Since 1996, real estate agents in Israel are required by law to be licensed by the Ministry of Justice. The Real Estate Agent law defines the obligations and the areas of responsibility for an agent in Israel. An agent in Israel can represent property transactions, buying and selling or both.
Why using a real estate agent saves time and money for buyers
An efficient and professional agent is usually more familiar with the real estate market than the average buyer. This gives the agent several advantages: a wide selection of properties; familiarity with transactions prices in the past; knowledge of anticipated changes in the area/building that might affect the apartment’s prices; knowing how long an apartment is on the market and which offers were submitted for it in the past, and so forth.
The customary real estate broker’s fee in Israel is payable by each side of the transaction (both seller and buyer). It is 2% of the inclusive price of the property. A Valued Added Tax/VAT of 17% of the broker’s fee is also added. The full payment of the broker’s fee is due upon the signing of a binding agreement to sell or buy the property. A good agent will save you more money than he costs, as he has a wealth of experience which will help you make the right decisions.
Israel’s purchase tax is calculated gradually. It ranges between 5 -8% of the property price. Purchase Tax must be paid within 50 days of contract signing.
The fees for professional services (legal) in real estate transactions are at the accepted rate of 0.5-1.5% plus VAT of the buying price. This however depends on the lawyer and on the size of the transaction.
The fees for professional legal services of a new project are between 1.5%-2% plus VAT. The fees go towards formal registration of the building
Before I sign the contract, should I have the property checked?
It is recommended that the property be checked by a licensed and reputable engineer before you sign the contract. The customary engineer’s service fee is about 1,500 $, depending on the size of the property. If you want to make changes to the property, you will need an architect to advise and inform you of the feasibility, time and financial cost of your desired change. Some changes require municipal permits and the architect can outline the process and estimate the additional costs that such change requires.
Financing
The Israeli mortgages market offers a wide range of loan paths with various terms and conditions. Linkage to the dollar or the shekel, fixed interest or variable interest for a period of up to 30 years. The rate of financing on properties can be as high as 50% of the valued property, or more, depending on the guarantees the client is prepared to give to the bank.
Real Estate – Useful Local Terms
Tabu – Land registry office
• Mas Rechisha – Purchase tax
• Maam – VAT (value-added tax)
• Mas Shevach – Capital gains tax on real estate
• Heitel Hasbacha – Property betterment tax
• Metavech – Real-estate agent
• Misrad Tivuch – real estate agency
• Biladiut – Exclusivity
• Arnona – City Taxes
• Va’ad Bait – House committee, building committee
• Private land – Property privately owned by the purchaser.
• Church land – property belonging to the church – is leased to buyers and generations, usually up to 2051, or for various periods of time according to the specific lease. Following the Ben David land agreement, buyers can purchase the title of the land and transform it from church to private.
