BUYING SECOND HAND APARTMENT
The advantages of buying a second hand apartment is that you can see what you are buying and you know what you are getting. The price is generally final and not linked to any index. The date you are supposed to receive the apartment can not generally be changed.
When buying a second hand apartment it is important to make sure that the apartment was built legally and has no illegal additions. Otherwise you may later have to dismantle any illegal additions to the house. It is also prudent to check the town zoning plan. By doing so, the buyer can confirm that there won`t be any surprises in the future such as tall buildings, schools, kindergartens etc.
The payment schedule and the guarantees are of the utmost importance. Since the norm in Israel is that most of the monies are paid before the apartment is given over to the buyer the protection of monies paid is of paramount importance. In addition, the physical transfer of the apartment and the transfer of rights to the apartment are generally not done simultaneously. An experienced lawyer is necessary to explain to a buyer what is going on and to take steps to protect him.
There are various expenses connected to buying an apartment:
1.The purchase price.
2. Purchase tax – A calculator can be found here. Note that Olim have a partial exemption.
3. Legal fees – Most lawyers take between 0.5%-1% of the price of the apartment plus value added tax though occasionally additional work is required and a higher fee is requested.
4. Money transfer and/or conversion costs – If the buyer is sending money from overseas then not only will he pay transfer costs but he will also pay a commission for converting the money into shekels.
5. Mortgage costs – There are various costs connected with receiving a mortgage such as a fee for opening a file, an assessor fee, notary fees, registration fees. All in all these fees come out to a few thousand shekels. If one is living overseas and buying an apartment in Israel it helps to have a mortgage broker in order to cut through the red tape and to receive the best interest rates possible.
6. Deposit for gas– The buyer has to pay a deposit to the gas company. Alternatively he can pay the seller and the seller can leave his deposit.
7. Real estate agents – They usually ask for 2%+ vat but the price is generally negotiable.
8. Engineer – It is recommended to have the apartment checked out by an engineer before taking possession. The usual fee is approximately $500 plus V.A.T for a written report and $250 plus V.A.T. for a verbal report.
9. Registration fees – The fees usually come out to a few hundred shekels, depending on where the apartment is registered and if the buyer has a mortgage.