the property (e.g., leaks, termite damage, etc.) after delivery, the seller is liable to the buyer for repair or compensation for damages under the "non-conformity liability of the contract. However, in the case of purchase and resale where the buyer is a real estate agent, this liability is generally exempted. The fact that the risk of future problems can be avoided greatly reduces the mental burden.

Third, a mediating fee is unnecessary. When using an intermediary, a mediating fee of up to "sales price x 3% + 60,000 yen + consumption tax" is incurred depending on the sales price, but this is not required in purchase and resale. However, since the sale price itself tends to be low as described later, you should not judge gain or loss simply by the presence or absence of a commission.

And lastly, it is the easiness that can be sold as it is. In the case of brokerage, remodeling and house cleaning may be necessary to improve the impression of viewers, but since purchase and resale is based on the premise of renovation, it is possible to sell the property as is even if there are some scratches and stains or household goods left inside the room. This is a big attraction for those who do not want to spend extra time and money on the sale. 2.

2. disadvantages of using purchase resale

On the other hand, there is also a clear demerit in purchase resale. The greatest disadvantage is that the sale price tends to be lower than the market price of intermediation. Generally speaking, it is said that the price is often about 70-80% of the price when it is sold by agency.

This is because a real estate company needs to deduct renovation costs, sales expenses, and its own profits from the purchase price. In addition, depending on the property's location, condition, and ease of resale, there are cases where the property is not eligible for purchase in the first place.

3. what is the best case for purchase and resale?

Given these advantages and disadvantages, purchase and resale is a particularly effective option for those in the following situations

Those who need cash immediately: When there is a clear reason to hurry the sale, such as to fund inheritance tax payments, secure business funds, or purchase funds for a new place to live.

Those who have older properties or properties in poor condition: Properties that are difficult to sell through intermediaries as they are, or properties that require large-scale renovation.

Those who want to sell without spending much time and effort: If you live far away from the property and it is difficult to manage the property, or if you are too busy to devote time to sales activities.

Those who wish to sell the property without the neighbors knowing: If you wish to proceed with the sale process while protecting your privacy as no advertising activities are conducted.

Specific process of purchase and resale

Now, we will introduce the specific process of how we, real estate companies, proceed with the purchase and resale business. We believe that by understanding this process, you will be able to approach the transaction with greater peace of mind.

Summary: Toward a New Standard for Real Estate Sales

This article has provided a comprehensive explanation of the structure of the real estate purchase and resale business, its advantages and disadvantages, and the future potential of the market. Purchase and resale is not a simple business of simply buying properties at a low price and selling them at a high price. It is a socially very significant business that breathes new life into existing homes, revitalizes their value, and passes them on to the next generation.

And for the seller, it can be a powerful selling option, offering different value from conventional brokerage, namely "time" and "peace of mind.

The important thing is to grasp your situation objectively and clarify whether "price" is your top priority or whether "speed" or "hassle-free" is more important. On that basis, selecting the best method of sale for you will lead to a real estate transaction with no regrets.

At INA&Associates, Inc., we listen sincerely to the circumstances of each and every client and promise to always make the best possible proposal from both a brokerage and purchase perspective. The sale of real estate is a major life decision for many people. If you have any concerns or worries at this important decision-making stage, please feel free to contact us.

As a team of professionals who place the highest priority on human resources and trust, we will support you with sincerity.

Frequently Asked Questions (Q&A)

Q1: Can you buy any property?

A1: Basically, any property is eligible for appraisal. However, we may decline to purchase a property if it is judged to be extremely difficult to resell (e.g., if it has major legal restrictions or serious structural problems). Please feel free to contact us first.

Q2: Is there a fee for just an appraisal?

A2: No, there is no charge for an appraisal. Even if you have not yet decided to sell, feel free to use our service to learn the value of your property.

Q3: Can you handle properties in rural areas?

A3: Yes, we have offices in the Tokyo metropolitan area and the Kinki region, and can handle properties throughout Japan. Even if your property is located far away, please contact us first.

Q4: I am not sure which is better, brokerage or purchase and resale.

A4: The best method depends on your situation. If you consult with us, we will explain the advantages and disadvantages of each method again, listen to your wishes, and propose the best plan from a neutral standpoint.