Should You Sell an Entire Apartment Building via Direct Purchase or Brokerage? Calculating the Break-Even Point for Net Proceeds Using Yields from Three Tokyo Stations
When considering selling an entire apartment building, the first dilemma is whether to have a real estate company buy it directly or to look for investors via brokerage. Generally, it is said, "For a quick sale, choose direct purchase; for a higher price, choose brokerage," but for entire buildings, you cannot judge which is better without comparing brokerage fees, price reductions until contract, and financing conditions.
This article organizes the differences between direct purchase and brokerage, then calculates "from what percentage of the brokerage estimated price the direct purchase price should be for net proceeds to be almost the same," based on Urbalytics sales data (gross yields for three Tokyo stations).
Article Highlights
- If you deduct only the brokerage fee (maximum), a direct purchase price at about 96.7% of the brokerage estimated price results in roughly equal net proceeds (calculated for a building with annual rent of 10 million yen).
- If the brokerage contract price is reduced by 10% at closing, the direct purchase price break-even point falls to approximately 87.0% of the estimated price.
- The median gross yield for entire buildings is 4.11% at Sangenjaya, 4.68% at Ikebukuro, and 5.49% at Kitasenju (September 2026, Urbalytics sales data). With the same rent, the brokerage estimated price differs by about 61 million yen across these stations.
The Difference Between Direct Purchase and Brokerage Is "Who Buys"
Direct purchase means the real estate company itself becomes the buyer, while brokerage means the company acts as an intermediary between the seller and buyers, mainly individual or corporate investors. This difference in "who the buyer is" leads to differences in price, duration, fees, and post-sale liabilities.
| Comparison Item | Direct Purchase | Brokerage |
|---|---|---|
| Buyer | Real estate company | Individual or corporate investors |
| Price Determination | Company proposes a price considering costs and risks of renovation and resale | The company solicits buyers in the market and price is determined by negotiation |
| Time Until Contract | Short if conditions match | Time may be required to find buyers and for loan screening |
| Brokerage Fee | None | Yes (maximum is purchase price × 3% + 60,000 yen + consumption tax) |
| Buyer's Financing | Less affected | Whether buyer’s loan is approved greatly affects contract completion |
| Contractual Nonconformity Liability | Often contracted as exempt | Seller generally bears liability for a certain period |
| Information Dissemination | Limited to certain parties | Listed on REINS and advertised to the market |
In entire apartment buildings, a particularly decisive factor is the buyer’s financing. Since many investors purchase by borrowing, properties that are old, lack inspection certificates, or are not allowed to be rebuilt tend to have difficulty getting loans, which limits buyers via brokerage. On the other hand, in direct purchase, the company buys using its own funds or financing, so even such properties may receive price offers.
What Is the Estimated Brokerage Price?
The brokerage estimated price is basically calculated as "annual income ÷ yield demanded by buyers in that area." Details on this method are explained in How the Appraisal Price of an Entire Apartment Building Is Determined. Here, using an example of an apartment building with annual fully rented income of 10 million yen, we calculated estimated prices and brokerage fees based on the median yields of three stations.
| Station (Ward) | Number of Cases | Median Gross Yield | Brokerage Estimated Price | Brokerage Fee (Maximum, Tax Included) | After Fee Deduction |
|---|---|---|---|---|---|
| Sangenjaya (Setagaya Ward) | 135 cases | 4.11% | Approx. 243.3 million yen | Approx. 8.1 million yen | Approx. 235.2 million yen |
| Ikebukuro (Toshima Ward) | 167 cases | 4.68% | Approx. 213.7 million yen | Approx. 7.12 million yen | Approx. 206.6 million yen |
| Kitasenju (Adachi Ward) | 177 cases | 5.49% | Approx. 182.2 million yen | Approx. 6.08 million yen | Approx. 176.1 million yen |
Source: Urbalytics sales data (entire buildings in Tokyo including apartments, mansions, buildings; listings including annual expected rent; aggregated on September 29, 2026). Estimated price = 10 million yen annual rent ÷ median gross yield. Brokerage fee calculation based on maximum under the Real Estate Transaction Business Act (purchase price × 3% + 60,000 yen) plus 10% consumption tax.
