Residential upgrading in an economic downturn

By on November 28, 2009

Well into the economic downturn and the company has requested that you cut corners in the Japan office, starting with your housing allowance. What do you do?

1. DO YOUR HOMEWORK. First, don’t panic. Less does not have to necessarily mean less, but most importantly understand your situation. Examine the budget decrease and the timetable. If the budget decrease is the same as the level of the market then you may be able to get the same quality for less. Second, take stock of your lifestyle needs in Japan, which may vary slightly from what they were when you first moved here. What do you need more of and what can you do without? This move may be an opportunity to secure a property that more appropriately fits your lifestyle needs and wants.

2. CHOOSE YOUR FRIENDS WISELY. Your best friend in this situation is an expert broker. An independent broker, paid only by you, can be your barometer on market micro-movements missed by macro analysts. Independent brokers can represent your best interests and can find an ideal solution, but you will need to do your homework in order to explain your needs to them.

3. START AT HOME. Have your broker re-examine your lease agreement immediately. It is likely that your landlord would prefer a decrease in rent to the loss of revenue entirely, though each case depends on the property owner.  Standard broker’s fee for renegotiation is the difference between the old and new rent. When considered on an annual basis and over the life of the agreement renegotiating your present agreement may create greater savings than the cost of relocating to a different property.  

4. WORK TOWARD YOUR NEEDS. As each case varies, there are no specific properties that are better than others with respect to budget restrictions or relocation. Again, this is an opportunity to relocate into something more appropriate to your lifestyle. And in the end, you may have the last laugh, because in a depressed market, everything is negotiable. While not always, you may happen upon the paradoxical opportunity of upgraded quality at downsized pricing. But don’t tell them I told you that.

 

Kevyn Johnson is a director with Platinum Real Estate Consulting and a co-chair for the Architecture, Construction and Real Estate committee of the American Chamber of Commerce in Japan.  He can be reached through our editors or directly at kevyn@platinum1000.com


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