Buying Property in Israel: Clearing up The Balagan

A.  AS IS

It is uncommon for homeowners in Israel to repair every flaw in their property before selling, unless it is otherwise specified in your contract with the seller. Usually, contracts state that the property is sold “AS IS”. Moreover, most sellers won’t bother much to get the house to look perfectly neat or tidy before letting buyers tour it. Some will say that the toys on the floor and unmade beds show “the house with life in it.”

B. HOME INSPECTION

Since sellers do not perform a home inspection prior to putting their property up for sale, don’t expect to receive any documentation regarding its condition. You can, however, bring an engineer to inspect the house at your own expense if you wish.

C. MASTERS OF ONE

You are going to meet many different professionals on your journey to finding your house. Every professional is responsible for a very specific job. As a matter of fact, sometimes it is even illegal for one professional to interfere with the job of another. These are some of the professionals you’ll come across: A mortgage broker who will help you with everything loan-related. A lawyer who will handle the contract. And your real estate agent who will find the best property for you and negotiate the price and conditions on your behalf. A good agent will know all the professionals you may need, and can make referrals so you won’t have to search for them yourself!

Now, let’s dive deeper into the steps of buying a property in Israel.

1. SETTING A BUDGET

Don’t skip this step – real estate in Israel is not cheap. Your budget will determine the type of property you should look for, as well as the location. While calculating your budget, also consider the expenses OTHER than the property’s value, such as taxes, utilities, renovations, your real estate agent, mortgage broker, and lawyer, or other services you might need -- more on that later. However, keep in mind that it is common for Israeli banks to allow non-Israelis and new olim a loan of up to 50% (and sometimes more) of the property value! Once you get pre-approved, you have to decide quickly – the loan approvals are valid only for a limited period of time. Too much of a delay, and you’ll have to start the whole process all over again. A good mortgage broker can help you negotiate the rates and terms of your mortgage and save you a LOT of money – possibly hundreds of thousands of shekels.

2. LOCATION

While deciding on the best place to live, consider the following factors:

Weather and environment: Are you a mountain-type of person, or do you prefer the beach?
Public transportation and traffic: Do you need immediate access to buses and the train, or do you prefer driving your car?
Occupation: Where will your job be? How long are you willing to commute to work?
Schools and community: In what kind of social environment would you like your child(ren) to grow up? Maybe you’d like a neighborhood with other English speakers, or a religious neighborhood, or a secular one.

3. THE SEARCH

If you can’t read in Hebrew yet, start by simply searching on Google for “real estate in Israel” or “real estate in ‘city-name’”. You might find some interesting results; however, if you can read in Hebrew, this step will be significantly easier for you. You can also look up properties in your favorite cities on Israeli websites like Yad2.co.il and Madlan.co.il. These websites often list thousands of dreamy houses and apartments, but beware – many posts will be irrelevant because they are out of date or misleading, and you could end up being disappointed and wasting a lot of time. A good agent will save you time and avoid stress by finding for you valuable leads that meet your specific needs.

Pro tip: Some agents (like Sabras, ehm ehm) specialize in international buyers! The buying process and the law regarding international buyers may, in some cases, differ slightly from those of the locals. It is important that your agent is familiar with the differences.

4. NEGOTIATION

It is recommended that you consult with your agent, lawyer, or mortgage broker to help you calculate and understand all the expenses involved in your purchase other than the property itself. These include monthly expenses such as the mortgage interest, Arnona (city property tax), va’ad habayit (building maintenance fee), and more.

It’s almost always a good idea to bargain! However, you can let your agent bargain for you – a good agent will make sure you’re getting the best price possible and help you cover fees, as well as leave you with spare cash, perhaps for new furniture.

Also, your agent will help to make sure to set a payment schedule. The buyer usually pays anywhere between 10% and 20% of the sum upon signing the contract. The rest can be divided in any way that is agreed on by the two sides. Here, again, your agent can bargain for you and help you schedule your payments carefully, so you have sufficient funds available at least one week before each payment.

5. THE CONTRACT

Find a lawyer if you haven’t yet. Your lawyer should be one who specializes in real estate, is experienced with foreign buyers, and is preferably an English speaker. Your agent can help you find the right one. Do not compromise here! A lawyer who specializes in real estate will know how to best secure your deal and prevent any possible pitfalls. Some lawyers will have expertise in contracts but not real estate, but will claim that they can help you. Your agent can make sure the lawyer has the necessary expertise in real estate. Many deals are called off at this stage, so they have to know what they’re doing.

If you’re purchasing a home in a new project (for example, an apartment building under construction), you will also need to complete an application and deposit a check to reserve your apartment, and start working on the contract. It is good to have your lawyer read through and review any contract you come across before signing it. If the contract is in Hebrew, your lawyer can have it translated into your native language, so you understand what you are signing.

Once you’ve signed that contract – congratulations! The property is now officially yours. From here, your lawyer will take care of the documentation, such as the property’s registration, and you will take care of payments.

6. MORTGAGE

If you applied for financing, it is time to finalize your mortgage. You will present the bank with your contract, and they will transfer the money according to the payment schedule set in your contract. Make sure you mark the dates of the transfer to keep yourself informed of the payments and to ensure there are no delays by the bank. The bank might ask you for additional documents, in which case it is best to provide them as soon as possible.

7. TAXES

One must pay a purchase tax within 60 days after signing the contract (unless you are entitled to an exemption). This payment shouldn’t be delayed. Good news! If you’re planning your Aliyah for the near future, you might be eligible for a refund on this tax. To make this process easier, consult with your lawyer and share your plans with them, so they can best prepare.

8. MOVING DAY

First, it’s highly recommended to confirm with the seller that all the payments have been transferred. It would be a shame to ruin your exciting, yet busy and stressful, moving day with angry phone calls asking, “Where’s the money?!”

Second, it is suggested to have a one- or two-day delay between the day you take possession of your new house or apartment, and the day on which your belongings are delivered. Not everything goes as planned – there might be an unexpected delay, miscommunication, or just a simple mistake. Furthermore, it is suggested that you schedule your moving day two weeks before you have to leave your current home. This will ensure that you have a place to stay in case there are any last-minute issues that need to be worked out before you take possession of the new home.

Pro tip: If you buy a home in a new project, take note that it is legal for the developer to deliver the property in a delay of up to 60 days without any compensation to the buyer (you)!

9. BILLS

The last step in your moving journey is transferring the ongoing bills (including water, electricity, arnona, internet, and so on) to your name. And that’s it! Enjoy your new home in Israel, Mazel Tov!

10. BONUS TIP

This isn’t as obvious as it may seem: Learn some Hebrew in advance! Not only will it be easier for you to understand what’s going on once you’re here, but it also impresses the locals and creates a sense of warmth and connection. Israelis love hearing Olim Chadashim respond with “sababa” to their invitation for a falafel. Thanks to the Internet, it is easier than ever to find learning sources: free apps like Duolingo, a private teacher on iTalki, or a Pimsleur audio course if you are on the go. You can learn plenty before your Aliyah and before going to an Ulpan.

Good luck!

Sabras – Where your dreams become home.