Real Estate Agents’ Commission and Agreements

In Israel, real estate agent commissions are typically 2% + VAT, paid by the buyer upon signing the purchase contract. The commission agreement, which should be signed before viewing properties, is legally binding and outlines the agent’s role, the buyer’s obligations, and payment terms. Digital signatures are generally accepted if they comply with Israeli contract law.

Can I negotiate the agent’s commission?

Yes, in some cases. While 2% + VAT is the standard, there is room for negotiation, particularly in high-value transactions or when working exclusively with an agent.

What details should I look for in a commission agreement?

A commission agreement should clearly outline the terms of engagement between you and the agent. The following key details should be included:

• Agent’s fee – Typically, the fee is a percentage of the transaction amount, though it may also be a fixed sum. The agreement should clearly state the exact percentage or fixed amount, with VAT explicitly mentioned as additional. The agreement should also specify when the payment is due to ensure transparency.
• Property details – A description of each property the agent presents, including registration details, address, floor number, number of rooms, parking spaces, storage rooms, and any other relevant features.
• Price – The asking price for each property.
• Agent’s details – Full name, Israeli ID number, and real estate license number. Unlicensed intermediaries are not legally entitled to earn a commission.
• Client information – Full name and ID or passport number of each buyer.

What am I committing to by signing a commission agreement?

By signing, you agree to pay the agent’s fee if you purchase the property, even at a later date. You also agree not to share property details with third parties, bypass the agent, or negotiate directly with the seller or landlord without the agent’s involvement. The commission is only due when a binding sale is signed, provided the agent played a direct and effective role in facilitating the deal. Some agreements define a specific timeframe in which the agent is entitled to commission if you complete the transaction, while others do not.

Can I revisit a property with a different agent after signing a commission agreement?

If you have already signed an agreement with one agent and later visit the same property with another agent, you may still owe a commission to the first agent.

If an agent shows me a new construction project, can I contact the developer directly?

If an agent introduces you to the units in new project and you have signed an agreement stating that commission is due for a purchase, you will still be required to pay a commission if a transaction is completed, even if you negotiate directly with the developer. If you engage directly with the developer, you must inform the agent. Developers and agents have agreements in place to prevent buyers from bypassing agents to avoid fees.

Additionally, developers often work exclusively with specific agents or marketing companies, so going directly to the developer may not result in better terms.

Should I sign an exclusivity agreement with an agent?

While exclusivity is more common for sales agents representing sellers, for buyers, it means committing to a single agent for a defined period. This can be beneficial if you work with a knowledgeable, well-connected agent who provides personalized service and access to off-market opportunities. However, to justify exclusivity, a reduced commission or added value may be expected. If you prefer flexibility or want to explore a wider range of properties, working with multiple agents might be a better option.