Comparison between Israeli Residential Real Estate Transactions and U.S. Residential Real Estate Transactions

Many people are nervous about entering into Real Estate transactions in Israel for many reasons. In Israel, the real estate transactions are conducted in Hebrew, a language they are not completely familiar with. They are not used to Israeli business mentality. Purchasers who are not native Israelis feel that the process is different in Israel than in their native countries, thereby exposing them to more risk. Below you will find a list of practical differences between U.S. real estate transactions and Israeli real estate transactions.

	ISRAEL	USA
Real Estate Agents’ Fees	The standard amount is 2% of the price from both buyers and sellers, plus V.A.T .	Sellers pay fees. Negotiable, but usually between 2% - 6% of the price.
Lawyers’ Fees	Fees vary between 0.5% - 2% of apartment price, plus V.A.T.	A flat rate of $1000 - $1500 per deal.
Title Search	Completed by the lawyer. Title insurance exists but is not very prevalent.	Completed by the insurance company which issues title insurance.
One Lawyer for Both Parties	Permitted.	Permitted if the parties sign conflict waivers permitting one attorney to represent both sides.
Payment Schedules	The payment schedule varies depending on the needs of the parties. Some money is held in escrow against fulfillment of certain duties by the seller, but it is virtually never 90% of the price.	10% at the signing, in escrow. 90% at the closing (transfer of rights).
Mortgages	Mortgages can be transferred from one apartment to another. The reason for this is that some mortgages have special rights attached (such as the oleh mortgage). The seller can transfer such a mortgage to his new apartment so as not to lose these rights. This whole process also affects the payment schedule.	Mortgages are not transferrable to another apartment. When you sell a property, you pay off the mortgage on the property and then have to get a new one any new property you buy.
Taxes	The purchaser pays a Purchase Tax and the seller pays a Capital Gains Tax and Sales Tax.	Capital Gains Tax is paid by the seller, plus a transfer tax of 1%.
Linking of Price	The prices of second hand apartments are usually linked to the U.S dollar. The prices of new apartments under construction are usually linked to the Building Index, but are sometimes linked to the Consumer Price Index or the U.S. dollar.	Prices are not linked.
When Is The Deal Binding?	Upon signature of both parties.	Upon signature of both parties.
Protection of Monies	In contracts for new apartments still under construction, the money is protected by a bank guarantee or insurance policy.	In contracts for new apartments still under construction, the money is held in escrow.
Who Pays the Construction Company’s Legal Fees?	Usually the buyer.	The construction company.
Freehold Land	Much of the land is freehold. The buyer gets a long term lease for 49 or 99 years from the government.	This is not prevalent.