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  • The 10 essential steps to a successful real estate purchase in Israel
    Ajouté le 17/07/2016 à 18h53

    Buying a property in Israel is an adventure, and there are clear rules not to make this beautiful story a nightmare.

    1 / I get a first idea of the local market

    Apartment prices in Israel and especially in Jerusalem or Tel Aviv are not the prices we are used to . It is not only about the strength of the euro or the dollar against the shekel, but simply a market where the real estate offer is much lower than the demand and where there is a secure bubble which is very expensive.

    For example, Jerusalem, 155,000 residential apartments , is far less than the local need (800,000 inhabitants) and the international demand. For comparison, in Marseille, there are 450,000 homes for 1,000,000 inhabitants.

    A first way to get an idea without wasting too much time is simply to look at classified ads on newspapers or on the internet. Even if the selling price of a property is not exactly the asking price, it is not so far . Think up to 10% less even if you are an outstanding negotiator.

    2 / I establish my budget by being realistic, and I check my borrowing capacity.

    When making a purchase, in Israel as elsewhere, it is necessary to consider the expenses which are added to the price of the apartment that one buys. These are agency fees 2% + VAT (17%), lawyer fees 1% + VAT, purchasing tax (8% for a tourist), remodeling (about 800 $ / m2 for a total renovation from floor to ceiling). It is therefore important to know which envelope is initially available by scraping all the funds of drawers, and how much can be eventually available by supplementing with a local mortgage based on income and ability to repay. You can reasonably think that if you can repay 500shekels per month, then you can borrow 100,000shekels for 20 years. But don't forget that the loan in Israel is capped at 50% of the value of the property.

    Example: I have 250,000 euros, 1,200,000 shekels, and I can repay 4,000 shekels a month by the rent that I can receive from the property I am buying (or that I'm willing to pay per month if I live there myself), so I can borrow 800,000 shekels, so I have 1.800.000shekels for my acquisition.

    Therefore 1,800,000 shekels = apartment price + agency fees + lawyer fees + tax acquisition + single stroke of paint, so the price of the apartment should not exceed 1,600,000 shekels.

    Indeed 1.600.000NIS + 37.000 agency + 18.000 lawyer + 128.000 purchasing tax = 1.783.000 NIS which leaves 17.000NIS for stroke of painting and false expenses (expertise, expenses of opening of bank file, ...)

    With this clearly established budget, it is often necessary to reduce claims and to work out a real definition of our needs, by setting priorities.

    You, me, rich, poor, big or small, we all dream of a large house with garden, terrace, beautiful succah, large living room, beautiful bedrooms, several bathrooms, cellar, parking and why not swimmingpool and tennis, obviously in a recent building with elevator and gym, but in Jerusalem all this does not fit with an envelope of 1,600,000 shekels. In many other cities yes, even villas, but here definitely not.

    So, since I can not have this all, I have 2 options: what do I have for 1,600,000 shekels in Rehavia next to my friends who bought several years ago (and therefore a lot less expensive)? and there is depression! Or, ok, finally I really need a 2 rooms downtown in a suitable building, or a 3 rooms in Baka in a building plaster (which will go up to 5 years), or even a 3 rooms in Har Homa in a beautiful building (but will not rise) with cellar and parking and elevator, or ... well, I groan, I get angry and I still do not buy ... and it goes up again and I can buy even less in 2 years ... so I learn the art of compromise.

    Again, now that I understand how it works, I re-look if I can try to improve my personal contribution and I start.

    Now, do not worry, for rich persons, it's not easier! If I have 500,000 euros of departure, I must also assume the disappointment that for this price in any other country I can have a small pavilion! 500.000 euros of contribution it is certainly often the savings of a whole life but it is 2.100.000 shekels, thus a purchase of 1.850.000 shekels if one does not make of loan, and 2.700.000 with loan, so we are still not in luxury. We are right in the price of a normal 3.5 room in a decent area.

    Beyond a million euros we can begin to consider a real terrace in a beautiful area with a lift and a cellar.

    3 / So I define my needs soberly
    What is most important to me? And above all, what am I ready to put second?

    The location? In relation to what or who? The religious environment? Schools? Bus service?

    The number of bedrooms? The surface of the apartment? Because we can have tiny parts, it is not always significant!

    The elevator? How many floors could I accept to climb if there is no lift? I could maybe get my groceries delivered, it's done here?

    Sunshine? The balcony? Calm? ?? The parking? A cellar maybe?

    When I have a rough idea of what is essential to me and what would be nice to me, then I'm almost ready.

    4 / I protect myself: I make contact with one or several lawyers.Here, no notary, it is my lawyer who will protect my rights during my purchase.

    So it is important to choose a lawyer who makes daily real estate contracts, who is well established in the city so he will have more facilities to check if the property  I wish to buy is well registered in the land registry, not necessarily an international business lawyer!

    The amount of the lawyer's fees counts, of course, but the main thing is the trust that can be granted to him. This is not the time to skimp.

     

    5 / I make contact with an agency and I visit.

    Not 3 months before, it is useless, but only 10 days before, because otherwise I may love a property that will already be sold before I even arrive. And after that it will be really difficult to appreciate something else!

    I give my criteria well but I agree to see a little wider, because the ideal property does not exist. Even if I started in a construction, it would not come out in conformity, so I do not forget that I must try not to find the ideal property but the one that fits me most among the properties on the market at this moment .

    And there, I begin my visits. The ideal is to concentrate the visits on maximum 2 weeks because thus I can be on to compare properties in real time and not to miss anything. I visit during the hours of daylight and outside noise to get a real idea of the sunshine and calm of what I visit. I take notes and I make a real selection without missing anything that can match me.

    Obviously, I only sign vouchers that I fully understand (preferably in english).

    6 / I negotiate

     I found, youpi! I start by asking to check the immaterial elements of the property: registration to the cadastre, local tax bill, ..and obviously I ask my lawyer to check that everything is a priori kosher, that if parts were added, it has been done with a building permit and so I can start projecting myself in this apartment.

    For negotiation, it is important to start reasonably, with tact and measurement. Frequent sellers who are angry at an offer they deem unworthy of their apartment and therefore do not follow, while the buyer was actually willing to pay more.

    I check what are, outside the price, the items that are important to me: the date of moving in, the payment dates, ... because all these elements can be decisive in my negotiation, and I ask the bank an agreement in principle for my loan.

    7 / I'm dying for fear, I hesitate!

     I closed the price, the payment terms and the date of handing over the keys, I got my loan agreement, I keep an eye on the market and I let my lawyer work carefully. Obviously I pass the expert to be sure that the bank will lend me well on the basis of the price that I'm about to pay and not on a low estimate. During this time I carefully work on my financing plan and check that my payment schedule coincides with my availability.

    At this point, it is very common to rest a lot of questions and even to be on the verge of "deflate": why so expensive, why here, why only 3 rooms, ... it is natural and normal. It's not about buying a pair of socks, but about a huge investment, plus a huge compromise! It's normal and I calm down!

    8 / I sign

    About a week later, I sign my purchase agreement and I pay at least 20% of the total, plus the agency and the lawyer, and I am provisioning my account to pay the purchasing tax. I am well aware that what I sign is not a simple compromise that it is possible to cancel but that it is indeed the definitive act of sale. It does not matter to the seller whether I have the money or not, whether I get my loan or not, and that I have work to do, everything that was not specified before signature and written on the contract is no longer addable or modifiable. My lawyer has written a mention to the land register indicating that I am the current purchaser and so my seller can not sell to anyone else without my consent, so I'm protected.

    9 / I run to the bank

    With my contract sign and I start the marathon of the mortgage loan: a multitude of documents to provide (tax returns, salary slips, bank updates, proof of civil status, ..). And there, I manage to make sure that my transfers are done well on the dates agreed with my salesman. Indeed, in case of significant delay, the seller may require late penalties, or even break the sale by charging me consequent compensation for non-compliance with the contract.

    10 / I go home!

    I made the last payment, I finally get the keys from home, I can finally open champagne. More than make the name changes to the town hall for the housing tax, and water companies, gas and electricity and I can finally ask my mezouzot and make a hanouccat bayt.

    The race is over, I finally have my piece of paradise on earth and I am well aware that I have managed a great adventure. It's a beautiful novel that starts at home and on my land, in Israel. I can be proud of myself, because until not so long ago it was still a dream, whereas today I made it a reality, I rowed, I struggled , I almost cracked, but I finally realized my project!

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