Buying property in Israel? Read this first!

Buying Property in Israel? Read This First!

Acquiring land in Eretz Yisroel is a huge mitzvah. Perhaps that’s why it’s one of the three things that Chazal say are acquired with suffering (niknim b’yissurim). Nonetheless, as with any acquisition – an informed consumer is a better consumer. Even when purchasing property in Israel there are still many things you can do to minimize some of the hardship.

When checking out potential properties here are six points that are often overlooked in the excitement of wanting to close the deal that could help you avoid major headaches in the future:

1.       How Big is the Apartment – Really?

It’s always a good idea to know exactly how big the apartment you are buying really is – even if you’re buying a finished project. However, sometimes you can be unpleasantly surprised that the apartment you buy is actually 25% (!) smaller than the colored diagrams claim.  The reason for this is because there are actually four different measurements that are used to calculate the size of an apartment.

“Neto Neto” – This is what you want to know – bottom line how much floor space do you really have? This measurement is used by some Israeli municipalities to tax your property including the Jerusalem municipality and only measures the usable area of the apartment however no one selling you an apt will ever mention this measurement. Uncovered balcony, parking, and storage are never included in any of the measurement systems.

“Neto” – The “net” area measures the internal room dimensions from one side of the apartment to other as if it was just one large room excluding interior walls. Although this does represent the “space” of your apartment, it does not represent the “usable space.”

c.       “Shetach Plad Delet ” – Today this is a very common measurement, meaning “solid door,” and includes everything from the front door on – meaning the net area as well as the width of the exterior walls and half the width of walls shared with the neighbor.

d.      “Bruto” – The “gross” measurement is the largest possible measurement and includes exterior walls, half of shared walls, and a proportion of the common property of the whole building (i.e. stairs, elevator shaft, hallway, lobby etc.) in direct proportion to the size of your property (i.e. if you’re apartment represents 10% of the total area of the entire building, you have a 10% share in the shared area). Most sales go according to bruto.

2.       The Law of Gravity

“What’s gravity got to do with it?” you ask. As we all know, Newton’s Laws still govern much of our perceived reality so – “what goes up, must come down!” So too with currency exchange. This week the dollar is up, but next week it’s not unlikely if it falls again. When you are changing $300 at the moneychanger the fluctuation of the dollar is only a matter of a few shekels (even though it always feels good to get a few more agorot for the pushka). But when you are dealing with many hundreds of thousands of dollars, a slight up or downtick in the currency rates can make a major difference in how many dollars you need to buy the shekel denominated property. If the dollar falls 5 agarot on the week of closing, your $500,000 can suddenly be worth 250,000 nis less!

3.       Shachein Tov?

There’s nothing like good neighbors to watch the kids from time to time, lend you milk, and water the plants when your away. But on the other token, a bad neighbor can be a virtual nightmare – banging on the walls during your afternoon simcha, keeping you up at night by blasting music, or influencing your family in a less than desirable manner – nothing worth spending your life’s saving for! If you’re buying a detached house, the neighbors may not be as important, however, considering that most of the property in Jerusalem consists of apartments, your neighbors play a major role in your life.

4.       Due Diligence

When it comes to buying a new appliance, we research the different options, compare prices, and speak to friends to make sure we get the best microwave or vacuum cleaner on the market even though it’s a relatively minor acquisition. Ironically, when it comes to major acquisitions – such as property – we forget to do our due diligence. Therefore before purchasing a new apartment, it’s vital that you do a little research into the seller and the property. First of all, it’s a good idea to find out why the current owner is selling and how flexible he might be in light of his situation. If the apartment’s been on the market for a long time, you should find out why. Maybe there’s something wrong that you don’t know about or maybe the owner’s desperate to sell and will accept much less than he’s asking. Before moving (or buying) anywhere, it’s always a good idea to speak to the neighbors to find out the inside scoop on the building. If there’s a tenant currently living in the apartment, they may be more than willing to tell you all the downsides of the property in an effort to scare off potential buyers so that they can stay there a bit longer. The landlord may have done a great job painting the apartment but the tenant and neighbors will have no problem complaining about the building’s chronic mold problem. The general rule is ask, ask, ask. You never know what you’ll discover.

5.       Going Once, Going Twice, Sold!

Although it may be foreign to many Americans, Israeli’s are masters of haggling from years of shopping in the shuk, so it’s important to come prepared with your negotiating plans. Always know your bottom line and when giving a counteroffer it’s best to avoid round numbers. For example if the property is listed at 700,000 NIS, don’t offer 675,000 NIS; offer 674,000 NIS instead. This is because when you go just below the next round number you give the impression that you’re just trying to bargain. A mid-range number, on the other hand, shows that it’s what you feel the apartment is really worth.

A Room With a View

There is an apartment currently up for sale in Romema with a breathtaking view of the Jerusalem hills extending to Ramot and Kever Shmuel Hanavi in the distance. At first glance it seems like there isn’t any buildable space nearby that could obstruct the view in the future, making it a dream apartment. If you check with the city municipality, however, you’ll discover that plans have already been drawn up to construct a shul on the small lot located just to the front of the building – totally blocking the wonderful view from the kitchen window with a wall of solid Jerusalem stone!

Shia Getter is the CEO of the Shia Getter Group, a full-range real estate services firm in Jerusalem catering to the Anglo-Charedi Community. He is a noted expert, columnist, and author of Everything You Need to Know about Buying Real Estate in Israel (Feldheim 2014). He and his professional team are Israel’s one and only true seller’s and buyer’s brokerage. They provide a unique service by managing and maintaining your apartment and being completely responsible for the entire buying or selling process.

For more information and to schedule an appointment, call Sarah at 077.234.6011 or email mail@thegettergroup.com.This article is intended to provide general information about the subject matter covered. It is not meant to provide legal opinions, offer advice, or serve as a substitute for advice by licensed, legal professionals. This article is published with the understanding that the author or publisher is not engaged in rendering legal or other professional services.

 The author does not warrant that the information is complete or accurate, and does not assume and hereby disclaims any liability to any person for any loss or damage caused by errors, inaccuracies or omissions, or usage of this article.

 Laws and interpretations of those laws change frequently and the subject matter of this article has important legal consequences. If not understood, legal, tax, or other counsel should be consulted.