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Israel real estate the buying process
08.09.2006
The Process
In Israel, both the Buyer and the Seller pay commissions to their respective Agents. Real Estate Agents in Israel, customarily charge between 2-3 % of the price of the property. As a Buyer, you can choose a Real Estate Agent first or just look for properties and deal with the individual Agent who is representing that particular property. Whichever course you choose, negotiations are conducted between the Agents ,Consult your Real Estate Agent for guidance in deciding on location ,type of property, understanding what is included in the Purchase Price the length of the process, etc. Be sure and determine what is included in the purchase price because property in Israel is sold with just the bare walls unless otherwise agreed. Once an agreement is reached, the matter is turned over to Lawyers.
Typically, both the Buyer and the Seller have their own Lawyers. The Lawyers do all the necessary research to determine the legal status of the property, insure that improvements that were made, were done with the proper permits, etc. Obviously, the price and all financial terms are incorporated into the Agreement by the Lawyers. Upon signing the Contract to purchase your property, you must be prepared to make a first payment and your Lawyer and Real Estate Agent will present their bills-their fees are due at this point. In addition, the purchase tax is also due, however you do have a 50 day grace period to pay the tax. Coordinate this payment with your Lawyer.
Costs
The fees and taxes involved in a Real Estate transaction can be as high as 9.65%. This includes Commissions of typically 2-3% plus VAT (Value Added Tax) approx. 2.34-3.48 %, Lawyer's Fees of typically 1% plus VAT approx. 1.155% and Purchase Tax of 3.5% to 5 % of the purchase price.
Mortgages
Mortgages for foreign non-residents are available in Israel. The typical mortgage would be up to 60% of the Appraised Value, although you can also use EMI (Mortgage Insurance) as a way to increase the amount of your mortgage. On New Construction Projects in Israel, you can often get higher % Mortgages than on resale property, sometimes as much as 80% of the value. In Israel, you can obtain Dollar Linked Mortgages, Euro Linked Mortgages and Shekel Linked Mortgages with variable or fixed rates. Contact one or more of the Israeli Banks or Mortgage brokers mentioned on this site for further information about your options relating to obtaining a Mortgage.
Terminology
In Israel, the types of residential property are:
Apartment
Cottage A dwelling on more than one level, attached to another dwelling with its own private entrance.
Villa A free standing dwelling.
Penthouse The top floor or apartment of an apartment building oftentimes with a roof terrace.
Homes sizes in Israel are described in terms of the number of rooms, counting only the bedrooms and living rooms. In other words a 4 room apartment would most likely mean 3 bedrooms and a living room.
Also sizes of homes or apartments will be expressed in sq meters.
1 square meter = 10.7 sq ft. If you are buying raw land, sizes will be expressed in terms of dunams. 1 dunam = 1000 sq meters or 9700 sq ft.
A. Walwater- Real Estate & Investments consultant
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