by Dvorah Rut Weidner. 29 August 2012
The first step to finding your dream home is to contact a professional real estate agent. There are many websites that list properties for sale in Israel, but without an experienced agent to help you walk through the negotiating and purchasing process, you could find yourself with a less than desired outcome. There are many reputable real estate agents in Israel, many who speak both Hebrew and English. You can locate them through the BuyPropertyInIsrael website, or the Nefesh b’Nefesh business directory, or the various yahoo and google groups established for specific communities in Israel. Word of mouth is also an excellent resource for locating an agent that will truly cater to your specific needs, rather than the needs of the seller.
In Israel, both the buyer and seller pays a commission. The standard commission is 2%. Be prepared to sign an agreement BEFORE you go out to see properties. Be sure you have a good idea in mind of what you are looking for, such as size of home, age, what do you want to look at every day (view), what floor (if apartment), and of course, most important, your budget. This will save both you and the agent a lot of wasted time. And be prepared to make an offer on the property. Most agents list properties at a marked up price, expecting you to negotiate a lower offer, so don’t be bashful about this.
It is not unusual for an agent to be both the listing agent and the selling agent. In such a case, make sure that you are careful to examine the property carefully and to ask lots of questions.
In Israel, all real estate sales contracts must be prepared by lawyers. Typcially, their fee is .5 percent of the sales price. Oh, and remember to add to everything the MAM (VAT), which right now is 17%. It is also not unusual for one lawyer to represent both the seller and the buyer, and this really is no problem and not something over which to be concerned. It really does speed up the process. Of course, if you have your own lawyer, then you can make different arrangements. Whichever course you choose, the lawyer has a legal obligation to research the property, to make sure it is fully registered in the land of registry (tabo), that the property is legally in the name of the seller and no other individuals, and that there are no liens or other charges against the property. Even if you use a lawyer that is representing both sides, there is still this obligation and almost all lawyers are careful to carry out their obligations to the full extent of the law.
Once you decide upon a property, you will need to pay a deposit to remove it from the market. Once you do this, the process of making a contract begins. This deposit is nonrefundable, and usually is 10% of the purchase price. If you are not absolutely certain that you want the property, or that you will have the financial resources in place to purchase the property, do not give this depsosit. Of course, if you do not make a deposit, then the agent still has a right to show the property and the seller has a right to sell it to someone else. Once you make such a deposit, the seller no longer has a right to show the property to anyone.
There are a wide variety of options available to you for making the actual payment. Cash of course is the best. There are several good mortgage companies, if you need to finance the purchase. The sales contract can be written so that at signing a first payment is made (the deposit is, of course, credited to the total purchase price), and then subsequent payments toward the total can be established. Most sellers need some time to find a new place, so they do not mind so much a 2-3 month payment plan. But, until the final payment is made, the property still belongs to the seller. So, if you are purchasing for investment, say, then you will not begin to earn any return on your investment until you have completely paid for the apartment. At the time of signing the contract, you will need to pay the real estate commission and the lawyer’s fee in full.
If you are purchasing in a new residential project, currently, or about to be under construction, then the above paragraph does not apply. These sales are handled very differently, and the developer or agent representing the developer will explain all the details to you. Be sure to ask lots of questions. In a nutshell, typically, one lawyer handles all the sales. The developer sets up an escrow account, into which all payments are deposited. There is a schedule of payment, according to the schedule of construction. As each phase of the construction is complete, a payment must be made. The final payment is not made until the developer is ready to hand over the keys.
In Israel, all property is sold “as is” and empty. And, by “empty” I mean completely empty! There are no obligations to include any appliances, light fixtures, air conditioning, etc. Many sellers will take all their appliances with them to their new location. So, when finalizing the purchase, before the contract stage, be careful to discuss and to put into writing all items that will be left in the apartment and included in the sale. If you see items in the apartment that you really love, including furniture, discuss this with your agent and or the seller. Oftentimes, they will be willing to leave behind certain items for an additional price. Of course, some apartments are sold fully furnished. You just need to ask lots of questions and not be shy about asking for what you want. Whatever items you agree on with the seller, make sure that they are listed on an addendum to the sale contract and that this page is signed by all parties involved in the sale. It helps also to take photos of the items that are included in the sale.
Real estate agents are not property inspectors. Real estate agents in Israel are not obligated to know the “unseen” condition of the properties they are selling. If you have any concerns about the condition of a property, you should retain the services of a shamai (inspector). If you are securing a mortgage, then the lender will require an inspection.
On this page, we have included some articles from real estate lawyers and mortgage brokers to give you more information about this exciting undertaking. Just remember– this is your first home in Israel. Be sure to research everything: location, schools, synagogues, medical facilities, shopping & entertainment, employment– all the things that are important to you. If you really don’t have a clue where you want to be, then it may be better to rent a home first, and take a year to travel around and visit different cities and villages.
Most of all, enjoy the process and welcome home!