Foreigner's guide to property market: Don't pay too much

A new real estate column: Property expert Lyle Plocher gives advice and tips for those from abroad looking to invest in Israeli property.

By LYLE PLOCHER
July 4, 2011 00:50
4 minute read.
Jerusalem property

property 521. (photo credit: Marc Israel Sellem)

There are several things that a foreign person buying property in Israel can do to protect themselves from paying too much for their dream home in Israel.  Just some of these are listed below:

Start your property search a few months before going to Israel

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One of the best ways to protect yourself from paying too much for a property is to properly educate yourself about the market by starting your property search a few months before you actually go to Israel to view specific properties. If you already know which city you are intending to buy in, then do as much of your research as possible on properties in that City. Real estate in Israel, just like anywhere else is very localized in terms of values being different neighborhood by neighborhood. The more you know about which neighborhoods you would consider within your target city, the better prepared you will be when it comes time to view and make offers on property.


RELATED:
Foreigner's guide to property market: The search begins
Foreigner's guide to property market: The offer process

One tool that will help you "get a grip" on market values is to break the "asking price" of each property down into a price per square meter.  If you are considering more than one neighborhood, your research will probably show you that the going price per square meter differs in each of the target neighborhoods. You will have to search several different websites as you view properties as the cities in Israel do not have large, well organized Multiple Listing Services such as are found in the US, where the bulk of properties for sale in a particular city can be found in one convenient location. If you happen to find "your dream home" during this research phase, just realize that the property will probably not be available by the time you get to Israel, so be prepared to temper your emotions and expectations. Unless the real estate market in Israel changes drastically, properties in the better neighborhoods have not remained on the market for very long these last few years.

Properties to avoid

Unless there is a shortage of properties available in your "target neighborhood(s)", you should probably avoid dealing with "For Sale by Owners."  There seems to be a universal phenomenon when it comes to this category of sellers and that is the majority of them have inflated opinions of the value of their properties. In Israel especially, many sellers think there are "two real estate markets," with two different sets of prices, one for the locals and one for the foreigners. One real estate agent in Tel Aviv, who shared his personal experience with me said that he gets at least two to three inquiries per week from homeowners who think they can get inflated prices for their apartments by selling them to a foreigner. He respectfully declines to work with them, instead focusing on sellers who are realistic about their property's value. If you happen to run into a property that is being offered by a "For Sale by Owner" that you fall in love with, make sure you utilize the services of a professional, licensed Israel Real Estate Agent to represent you. You can pay your agent his/her commission and let them go to work on the seller.

Viewing properties

Perhaps a week before you depart for Israel, you should identify several properties you would like to view and make the appropriate appointments/arrangements with the various Real Estate Agents you have been communicating with about properties. It's fine to look at properties with more than one agent, but you also may consider finding one agent that you are really comfortable with and having that agent send you a list of "currently available" properties that meet your search criteria and then selecting those that you would like to view. Whichever approach you take, the important thing is to try to schedule as many viewings as possible in advance to insure that the agent or agents and the sellers will be available at the times you have available. One Jerusalem agent who shared her philosophy with me about working with buyers said that she advises her clients to look at as many properties as they feel they need to in order to get their own ideas and insight into the "going rates" for properties in their target neighborhoods.
 
Making the right offer

Your Real Estate Agent should be able to provide you with a few samples of recently sold comparable properties to help you frame your "offer amount."  If you really want a second opinion, on what the property might be worth, you can always hire an appraiser.  If you are obtaining a mortgage for a portion of the purchase price, you will have to pay an appraiser anyway. Before determining your offer and getting your agent's opinion of the value, you should know whether or not your agent is collecting a commission from the seller's side as well.  The ideal scenario is for your agent to be representing only your interests so you can confide fully in them about your offer strategy. 

Lyle Plocher is the Director of Buy Property In Israel and can be reached by email at lyle@buypropertyinisrael.com.


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