Updated: Sep 15, 2020
In recent months, visiting Israel has been nearly impossible, making it challenging for anyone looking to buy a property. IsraTransfer decided to "bring Israel to you" by co-hosting a digital panel in partnership with experts in local real estate. The discussion covered how to buy a home in Israel and specific tips for corona times.
You can watch the video below or keep reading for a recap of the event.
Transferring Funds for your Purchase
When buying a property in Israel, you will need to transfer your funds. While this may seem simple and straightforward, it can get complicated! Daniel Eisenberg, the CCO of IsraTransfer, explains how using a transfer service can save you big time.
First of all, why transfer your money to Israel at all? The reason is that you purchase your home in shekels. You can't write a check from a foreign account and give it to the seller. Also, the first payment generally needed is a bank check. Subsequent ones are transfers, and IsraTransfer can take care of all the payments for you. We convert your funds and pay the lawyers, realtors, and all other parties involved. In that way, we save you a considerable headache.
IsraTransfer saves you money by offering lower exchange rates than the bank and no hidden fees. Going directly through the bank could cost tens of thousands of shekels more.
Another way services like IsraTransfer can help when it comes to dealing with compliance. Due to past money laundering issues, the banks are currently stringent regarding bringing over your money. IsraTransfer, certified by the Ministry of Finance and reports to the Anti Money Laundering Prohibition Authority, knows how to navigate the compliance process. Our experts can ensure you are prepared with the necessary documents to get the transaction moving smoothly.
We also keep you updated regarding the exchange rates and help plan your payments accordingly. Fluctuations in exchange rates can make a big difference. For instance, the amount of variation from the past year on a million-dollar home was more than $100,000. It is vital information to know when deciding how to time your payments.
Finding your Home in Israel
Noam Vasl, CEO of Noam Homes, discussed the current real estate market, things to keep in mind when buying property, and navigating the process during the new corona reality. Noam Homes, a bilingual real estate agency specializing in sales, rentals, and property management, is currently enabling many foreign residents to buy homes in Israel.
Currently, there is a shortage of 70,000 new properties on the market. With aliyah rates growing exponentially due to the current crisis, experts predict the number will double in the near future. So if you find a place you like, go for it. As long as you have a list of your top priorities, don't waste time asking for too many opinions or worrying about everything.
While there is a general lack of property on the market, there is a shortage of people buying high-end homes. Foreigners are the primary buyers of luxury homes, and with fewer outsiders visiting Israel, now might be the time to score a deal.
What to Consider When Buying Property in Israel
Since the corona epidemic began, home buyers' priorities have shifted. Porches and gardens have become top priorities, as the threat of home isolation looms. Many consider whether a property has an extra room or storage unit that can be turned into an office. Buyers also look for homes in close walking distance to shopping centers and grocery stores, in case restrictions in the movement are put into place.
Other important things to consider are the community you are buying in, noise levels, building amenities, and the condition of the apartment. A real estate agent that you trust can orchestrate virtual open houses and tell you all your need to know about the properties.
Purchase Costs when Buying a Home in Israel
Other than the actual cost of the property, there are other expenses to consider. Purchase tax can vary from 0-10%. There are also fees for the real estate agent, lawyer, mortgage broker, inspector, and appraiser, lift shipping costs and renovations. Moreover, transferring your money to Israel from abroad (put in link) can cost you more than you might expect. It is important to consult with professionals like IsraTransfer on this matter.
Legal Considerations when Purchasing a Home
Debbie Rosen Solow from Rosen Solow Law is a real estate attorney with over twenty years of experience. She is the managing partner at Rosen-Solow Law Offices, a boutique law firm specializing in representing Olim and investors in real estate transactions all over Israel.
Once you find a property you love, the next step is to sign documents. There are agreements with the real estate agent, the seller, and so on. But before you sign anything, Debbie affirms, you must understand the details. In Israel, once the contract is signed, the buyer and seller are bound by it, and any subsequent changes have monetary consequences. The only time a buyer can sign a contingent contract in Israel is when the property is on paper and is awaiting building permits. At the signing, you or your lawyer will sign on all deeds. You will need to put down 10%-20% on the spot. Therefore, carry out all relevant inspections before this moment.
Legal checks come first. A lawyer who specializes in property transactions will know which ones to do. Other types of lawyers may not be aware of all the legal intricacies of property purchases and sometimes overlook important information. Only use an expert in a real estate who can ensure that everything is OK when it comes to buying the property - the owners are who they say they are, there are no outstanding debts, etc.
Physical inspections are of the utmost importance when buying a second-hand property. An engineer should thoroughly inspect the home, ensuring there is no water damage and no structural issues. You also want to ensure there are no zoning issues and that nothing in the apartment was built illegally.