For any station, the brokerage fee maximum is approximately 3.3% of the estimated price. In other words, if you compare fees alone, a direct purchase price of about 96.7% of the brokerage estimated price results in equal net proceeds. However, this assumes the sale contracts at the listed estimated price.
Comparing Net Proceeds: At What Price Does Direct Purchase Match?
Contracts often close at prices different from the listing price. Price reductions during negotiations or longer selling periods reduce brokerage net proceeds, lowering the direct purchase price needed to match net proceeds. We calculated this for Kitasenju (estimated price approx. 182.2 million yen) by price reduction at closing.
| Price Reduction at Contract (Compared to Estimate) | Contract Price (Brokerage) | Brokerage Net Proceeds (After Fee Deduction) | Direct Purchase Price for Net Proceeds to Match (Compared to Estimate) |
|---|---|---|---|
| 0% | Approx. 182.2 million yen | Approx. 176.1 million yen | 96.7% |
| 5% | Approx. 173.0 million yen | Approx. 167.3 million yen | 91.8% |
| 10% | Approx. 163.9 million yen | Approx. 158.5 million yen | 87.0% |
| 15% | Approx. 154.8 million yen | Approx. 149.6 million yen | 82.2% |
Source: Calculation based on median yield for Kitasenju above (Urbalytics sales data, September 29, 2026). Does not include expenses common to both sales methods like stamp tax, mortgage clearance fee, capital gains tax, etc.
This table shows the break-even point where "if the direct purchase offer exceeds this ratio, direct purchase results in more net proceeds." Actual direct purchase prices vary widely due to property condition, location, and rights, so there is no uniform ratio. When comparing, it is important to look side-by-side at the direct purchase offer amount and the brokerage sale price realistically expected at contract minus fees.
Also, rental income continues during the brokerage sale period. While a long selling period is not itself a loss, increased vacancy, timing of major repairs, and inheritance tax filing/deadlines (within 10 months from day after inheritance commencement notification) can make the length of sale period a substantial cost.
Cases Where Direct Purchase and Brokerage Are Suitable
Cases Suitable for Direct Purchase
If the net proceeds difference is small or if any of the following apply, it is worth including direct purchase as an option.
- Properties difficult to get financing: lacking inspection certificates, no rebuilding permitted, exceeding floor area/building coverage ratios, old wooden buildings, etc. Brokerage buyers are limited and large price reductions are likely.
- Time-constrained sales: such as inheritance tax payments, loan repayments, distributions among co-owners with fixed timing.
- Heavy burdens from vacancies or repairs: when you no longer want to recruit tenants or manage major repairs yourself.
- Wanting to keep the sale confidential: if you want to proceed without tenants, neighbors, or business partners knowing.
TLL’s purchasing criteria (published on our website as of September 2026) cover entire income properties within the Tokyo metropolitan area and nearby three prefectures, within 15 minutes walk from stations, and up to 1 billion yen in price, with no lower limit on yield. Properties without inspection certificates are included; no rebuilding and excess floor area ratio properties are considered individually. Of 12 purchases from May 2024 to May 2026 listed on the same page, 8 were entire buildings, including 2 no-rebuilding cases.
Cases Suitable for Brokerage
On the other hand, properties meeting the following conditions are more likely to get higher net proceeds by brokerage and being listed on the market.
- Close to stations, relatively new, and easy for investors to get financing
- Close to full occupancy, and rents not far from market rates
- Flexible timing to allow a sales period of about 3–6 months
- Having prepared documents such as rent rolls and repair histories
Such properties tend to attract multiple purchase offers and have smaller price reductions. According to the figure above, if price reductions stay within 5%, brokerage yields more net proceeds unless direct purchase price exceeds about 92% of the estimate.
Contractual Nonconformity Liability and Tenant Treatment
Post-sale liabilities also differ between direct purchase and brokerage.
