Brokerage, San-tame, and Buy-and-Resell — Three Types of Real Estate Transactions in Japan

When you buy real estate in Japan, who exactly is on the other side of the deal?

Buying through a broker from an individual seller—that’s the transaction most people picture. But in practice, Japanese real estate transactions take several distinct forms. Brokerage, san-tame, and buy-and-resell. These three differ fundamentally in how money flows and where risk sits.

In the ultra-luxury market, failing to understand these differences means you can’t even judge whether a price is fair.

Brokerage — Connecting Seller and Buyer

This is the most straightforward form. A seller wants to sell. A buyer wants to buy. A brokerage firm steps in to negotiate terms and handle the paperwork.

The money flow is simple. The buyer’s payment goes directly to the seller. The brokerage earns a commission, capped by Japan’s Real Estate Brokerage Act (宅建業法) at 3% of the sale price + ¥60,000 + consumption tax. For a ¥1 billion property (approx. $6.7M), that’s roughly ¥33.66 million (approx. $225K). Typically, both the seller’s and buyer’s brokerages each receive a commission. Sometimes a single firm represents both sides—known as “dual agency” (両手仲介).

Title transfers directly from seller to buyer. The structure is clean, and price transparency is high. Both parties’ asking and offering prices are visible through the broker.

San-tame — In the Middle, but Never the Owner

San-tame (三為) is short for “contract for the benefit of a third party” (第三者のためにする契約). It’s a scheme under Article 537 of Japan’s Civil Code, and has been widely used in real estate since a 2007 legal reform.

Here’s how it works. Seller (A) and dealer (B) enter a purchase agreement. Simultaneously, dealer (B) and buyer (C) enter a separate purchase agreement. But title transfers directly from A to C. B is a contractual party but never appears on the property registry.

The advantage for the dealer is clear: no registration on the title means no registration tax and no real estate acquisition tax. The dealer can pocket the spread between purchase and sale prices with minimal capital at risk.

From the buyer’s perspective, the counterparty is the dealer (B). Since this isn’t a brokered deal, there’s no brokerage commission. Instead, the dealer’s profit is baked into the asking price. And in most cases, the price that A sold to B is not disclosed to the buyer. How much margin the dealer has added remains invisible.

This is the core risk of san-tame transactions.

In the investment apartment market—particularly one-room condos marketed to salaried workers—san-tame is extremely common. Industry insiders estimate the majority of investment condo transactions use this structure. Dealers partner with banks to offer “zero down, full financing” packages. The property price includes a healthy dealer margin, meaning the buyer is underwater from day one—the asset’s market value falls below the loan balance. Yields look attractive only because they’re calculated against the inflated price.

The 2018 share-house investment collapse was an extreme example of this dynamic.

That said, san-tame is used routinely in commercial building and land transactions with no controversy. When the seller wants quick liquidity, the buyer is already lined up, and both parties want to save on registration costs, san-tame is simply efficient. Not all san-tame deals are predatory. The problem arises when a buyer enters a san-tame transaction without understanding the structure.

Buy-and-Resell — The Dealer Becomes the Owner

In a buy-and-resell transaction, the dealer purchases the property outright, holds title, and then sells to the end buyer. Unlike san-tame, the dealer’s name goes on the registry. Registration tax and real estate acquisition tax are the dealer’s burden.

Buy-and-resell comes in two flavors.

Value-add. The dealer buys an older property, demolishes or renovates, and sells the improved product at a higher price. Think gut renovations of vintage condos or teardown-and-rebuild on prime land. This is real estate development in its most traditional form.

Flip. The dealer buys and resells with minimal or no improvements, profiting from price differentials or information asymmetry. No value is added to the property itself.

Flipping becomes problematic in the ultra-luxury market when resale chains develop. The original buyer at the developer’s price sells at a markup to a second buyer, who then sells to a dealer at an even higher price. The dealer at the end of the chain, having acquired at a steep cost, must price even higher to turn a profit. If no buyer materializes, the dealer is left holding expensive inventory.

For buyers, the question is: what does this price actually include? In a value-add deal, renovation and construction costs are naturally reflected in the price. In a flip, the price reflects nothing more than the dealer’s acquisition cost plus margin. Whether the property itself is worth the asking price requires independent judgment.

What Buyers Should Watch For

Different transaction types demand different due diligence.

Brokerage — Transparency is high. The seller’s asking price is visible, and commissions are legally capped. What varies is the brokerage’s depth of market knowledge and negotiating skill. In the ultra-luxury segment, which brokerage you work with dramatically affects the information you can access.

San-tame — The dealer’s acquisition price is virtually never disclosed. Non-disclosure is the entire point of using a san-tame structure. This means you need to independently verify the asking price against comparable transactions and local market data. Don’t take “no brokerage commission, so it’s cheaper” at face value.

Buy-and-resell — Because the dealer is the seller, statutory warranty obligations (契約不適合責任, formerly 瑕疵担保責任) apply under the Real Estate Brokerage Act. This actually gives buyers stronger legal protection than buying from an individual through a broker. On the other hand, the price inherently includes the dealer’s acquisition cost and profit margin. Assessing the property’s intrinsic value remains essential.

No single transaction type is inherently good or bad. What matters is whether you understand which type you’re entering. That understanding changes how you read the price and how you negotiate.

Articles on this site are based on hands-on industry experience and are not intended as individual investment advice.