Real estate agent fees in Israel: you pay for what you get

by | Jun 24, 2016 | Israel Real Estate | 0 comments

An important aspect of any real estate transaction are real estate agent fees. In the United States, real estate agent commissions are complicated, making it one of the least understood aspects to buying or selling a home. In general, there is a 6% commission included in the total amount of the property, split evenly between two agents, but one must check each contract for the exact terms of the commissions.

The real estate agent fee process in Israel is much more straightforward; both buyer and seller each pay their own real estate agent and the fee is not part of the total transaction. Both the buyer and seller pay an additional fee to their respective real estate agent. Most deals in Tel Aviv are between two different agents: one representing the seller and the other representing the buyer.

The standard commission is 2% of the transaction amount plus sales tax (which is currently 17%). Although 2% is the standard, the rate is negotiable: some agents charge more than 2% (up to 4%), and some less than 2%.

I would be very cautious in deciding to work with real estate agents that charge less than a 2% fee. Accepting a lower fee most often means they are offering a lesser service. They likely have many clients at the same time, and spend less of their time and energy on you. As a buyer, this could lead to not reaching the maximum number of prospective buyers and ultimately a lower closing price for your property; if you are looking to buy a property, this could lead to missing out on great properties that fit your needs.

Also, if an agent cannot properly negotiate their own money, how do you expect them to negotiate yours?