Bernard Raskin, regional owner of Remax Israel, urged real estate agencies on Monday to crack down on the "chapperim" operating in the market in an effort to fight flourishing black market activity, which he estimated is involved in between 40 percent to 50% of all deals on the country's real estate sector.
"With much regret we are seeing a growing phenomenon of "chapperim" (grabber in Yiddish) operating in the real estate agency market, who are taking commissions under the table without paying taxes encouraging black market activity, which I estimate happens in 40 to 50% of all deals," Raskin said in an interview with The Jerusalem Post. "Nobody wants to talk openly about this issue because it's an embarrassing phenomenon, which reflects badly on and damages the reputation of the real estate agency market. But I believe that we can't fight this phenomenon alone."
Remax Israel, which has 76 branches and 500 agents in Israel, reported that revenues in 2007 increased 21% compared with last year, while the number of transactions rose by 18% during the same period.
"I am bullish about a booming real estate market in 2008, there is huge demand and not enough to sell on the market," Raskin said. "Similar to 2007, we expect property prices to go up by between 10% to 30% in the popular areas.
While booming sales are good news for the market, Raskin appealed to all agencies to implement high standards in fighting black market activity, including ethical codes of conduct and investigative accounting procedures, and advised consumers to work only with real estate agency chains and licensed reputable agents who operate in accordance with the law.
"To my dismay, I found that many so-called real estate agents are truly amateurs and operate without a license saying it was not necessary in Israel to have one," a veteran US real estate broker, and recent immigrant to Israel, told the Post. "For the past four months, I have been seeking to rent property in the areas of Haifa and Caesarea through real estate agencies but every time I turn around I am being messed with. In one deal I was pushed into paying the commission fee in cash, the real estate agent didn't want to give me a receipt and when the transaction fell through at the last moment the same agent refused to pay back the fee. Only after several phone threats was the fee returned."
The former US real estate broker, who did not want to be named, was concerned that other house-seeking olim are being ripped off by the common phrase "this is how we do things in Israel."
"Clearly something needs to be done, for example formal education and testing for all real estate agents, because I can see how new olim can easily be taken to the cleaners by the large number of unscrupulous real estate agents here in Israel," he said.
Hanan Schlesinger, CEO of Anglo-Saxon, said that his real estate agency chain has a full electronic reporting system to record all deals and a fierce internal accounting system, making it virtually impossible for agents to engage in any black market activity.
"I believe that black market activity occurs mainly among privately-owned and small real estate brokers and less among real estate agency chains, but I don't believe that the black market figure, which is difficult to measure, is that high," he said.
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