Navigating a real estate transaction in Israel can be complex, and a good agent is an invaluable guide. They provide market expertise, access to listings, and negotiation skills. But how are they compensated? Understanding the standard fee structure is essential to avoid surprises and ensure a transparent and professional relationship.
Unlike some countries with legally mandated fees, the commission structure in Israel is based on customary practice and is always negotiable. However, there are very clear and widely accepted standards that form the basis of most transactions.
For Property Sales
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The Standard: The most common commission for both the buyer’s agent and the seller’s agent is 2% of the final sale price.
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The VAT (
Ma'am): This is the most important and often misunderstood part of the fee. The 2% commission is subject to Value Added Tax, which is currently 17%. So, the total fee you will pay is actually 2% + VAT. -
Example: On the sale of a 3,000,000 shekel apartment, the 2% commission is 60,000 shekels. The VAT on that commission is an additional 10,200 shekels (17% of 60,000). The total fee paid to the agent is 70,200 shekels.
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Negotiability: While 2% is the standard, commissions can sometimes be negotiated down slightly, especially on very high-priced luxury properties. However, a significant reduction might affect an agent’s motivation to prioritize your property.
For Property Rentals (Long-Term)
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The Standard: The standard commission for a rental transaction is equivalent to one month’s rent.
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The VAT (
Ma'am): Just like with sales, this fee is also subject to 17% VAT. -
Who Pays?: Typically, the tenant pays this commission to the agent who showed them the property and facilitated the deal. In some cases, a landlord may also hire an agent to find a tenant and pay a similar fee. It is possible for an agent to be compensated by both sides if they represent both the landlord and the tenant.
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Example: For an apartment that rents for 7,000 shekels per month, the commission is 7,000 shekels. The VAT is an additional 1,190 shekels. The total fee paid is 8,190 shekels.
Always sign a clear agreement with your agent before you begin working with them. This document should explicitly state the commission percentage or fee, clarifying that it is “plus VAT.” This transparency is the foundation of a good working relationship and a smooth transaction.
Too Long; Didn’t Read
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For Sales: The standard agent commission is 2% of the sale price, plus 17% VAT.
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For Rentals: The standard agent commission is one month’s rent, plus 17% VAT.
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VAT is Key: Always remember that the final cost is the commission plus the 17% Value Added Tax.
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Get it in Writing: Always sign a clear agreement with your agent outlining the fee structure before you start the process.
