Tips for successful property buying

Despite the recent war, international clients are arriving in Israel during the holidays both for the purpose of visiting relatives and friends and to purchase an asset in the Holy Land.

October 8, 2006 09:42
apolonia towers 88 298

apolonia towers 88 298. (photo credit: Courtesy)

The real estate market for foreign residents is hotter than ever. Despite the summer's war, international clients are arriving in Israel during the holidays both for the purpose of visiting relatives and friends and to purchase an asset in the Holy Land. Although, as the famous adage goes, real estate is all about "location, location, location," the purchase of a property in Israel is very different from those abroad. Therefore, those foreign clients interested in taking advantage of their stay in Israel to purchase a property would be wise to do some home work. Since their stay in the country is short and limited, it is recommended they prepare a "shopping list" in advance to predetermine such things as: budget; type of purchase desired - whether for the purpose of investment or for family residence; willingness to invest in renovations or a preference to buy an already renovated property; regular or Shabbat elevator; the need for a succa balcony; exposures; kitchen; air conditioning needs; availability dates; and so on. Additionally, some advance thought should be given to which type of community is desired: ultra orthodox, religious, foreign residents, secular etc. If unsure as to how to define the population in the area, a professional and well-established real estate agency that is well-versed in the area and can indicate any expected changes in the area, both with regard to the population type and status as well as changes in the area according to the municipality plans, should be consulted. It is preferable to choose an agency that is part of a large and well-known real estate company which has a reputation in the specific area you are interested in. In that way you are ensuring yourselves a richer choice of properties. The best method by which to evaluate the company is by references of acquaintances who have purchased with them. When arriving at the company for a meeting, clients should make sure to meet with the manager and ask to see company statistics as well as deals brokered by the company in their chosen area. Purchasers should never feel pressure to close a deal ahead of their return abroad. Such a decision could lead to a purchase that is a compromise. Rather, select a serious real estate company that can continue the search for an appropriate asset, while remaining in touch from afar. When selecting an attorney, purchasers should make sure that they specialize in real estate in general, and in real estate in the specific city, in particular. This will help ensure that time is not wasted on bureaucratic matters with the local authorities. An attorney versed in city planning, who knows how to receive permits for unusual uses and has experience working with the municipality, will know the demands of the municipality clerks and how to answer them. Those who are interested in renovating the property, should choose an architect whose work area is in that city and who will know how to translate the client's design needs into municipality demands. Of course, they should also be able to recommend and design in accordance with the weather and building style typical of the city. Should the situation arise were an asset has been found but the buying procedure has not ended, it is essential to make sure to entrust the attorney with a Power of Attorney specific to the purchase of property, which will allow him/her to deal with all the matters having to do with loans and mortgages and anything related to the property purchase. If there are doubts with regard to the value of the property, an appraiser should be appointed prior to the purchase. The reliability and professionalism of a real estate agent or an attorney familiar with the city and area can act as a replacement for an appraiser, and both should know how to evaluate the property's worth. Before deciding on a bank, one should look into several alternatives. Great competition among the Israeli banks, can translate into different terms and perks the banks can supply their clients. These banks tend to offer materials in foreign languages so that even the "small letters" will be clear. Unlike the practice overseas, Israeli mortgage banks usually grant up to 70% of the total and, in special cases, up to 80%. The remainder must be provided by the client. The real estate agent should be asked to examine the type of ownership of the property via the tabu documentation with a formal tabu signature. In Israel, different types of ownership exist and each case is individual: for example, lease by the Israel Lands Authority; land purchased from Arab hands; inheritance; Church land; and additional cases. Each case is treated differently. Those interested in checking the document reliability independently, can do so with the plot and sub-plot (listed on the Arnona, or property tax, bill) through the Web site of the Justice Department. An overseas resident purchasing a property in Israel, is asked to pay purchase tax in a sum ranging from 3.5 percent to 5% of the value of the purchase. It should be factored into account that the percentages change from time to time and the real estate agent should be asked to update it as per the reports from the Treasury Department. Additionally, in Israel it is commonplace to pay attorney fees in the range of 1.5% to 2.5% of the purchase value and brokerage fees of 2% + V.A.T. (as opposed to the practice in the US where the percentages tend to be higher). Payment norm in Israel is such that when the full sum is provided in cash, a price reduction can be expected, commensurate with the negotiations and the terms of the sale. The US dollar rate should be fitted to the day of the purchase and the representative rate should be checked daily. Unlike abroad, the dollar value is in constant flux. How to choose a real estate agency The special needs of overseas clients are associated with a need to find a real estate agency specializing in this field. A greater deal of involvement is necessary when working with foreign clients, than when working with local residents. The agents are required to accompany the clients from the early phase of choosing an appropriate property, all the way through brokering the deal and leading up to working with local and legal authorities, along with all that is involved with procedure and the legal requirements involved with the purchase and/or sale of an asset. An appropriate realtor, should have the following attributes and experience: * Be proficient in the sale of first and second hand properties, thus having the ability to offer the client optimal and diverse options. * Be experienced in his/her area of expertise, and thus be able to provide the client with reliable information regarding the history of the desired asset. * Have creative ability in negotiation from advising the owner when to adjust the property price, "oiling the wheels" of the negotiation, to assist a quick agreement between the parties. * Have a variety of clients to interest in any new property or project offered for sale/rent. *Be well-versed in dealing with diverse clients. Poriah Taizi is CEO of Ambassador Israel, which specializes in real estate for foreign residents. Moti Zelikovich is head of the firm's second-hand department.

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