A buyer's market: How to know if the discount you are getting is really worth it
A real discount on an apartment is not measured against the list price, but against the market price and the minimum price at which the developer is willing to sell. Checking similar transactions, financing benefits, and the buyer's bargaining power can help distinguish between a marketing promotion and a worthwhile deal.
What is an apartment discount? How should one view a developer who lowers the original price? Is it a genuine discount or a marketing tactic? Defining true value in the real estate market is complex.
Consider the Pershkovsky company’s 72-hour digital auction for six projects in Haifa, Herzliya, Tel Aviv, and Ashdod. "We analyzed prices of similar sold units and applied double-digit discounts to set minimum auction prices," explains Chairman Yossi Pershkovsky. Reductions range from 10% to 15% or more.
Examples include minimum prices of 5.2 million shekels in the HaGaDa project (Tel Aviv), 3.12 million shekels in Glil Yam (Herzliya), and 1.9 million shekels for a 4-room apartment in Ramat HaNasi (Haifa). Our checks confirm these prices are up to 10% below market rates, though buyers must still account for floor level and layout when calculating individual savings.
1. Why list prices are misleading
The minimum price is a developer's best-kept secret. Official price lists are often inflated, serving as a starting point for negotiation, much like second-hand listings. Sales staff often offer initial discounts of tens of thousands of shekels, with an extra 1–2% "seriousness discount" available for committed buyers.
The real negotiation happens when a buyer demands further concessions. At this stage, management may approve a final price, often reaching a 5% discount from the list price. However, compared to objective market data, the actual savings may be smaller than they appear.
How to determine the real discount:
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Ignore list prices: They are designed for bargaining.
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Compare with market rates: Use the Tax Authority website to verify recent local transactions.
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Factor in financial benefits: Account for construction index linkage exemptions and payment plans (e.g., 10%-90%).
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Use cash leverage: A large down payment is a powerful tool to lower the final price.
2. Calculating true value
Dagan Ronen, CEO of HiTechZone, notes: "You cannot base calculations on the developer's list price. We verify market rates via Tax Authority reports and account for hidden perks like free parking or financial promotions." Their goal is to secure a 4–10% discount below the developer's minimum price.
Financial discounts embedded in payment methods (e.g., 10%-90%) are indirect. Buyers save on mortgage interest and construction index linkage until completion, which is particularly beneficial for investors.
3. The power of cash
Roni Cohen, CEO of Elder Real Estate Marketing, emphasizes that every deal is unique. Developers are constrained by the "zero report" (the bank-approved minimum price), but older projects often offer more flexibility.
"Those who have cash and can provide a significant down payment can secure discounts of 7–8% and exemptions from index linkage," adds Irit Hofer, owner of Inhouse Real Estate Marketing. Cash remains a tremendous advantage that many buyers overlook.
