Japan takes hints from the US on real estate marketing techniques
Over the last few years, it's no secret that American business leaders have been studying the methods and technologies of Japanese industry. Now, the shoe is on the other foot in at least one business: real estate sales. The Japanese are studying American real estate procedures, practices, and marketing techniques as they rapidly upgrade their own methods, often using ideas that are patterned precisely after those that are already successful in the United States.
Commenting on the Japanese real estate market, Richard Loughlin, president of Century 21, says, ''It is very similar to where the United States . . . market was 15 years ago.''
Indeed, real estate ''transactors'' in Japan are becoming more active and sophisticated in their local markets. They are rapidly enlarging their capabilities, to a point that may soon equal their counterparts in the US.
A special committee of the Japanese Government's Ministry of Construction has been appointed to study and recommend methods to improve marketing techniques in real estate.
Progress, the Japanese say, has been substantial. Among other forward steps, the Japanese now use an ''exclusive right to sell'' listing contract: No matter who makes the sale, the original broker receives a commission. And they have established multiple-listing services (MLS), a pooling system in which individual broker-members submit listings which are then available to all members. If a sale is made by someone other than the original broker, the commission is split between them. The Japanese are also using advertising and other promotional techniques that are widely used in the US.
While the ''exclusive right'' listing has been transplanted to Japan, it is on a somewhat limited experimental basis, according to Robin Broadfield, vice-president of international affairs at the National Association of Realtors.
The ''exclusive right'' concept is growing, but many real estate transactors (agents) use the ''exclusive agency'' listing. Under this listing agreement, the contracted agency controls the listing and will receive a commission if the property is sold by any agency, although the owner can sell the property himself without paying a commission.
The MLS concept is new and growing rapidly in Japan, with MLS operations already established in each prefecture (similar to a US county). A serious problem exists, however, in processing high-quality listings through the MLS system, Mr. Broadfield asserts.
Thus far, most MLS operations in Japan are voluntary, and members are not required to submit all their property listings to the MLS ''pooling'' system. Therefore, the best (most salable) listings are often withheld.
Japan now has 96 voluntary MLS operations, many of which may become ''mandatory'' as the Japanese become more sophisticated and stronger within their own marketing area. In a mandatory MLS, all property listings must be submitted, as with most MLS operations in the US.
In total, there are now more than 105,000 real estate agents in Japan, all of them licensed by either the minister of construction or a regional prefectural governor.
More than 80 percent of the licensees are members of local real estate associations, which, in turn, are members of the National Federation of Real Estate Transaction Associations, the largest realty organization in Japan.
There are now more than 35 million houses in Japan, but far more are needed to satisfy the demand. New home construction is progressing at a rate of about 1 .5 million a year.
One notable difference between brokerage practices in Japan and the US is the commission setup. In Japan, brokers normally charge a 3 percent commission from both the property seller and the buyer. In the US, the total commission is usually paid by the seller, although the selling price of the property can also reflect the cost of selling it.
Meanwhile, real estate franchising has invaded Japan. Century 21 Real Estate Corporation has teamed up with C. Itoh & Co., one of the world's largest trading companies. The first office is expected to open in June.
''Century 21 of Japan is well financed and organized,'' says Mr. Loughlin. ''We have already received more than 1,000 inquiries from interested Japanese brokers. This gives Century 21 of Japan a pipeline of highly qualified brokers, giving us the capability to build a strong franchise organization in a short time.
''As a society, Japan has become a great deal more mobile than ever before. So we look at our Japanese venture to be a very successful marketplace for our system, and we are excited about it.
''We expect great success in Japan in a very short time.''