Buying a Property - A Step by Step Guide
- Choose a location
- Decide on a type of property
- Check the legal status of the property
Look to be close to your contemporaries - different peer groups tend to cluster in certain areas. The services in these areas will probably cater to your needs - and many of your friends will most likely live close by. Since Jerusalem is a generally hilly location, if you have problems with mobility, it is advisable to avoid property at the bottom of a hill. Check out shopping, buses, schools, parks & synagogues.
To save time make a checklist of those absolutely essential features you require and communicate them to your Real Estate broker with the list you have compiled.
Important points include: maximum number of steps, Shabbat elevator, balcony (succah), garden, whether you are prepared to renovate, if traffic noise really bothers you, parking, storeroom.
Once you have decided on the type, size & location it's time to talk to the agent and ask about prices, mortgages and costs. Take into account that fees and taxes will add about 8% to the price of the property. The agent should prepare a short list of property that matches your requirements. If after viewing about ten properties and you still have not located a property in your price range, then we suggest you review your requirements and compromise on one of those important features, or find a way to increase your budget.
Your lawyer should check that the owner is the registered owner and that parking space and storerooms are indeed legally attached to the property.
If there is an empty lot or a single story house close by ask your lawyer to check what the city master plan allows to be built there.
Before starting negotiations, obtain an estimate from a builder/decorator or interior designer as to the cost of any renovation you may require.
Usually negotiations are completed in a single meeting. A good broker can usually break any impasse. Remember the broker often represents both sides and must be even-handed in his dealings.
Agents also act as a 'go-between' in negotiations when the parties to the contract don't actually meet.
We recommend that negotiations progress in this order:
- Determine what is, or not, included in the sale price.
- Property in Israel is usually sold with just the bare walls, unless otherwise agreed. Appliances, light fittings, even fitted wardrobes and kitchen cupboards are often removed. The broker must make an agreed list at the beginning of the negotiations.
- Determine when the property will be vacated.
- This is always after the final payment is made and can often range from 2 months to 2 years according to the needs of the parties.
- Determine how payments are to be made and in what currency.
- In Israel deposits are not put down – we go immediately to a binding contract that contains penalties for non-performance. The usual first payment is between 20%-50%. The amount depends on any taxation due or whether mortgages or liens are registered on the property. The remainder is not usually paid until the seller has presented a certificate from the tax authorities that no taxes are due so that the title can be transferred. Some 15% to 20% is usually left to be paid when the property is physically transferred to the buyer. The number of payments generally relates to the amount of time between the signing of the contract and the date of occupancy.
- Negotiate the 'sale price'.
- Once having agreed on a price, the matter is now passed to the lawyers. Do not sign anything without consulting a lawyer.
This can be the most frustrating stage. Many good lawyers are over-worked and we advise contacting your lawyer every day to check on progress and push things forward. A transaction can be completed in two or three days but it can often take a month or more.
On signing the contract you must be ready to make a first payment and your lawyer and agent will present their bills. Remember that there is Mas Rechisha (purchase tax) to be paid within 50 days of signing the contract
The process of buying from a builder /developer is somewhat more complicated. However, with care and advice from a good lawyer, architect and building supervisor, purchases on paper can offer attractive prices. Be very careful fixing the technical specifications, take advice on this from your architect/interior designer.