Sellers are responsible if the transferred building does not conform to contract specifications (e.g., leaks, plumbing issues) under contractual nonconformity liability. This can be exempted by written agreement, but not for defects the seller knew and failed to disclose (Civil Code Article 572). In direct purchase with real estate companies as buyers, exemption clauses are common, while with individual investors via brokerage, sellers generally bear responsibility for a certain period after transfer. This difference is more significant with older properties.
"Owner change" sales where tenants remain are possible both via direct purchase and brokerage. The lessee’s position and deposit return obligations transfer to the buyer, so it is unnecessary to ask tenants to move out solely due to sale.
How to Proceed When Unsure
You don’t have to decide one way from the start. For entire apartment buildings, the practical approach is:
- First confirm the direct purchase offer: know the minimum guaranteed sale price.
- Confirm the probable brokerage contract price: don't rely on the listing price, but get an estimate of the likely contract price and sales period.
- Compare net proceeds: subtract fees and anticipate price reductions from brokerage estimates, then cross-check with break-even table above.
If choosing brokerage, the exclusive or exclusive exclusive brokerage contract period is limited to 3 months or less. You can initially try brokerage to test market response, and switch to direct purchase if the conditions after contract expiry are not favorable. However, exclusive brokerage requires registration on REINS (within 7 days for exclusive, 5 days for exclusive exclusive, excluding holidays), which means property information will be publicly available.
If you are undecided whether to sell or keep the property, reviewing management to see if cash flow can be improved may help. Please also make use of asset management and operation consultations.
Frequently Asked Questions
Q. How much of the brokerage price is the direct purchase price for an entire apartment building?
There is no uniform percentage as it varies greatly by property condition, location, and title issues. For example, with annual rent of 10 million yen and median yield for Kitasenju, direct purchase price without brokerage discount is around 96.7% of brokerage estimate; with a 10% discount, it drops to about 87.0%, which are break-even points for net proceeds.
Q. Can a building with tenants be purchased directly?
Yes. Since the tenancy rights and deposit return obligations transfer to the buyer, tenants do not have to move out due to sale.
Q. Is contractual nonconformity liability exempted in direct purchase?
When a real estate company is the buyer, exemption clauses are often included. However, any defects the seller knew but did not disclose are not exempt, so sellers must disclose known issues before sale.
Q. Can I switch from brokerage to direct purchase after listing?
Yes. The exclusive brokerage contract period is limited to 3 months, so it is common to reconsider options at the contract’s end.
Q. Can properties without inspection certificates be purchased directly?
Responses vary by company. TLL’s purchasing criteria include entire income properties without inspection certificates.
Summary
- The difference between direct purchase and brokerage is "who buys." For entire apartment buildings, whether the buyer’s financing is approved greatly affects sales via brokerage.
- Maximum brokerage fee is about 3.3% of the estimated price. If sale contracts without price reduction, a direct purchase price at about 96.7% of the estimate yields roughly the same net proceeds.
- If the contract price decreases 10%, the direct purchase price break-even point falls to about 87.0% (calculated at Kitasenju median yield 5.49%, September 2026).
- Direct purchase is worth considering for hard-to-finance properties, time-restricted sales, and when confidentiality is important.
Actual net proceeds differ per property. It is recommended to compare the direct purchase offer and brokerage contract estimation side-by-side for the same property.
Top image: Photo by Dorothy Kuromi on Unsplash (image)
About this article
- Author
- Chen Tan（Founder）Qualifications: Real Estate Transaction Specialist, Building Management Specialist, US Certified Buyer's Agent
A serial entrepreneur spanning real estate investment, fund formation, and digital strategy. At McKinsey & Company, he led organizational restructuring, DX, and new business strategy projects for financial institutions and real estate developers across Japan and Greater China. At Amazon Japan, he served as the design lead for large-scale e-commerce products. Since founding TLL, he has overseen the full cycle from acquisition, repositioning, and operation of income-producing properties to fund formation, while building a data-driven investment decision model.
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- TLL合同会社宅地建物取引業 東京都知事(1)第108202号住宅宿泊管理業 国土交通大臣(01)第F03424号
Data in this article cite their source and as-of date. Market conditions and regulations change, so check the latest information and consult a professional before deciding. Translated from the Japanese original.
