Thirty years ago I had the good fortune of spending two years learning in yeshiva in Jerusalem’s Old City. One day, while walking through the Arab shuk, I observed an older American couple who were considering buying a pair of shearling slippers. Responding to their price inquiry, the Arab shopkeeper answered, “for you, $25!” Thereupon the husband whispered to his wife, “let me handle these negotiations, Mildred; you have to bargain with them!” The man then turned to the shopkeeper and said, “$20 and not a penny more!” The Arab, barely able to conceal his glee, quickly accepted their offer.
Having bargained with these local retailers and knowing the negotiation game, I was shocked that the older gentleman did not counter the shopkeeper with an offer of a dollar at most, and that the sales price did not end up at $5, $10 tops.
After that experience, I understandably thought that American and Israeli negotiating cultures were very different. However, I was surprised to learn that Israeli and American cultures are actually considered relatively similar, as they both value directness and clarity in business negotiations. After giving this some thought, it made sense that Israel—a country molded by the many cultures of its diverse population—would incorporate western sensibilities and negotiations from its American and British immigrants.
It is interesting to contrast the Israeli and Anglo cultures with the Japanese, who prefer negotiating in an indirect manner and frown upon directness, which they consider aggressive and insulting. This reminds me of a remarkable experience I had about 15 years ago, negotiating the sale of a Manhattan office building between an American seller and a Japanese buyer. When we finished the hour-long meeting, the seller believed we had a handshake on the deal, while in fact the Japanese purchaser had walked away from the deal. It was fascinating that both parties came out of the same meeting with totally opposite understandings of what had transpired.
With that background, let’s fast forward to 2013: My client fell in love with an apartment and directed me to give the seller his asking price. I proceeded to explain to the client that the property was priced about 10% above market and that we should offer 13% below the asking price, leaving us room to negotiate up to the property’s market value. He gratefully agreed with my strategy and, after a few rounds of negotiations, we closed the deal very close to its market value—and saved my client over $100,000.
In the United States, motivated home sellers usually attach an asking price of 3-5 percent—and in some markets up to 10 percent—above the market value. In Israel, there is no unwritten rule how to price properties. Sometimes sellers price their property at their “take” price without taking into account any room for negotiation, and sometimes the apartment can be priced at up to 20% above market.
So how do you get the home that you want without being taken for a ride?
The key is market knowledge. If you know the prices of similar properties in the vicinity that have recently closed, you are empowered to make prudent decisions. A good real estate agent can provide you with recent comparable sales to ensure that you are not overpaying for the property. Armed with market data and flanked with seasoned professionals protecting your interests, you can move forward with confidence and close the deal at the right price.
Gedaliah Borvick is the founder of My Israel Home (www.myisraelhome.com), a real estate agency focused on helping people from abroad buy and sell homes in Israel. To sign up for his monthly market updates, contact him at [email protected]
By Gedaliah Borvick