Buying or Renting an Apartment? How to Avoid Trouble with Real Estate Agents
Summer is the peak season for Israeli real estate. To avoid disputes and financial losses when working with agents, it is crucial to understand the 'Real Estate Brokers Law' and properly document all agreements.
Summer has arrived, and with it the season of Israeli "apartment migration." The hot months are traditionally the peak of the real estate market, when thousands of tenants and buyers set out in search of their next property. While a professional agent can save precious time, the pressure to close a deal quickly, combined with a lack of familiarity with the "Real Estate Brokers Law," often leads to mistakes and disputes. "Mamon" and Ynet have compiled a guide with the help of Adv. Dr. Arik Ariel, author of "Real Estate Brokerage Laws," to help you conduct yourself correctly and avoid unnecessary costs.
What Tenants Should Know
Before engaging with an agent, verify they hold a valid license. The agent must provide full property details: block, plot, number of rooms, balconies, storage, floor, elevator access, area, municipal tax (arnona), and the asking price. It is also vital to know if the property is being sold by an authority, such as the Execution Office or a court, and if there are any defects.
Agents are obligated to demand a disclosure document from the owner regarding dampness, illegal construction, infrastructure defects, or nuisances like noise or radiation. If the owner refuses, the agent must inform the tenant.
The Brokerage Order Form
Brokerage service forms often include both "purchase" and "rent" options. If you are only renting, ensure the "purchase" option is crossed out. Failing to do so could lead to a situation where, years later, you are sued for brokerage fees upon deciding to buy the property.
The "Effective Factor" Test
Most brokerage lawsuits involve agents claiming they were the "effective factor" in closing a deal. The law does not measure the hours or effort invested, but the result. If the agent's actions served as the central catalyst for the signing of the agreement, they are legally entitled to the agreed-upon commission.
Key Rules and Restrictions
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Commissions: While the law does not set a cap, the customary rate for sales is 1.5% to 2% plus VAT, and for rentals, one month's rent plus VAT.
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Dual Representation: An agent may represent both parties if they have informed each side and received written consent.
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Legal Documents: Agents are strictly forbidden from drafting rental or sales contracts. Doing so is a disciplinary offense and may result in the loss of commission rights or a lawsuit for damages.
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Conflicts of Interest: An agent may broker a relative's property only if they have fully disclosed the relationship and received written consent from the client.
Tips for Exclusivity Agreements
When signing an exclusivity agreement, agree in advance on specific marketing actions. If you already have interested parties, list them in the remarks section of the agreement so the agent is not entitled to commission if those specific individuals eventually purchase the property. Additionally, sellers may instruct agents to keep sensitive information, such as financial pressure to sell, confidential from potential buyers.
