Are you looking to buy a property at a reasonable price, without paying an extortionate agent fee?
Below I share some firsthand cases of buyers, who closely avoided purchasing overpriced apartments, and managed to significantly reduce the agent fees.
Follow for some helpful tips on how to get the best price when buying a property.
Case #1
My wife and I were interested in buying an apartment. The asking price was 2.1M NIS. The agent insisted that she had already bargained with the owner. She maintained that there was no way the seller would reduce the price.
I personally paid the owner a visit, withhout informing the agent. I told the owner that the price was a little high, and asked if she was flexible. Ultimately she agreed to sell the apartment for 1.8M-a difference of 300,000NIS.
The agent receives around 2% of the sale price. In this case, 6,000 NIS. If the agent was receiving a percentage from the seller as well, the agent fee would have reached 12, 000 NIS. The agent therefore has little motivation to negotiate a better price.
Tip #1 Do not always leave the negotiation up to the agent. If you have a personal relationship with the him/her and you are sure they intend to get you the best deal, then it may be safe to do so, otherwise send a friend, your lawyer, or go personally to negotiate. You’ll be surprised how much money you can save.
Case #2
A relative of mine approached an agent to find an apartment to buy. He was only willing to pay a certain sum as the agent fee. This was considerably lower than the asking rate. Since this property had been on the market for a while, the agent decided it was better to sell the apartment for a lower fee, than not to sell at all. They closed on the apartment in three weeks, the agent made her money, with minimal work, and all parties were happy.
Tip #2 The agent fee is negotiable. Inform the agent in advance that you will only pay 1-1.5% of the property price. Many agents will agree to this. Make sure the fee is written on any paper you are asked to sign. Remember, once anything is signed, there is no more room for negotiation, negotiating takes place BEFORE you see the apartment, NOT AFTER.
Case #3
I accompanied a close friend of mine to see an apartment that he was interested in buying. The agent told him the property was a 120 sq.mr. duplex. They were ready to sign a ‘memorandum of understanding’ (zichron devarim). The owner presented a copy of the “taba,” the official government description of the apartment. On the “taba” the apartment was listed only as 95 square meters.
I asked the agent what happened to the other 25 sq.mr. He explained that there was permission to build a balcony of 20 sq.mr. Later it became apparent, that there was no permission, only a request in the city hall, permission was “on the way.”
He continued to explain how and why the steps in the apartment also somehow were included, therefore totaling 120 sq.mr. I insisted that one does not pay full value for something that there is no permission to build. Had my friend taken a good lawyer, he would have caught this almost immediately.
Tip #3 With the help of a good lawyer, check out the apartment very well BEFORE you sign any kind of agreement. Even signing a ‘memorandum of understanding’ will already make you responsible to pay large sums of money.
Tip #4 Make sure you understand exactly what is included in the sale price. If there is permission to build, let the seller show you the signed copy of the permission. If permission is pending, take your own architect to check it out. (I have seen cases when the “permission” had already expired, been refused or was just wishful thinking) If appliances/furniture are included in the sale, this should be included in the document of sale.
Tip #5 Signing a ‘memorandum of understanding’ is a legal document that can hold you responsible for a lot of money. NEVER sign this document without YOUR lawyer giving you the green light. You cannot rely on the sellers lawyer to have your interests as his priority. I have witnessed agents pushing clients to sign this document, insisting that it is just to hold the apartment until the client makes a final decision. This is false. If you decide to pull out, after signing this document, you can be liable for a lot of money.
Tip #6 A price of an apartment is based on the “legal” size of the apartment. Many apartments (especially in Israel) have illegal additions. If it is illegal the city can pull it down anytime, even after many years) The illegal additions do not have the same value as the legal sections of the apartment. In addition, balconies and service areas do not have the same value as primary areas of the apartment.
1. Try negotiating the price personally with the seller, although you can’t leave the agent out of the negotiations you can make sure you are getting the best deal by double checking it.
2. Agree on an agent fee before seeing the apartment, and try to negotiate a lower fee than the typical 2%.
3. Illegal additions to an apartment do not have the same value as the legal parts. Balconies and service areas also are valued less than primary areas. Make sure the asking price matches the legal dimensions of the apartment.
4. Make sure you understand what extras are included in the sale price. Do not pay for “building permission” If there is no written permission.
5. Do not sign a “zichron dvarim” or any other agreement until you have the go ahead from your lawyer.
For more advice or if you have a question then be in touch. I will be happy to answer any questions for you.
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