Mortgage brokers can help when you're looking to finance the home. There are many financing options available - variable rates, fixed rates, index-linked rates, and more - and a qualified mortgage broker can assist you in picking the right plan.
What to Know when Buying from Abroad?
The bottom line for purchasing from abroad is to have a trusted team of professionals by your side. Your team of experts is your eyes and ears in Israel. They can advise you every step of the way and help you avoid pitfalls.
Questions from our Audience
How Can I Buy an Apartment over Zoom?
From a real estate perspective, you can have a good look at a property over a video call. The real estate agent can point the camera at the ceilings, corners, closets, etc. Noam has even flown drones from the tops of buildings to give prospective buyers a good look at the surrounding areas.
Legal documents can also be sent and signed from a different country. Although these technically can't all be done over zoom, many papers can be signed at local consulates or sent by mail.
Daniel explains that what is good to keep in mind is to make sure you are working with Israeli lawyers and realtors who are versed in buying from abroad. Having a knowledgeable team will make the whole experience smoother and more pleasant.
Which is the Best Place to Buy in Jerusalem?
Jerusalem is a diverse city, so it depends on what you are looking for. In general, apartments undergoing "demolition and construction" are great for investment purposes. These are properties that were built many years ago and are being torn down and rebuilt to meet modern building codes.
In terms of finding the right neighborhood, this is a personal decision, and your budget and religious level can be a relevant factor to consider. More religious areas that people are moving from abroad include Ramat Eshkol, Sha'arei Chessed, and Rechaviya. Beit Hakerem and Katamon have more secular and religiously diverse populations.
Why Can't I Buy Shekels at my Local Bank?
Although you can buy shekels at a local bank, it is much more expensive. Many banks will charge as much as six times what IsraTransfer will charge you. Changing the money at an Israeli bank will be cheaper, but still quite expensive. They charge high exchange rates and have hidden fees, like the commission. IsraTransfer doesn't charge commission and only charges a small fee on the mid-market rate. Everything is upfront, and there are no hidden fees, as is often the case with the local banks.
I'm considering buying in Gvaot Eden, a new development near Beit Shemesh, but I understand they don't have a permit yet. What are the risks of buying there?
There are many benefits to buying into a new project like Gvaot Eden. It looks like it is going to be a beautiful development, and prices are often lower when purchased before they get permits. It can be a smart investment as long as you know how to protect yourself against potential legal headaches and use an excellent legal team.
Firstly, understand that there could be deviations from the original plans. Any plans you sign are not final, and the local authorities might not approve of them. Therefore, it's crucial that in your contract, there is a clause giving you an out from the agreement in the case that there are significant changes to the plans that you are not OK with.
Secondly, understand that when dealing with a project without a permit, it could take a long time to finalize all the stages. Experts familiar with the local market can often figure out where the project stands and the projected timeline. For example, Gvaot Eden is well on its way and looks like it will have a permit within the next six months.
What Should I Know about Church Land Properties?
Church land owned properties present a problem in Jerusalem. These are properties built on areas leased from the Greek Orthodox Church, where the original leases were for very long periods. Although you don't have to stay away from these properties, your lawyer must find out all the details regarding the lease rights to assess whether it is worthwhile.
There are instances where the land can be purchased, thereby making the property entirely privately owned. But it is important to reiterate that anything related to church land should be approached carefully and with expert guidance.
Can a Parent Send Money to Israel for a Child?
Yes, this happens a lot. Parents often want to send money to help their children buy real estate in Israel. An issue comes up when the bank asks for the source of funds. We need to prove that the people sending the money are indeed the parents. It is usually pretty straightforward.
Other than a Mortgage, What Costs are There?
Additional costs can vary extensively from one apartment to another. In addition to the purchase costs mentioned above, some things to keep in mind are:
Maintenance costs - up to 4,000 ILS (or as little as 200 ILS) depends on building and how fancy it is
Insurance depends on the side of the property
What Compensation Will I Receive if My Contractor Runs Late Finishing our Home?
Buying an "on paper" property can be an exciting venture, and many people are in the market for a brand new home. One of the risks involved with these properties is that the company may not finish the project on time. Legally, a contractor can run up to 60 days late on a project for any reason whatsoever with no compensation owed to the buyer.
After 60 days, the buyer is entitled to monthly payments equal to the going rent of a comparable apartment in the area where the new home is situated. This amount can go up if the project is still not completed after eight months.
Extenuating circumstances are requiring the contractor to be over 60 days late without needing to pay the buyer. These should be included in the contract but, in general, consist of instances of general upheaval which could prevent the company from working, such as war, strikes, and the like. A knowledgeable lawyer can put stipulations in the contract that protect you even under these circumstances.
We hope we've answered your questions about buying a property in Israel! You can also view the accompanying slideshows that the panelists presented: