Most new olim, especially Americans, find the real estate in Israel somewhat strange. While shopping for their dream house, they can’t get used to what they see – messy places, broken parts, and “too much to renovate.” One of the most common phrases I hear is “When we sold our house, we…” or “Are they going to fix that for the sell?”, so before we proceed to the guide, take a piece of friendly advice: you are not in the US, Europe, or any other place. This is Israel, and here things are different.
A. As Is
It is not common to renovate or repair every possible property flaw for the sale. Every broken part is not going to be fixed unless you ask and it is written in the contract. Most contracts have a statement where you buy the property “AS IS.” Also, nearly all sellers don’t even try too hard to keep it perfectly clean, so don’t be surprised when you see laundry and toys all over the place.
B. Home Inspection
Sellers don’t inspect the property before the sale; therefore, they don’t provide any documents or reports regarding the property condition. If you are interested in inspecting the property, you bring the engineer at your expense.
C. One job
Every professional has only one job. The agent finds you a property; the lawyer takes care of the contract; the mortgage broker helps with the loan, and so on. Everyone does what he does best, and sometimes it is prohibited by law to interfere in another’s professional job. For example, realtors are prohibited from drawing up contracts and sometimes even help with them. However, good agents know all the professionals needed, and they won’t leave you struggling alone.
And now, let’s begin with the guide.
How to Buy Property in Israel
- Calculate Your Budget
Real estate in Israel is not cheap. If limited, knowing your budget will help you decide where to live and what type of property to look for. If it is not enough, consider financing the deal. Israeli banks will be happy to provide you with a loan of up to 50% of the property value, and sometimes even more.
Make a list of preferred cities or areas. Consider all that is important – weather, job, school, leisure, traffic, public transport, community, and so on. Your first thought might be finding an English-speaking community to feel at home. However, it is known that living in these communities slows down your Hebrew learning and getting to know the local culture.
If you are struggling with choosing a location, ask for advice. Google is the first to help – there are lots of forums and websites in English describing what life looks like in different areas. Ask questions on forums and Facebook groups, and don’t worry; it is always possible to move if you made a mistake.
If you can read Hebrew, you can use Yad2 and Madlan for finding properties. Else, you can start by typing “real estate in Israel” (or in a specific city) in Google and see what you can find. Either way, you can ease your search by finding an agent, preferably specializing in international buyers, describing your requirements, and letting him do the job. A good agent doesn’t only save you time; he finds the right property just for you.
When you find one or several options you would like to buy, calculate the final expenses, such as fees (agent, lawyer, mortgage broker, and any other service you might need), taxes, renovation, and so on. Consult with your agent or lawyer to understand better. Don’t forget the monthly expenses like mortgage, arnona, va’ad habayit, and other ongoing bills.
Try bargaining or let your agent do it. A good agent will get the lowest price for you to cover the fee he takes and leave you with extras for some fancy furniture and new appliances.
Don’t forget to set a payment schedule. Usually, the buyer pays 10-20% of the sum upon signing the contract, and the rest is divided as both sides agree. Schedule wisely and make sure you have the money at least a week before the payment date.
If you still haven’t found a lawyer, get one. Ask your agent for an English-speaking lawyer who specializes in real estate and is experienced with foreign buyers; don’t compromise on that. You or your friends or relatives might know or might be some kind of a lawyer, but only a real estate lawyer knows best how to protect you and your deal from pitfalls. Quite a few deals are called off at this stage, so he must know what he is doing.
If it’s a new project, you will be asked to sign an application or registration form (tofes harshama) and deposit a check to reserve the apartment and start working on the contract. It is better to let your lawyer review it before signing.
The contract is signed. Congratulations! The property is officially yours. Your lawyer will take care of the property registration, and you will take care of the payments.
After finishing the contract, you must finalize the mortgage if you apply for financing. Take your contract to your banker to open a file. Your bank will transfer the money according to the schedule on the contract. Mark the dates to make sure the bank doesn’t delay the transfer. In addition, the bank can request more documents. It would be wise to provide all without delay.
After signing the contract, you have 60 days to pay the purchase tax unless you are entitled to an exemption. This payment is also shouldn’t be delayed. If you are planning to make aliyah in the very near future, you might be eligible for a refund. Share your plans with your lawyer so he can prepare.
- Moving In
First of all, make sure all the payments are transferred to the seller. Believe me; it is very unpleasant to ruin this exciting day with phone calls of why the last payment wasn’t transferred. Second, do not plan the day of moving to the day of delivery of the apartment. Things don’t always go as we think, so you better be prepared. Extend your rental agreement or wherever you stay by a few weeks to prepare the apartment for the move.
If you bought a new project from a developer, prepare for a longer possible delay. By the law, the developer is allowed to delay the delivery of the property by 60 days without compensating the buyer.
After moving in, ongoing bills such as electricity, gas, water, arnona (land tax), and va’ad habayit have to be transferred in your name, and that’s all.
Mazel tov on your new home in Israel!
As you can see, the process is different from what you know. It might even seem too complicated and even scary. Nevertheless, having the right people by your side will save you so much effort and sleepless nights.
Arthur Yakubovich is a CVO of Buy Home in Israel, your local guide to real estate in Israel. You can reach him at +972-546802247, email@example.com, or visit the website if you have any questions.