Ever felt like you’re juggling flaming torches while riding a unicycle? That’s exactly how it feels trying to buy a new home in Israel when your current property hasn’t sold yet. You’re not alone—many Israelis face this balancing act every year. Thankfully, there’s a smart solution called a home sale contingency. In this guide, we’ll break down exactly what that means, why it’s useful, and how you can leverage it effectively here in Israel.
First Things First: What’s a Home Sale Contingency?
In simple terms, a home sale contingency is a condition you include in your purchase agreement. It clearly states that buying your new home depends entirely on selling your current one first. If your old home doesn’t sell within the specified timeframe, you’re free to withdraw from the deal without facing harsh penalties.
This is especially crucial in Israel’s fast-paced and expensive housing market, where getting stuck with two homes (and two mortgages) can quickly become overwhelming.
Why Sellers Might Be Hesitant (And How to Convince Them)
Let’s be honest—most Israeli sellers prefer uncomplicated deals. They worry a contingent offer might delay their own plans. But don’t let that discourage you! To make your offer attractive:
- Be Transparent: Show sellers you’ve already listed your current home or even better, already have a serious buyer lined up.
- Prove Financial Strength: Provide mortgage pre-approval letters from your bank to reassure sellers.
- Offer a Larger Initial Deposit: Demonstrate your commitment by offering a higher upfront deposit.
- Add a Kick-Out Clause: This lets sellers keep marketing their property. If another offer comes in, you’re given a short window (usually 48–72 hours) to either remove your contingency or let the house go.
Understanding the Israeli Market and Making Your Move
The real estate market in Israel is famously competitive—especially in cities like Tel Aviv, Jerusalem, and Herzliya. Properties move quickly, and prices are steadily climbing. Here are some tips to navigate smoothly:
1. Evaluate Your Home’s Marketability
Research similar homes in your area. Check how quickly properties are selling and set your pricing strategically. The quicker your current home is under contract, the stronger your position when negotiating.
Financing Solutions for Contingent Buyers in Israel
Here are a few popular options you can consider:
- Bridge Loans (Halva’at Gishur): Short-term loans to cover the gap between buying your new home and selling your old one. Typically, you pay interest-only during this period and repay the loan once your sale closes.
- Mortgage Guidelines: Remember, the Bank of Israel usually limits “home upgraders” to around 70% financing on the new home, meaning you’ll need about 30% equity upfront from your sale or savings.
- Flexible Payment Timelines: Negotiate payment milestones that align closely with your home sale process.
Essential Legal Steps and Tips
To protect yourself legally, consider:
- Clearly Defined Contingency Clauses: Your lawyer should explicitly state your condition in the purchase agreement, including deadlines and exact terms.
- Avoid ‘Zichron Devarim’: Always wait for a formal, lawyer-reviewed contract (“Heskem Mechira”). Preliminary agreements can accidentally lock you into terms you don’t intend.
- Taxes: Be aware of the 18-month window to sell your existing home to qualify for reduced purchase tax rates on your new property.
Choosing the Right Real Estate Agent
A seasoned Israeli real estate agent is crucial when juggling two deals. They’ll help with:
- Pricing and marketing your current home effectively.
- Negotiating timelines and terms to align your purchase and sale.
- Advising on market conditions and the best strategic approach.
Common Challenges and Proactive Solutions
- Delayed Home Sale: Have a backup plan like temporary renting or adjusting your listing strategy.
- Timing Gaps: Negotiate flexible occupancy dates or rental arrangements to manage transitions smoothly.
Final Thoughts: You’ve Got This!
Buying a home in Israel contingent on selling your current one is manageable with careful planning and the right strategy. Remember to stay flexible, proactive, and lean heavily on trusted professionals to navigate the complexities. Soon enough, you’ll be handing over the keys to your old place and stepping into your new Israeli dream home!
Too Long; Didn’t Read (TL;DR):
- Home sale contingency protects you from financial risk.
- Transparency and strategic clauses (like kick-out clauses) strengthen your offer.
- Use bridge loans or flexible payment terms to navigate timing issues.
- Ensure legal clarity and timely sales to avoid tax pitfalls.
- Work closely with experienced real estate agents to coordinate seamlessly.
Now, happy house hunting in Israel!
