You've Found THE Apartment...Now What:
Negotiating in Good-Faith
(These are the thoughts of CapitIL Sales Director Ben Levene.)
You finally did it!
This is when we get the questions such as “Now what?” “What is the process?” “Do we make an offer today? Not Today?”
“Do we offer something immediately and sign something immediately?”
Offers in Good Faith
Here in Israel, all offers are made in good faith, so you do not make an offer if you are not sure you want to buy the apartment.
Of course, you do make an offer if you want to go and do all the thorough due diligence with the full intention of buying the apartment. You shake hands in good faith, and we make it subject to completing due diligence before signing.
You call in inspectors, make sure you have got the finances, and complete all the legal due diligence. This is all done between offer and signing. Once you made the offer, you are in good faith and do due diligence.
Once you’ve signed, you are in with no contingencies. Ethically, this means that you will not be looking at other apartments and the seller will not be showing his apartment to other buyers. This generally is the rule and most of the time stands up to be true.
The good-faith offer needs to be made to make sure there is something to look into, no one should spend money on due diligence if we're not going to get to commercial terms.
Commercial terms include agreeing on a price and agreeing on the payment terms.
An example from recent days...
For example, this week, I’m showing someone apartments in the heart of Jerusalem - a very serious buyer looking for a holiday home that he will make into an Airbnb or short-term rental.
We found an apartment and agreed to the price, however, we are pushing very hard for non-standard payment terms - 10% down instead of 35% down. That is not standard here in Israel, but it is the role of a strong broker to try and obtain specific terms depending on their clients' needs.
Because there has been a good-faith offer made and the buyer took the angle not to try to play with the price too much as finding the capital quickly was the bigger issue, we are very likely to get the deal agreed as the seller sees good faith and common sense of the buyer to try and make a deal.
If you don't start talking, you don't get moving.
In essence, that is the point of a good-faith offer. It is not for fun, it is not to check out the seller and see how far we can push them and then decide it's to see if we can get what we want, we can get the deal rolling.
If you do not ask, you won't receive, and the point of starting negotiations is to get the deal rolling.
There is no point in investing time, money, and emotionally getting attached to the apartment unless commercial terms can be agreed upon!