What’s the number one mistake buyers make?
Feeling pressure. People feel pushed by sellers, pressed by real estate brokers; everyone’s pushing the buyer to act fast.
It’s essential that buyers take the time needed for such a significant purchase, to research the apartment, area, and market, and to carefully examine their options. I always remind buyers to have bitachon; the Gemara says, “Bayis ploni l’ploni.” The dirah you need will come to you.
This is one of life’s biggest decisions; do it with knowledge and yishuv hadaas — not out of pressure.
When prices are high how do I avoid going over my budget?
Sticking to a budget is one of the most important elements in purchasing a home. To avoid unexpected budgetary developments, plan to spend 17–19% more than the apartment’s ticket price. Go ahead and say “ouch” now. Then breathe a sigh of relief, because working this into your budget will only help you in the end.
With a solid number in your head, you can search for an apartment you can actually afford, both now and later on, even if “surprises” pop up. Bear in mind that having a realistic, firm budget makes you into a stronger, savvier negotiator when presenting an offer on an apartment. Realtors and sellers will quickly realize you can’t be pressured to raise your numbers.
What concessions should a buyer seek when making an offer?
If a dirah is priced at NIS 3 million, many people will offer NIS 2.8 million. But throwing out a number isn’t actually the sensible way to do it. A buyer who does proper research will learn the real value of a dirah. Once he’s checked the price per square meter in the area, street, and building, he’ll know the place’s true worth. Then he can make an offer that works for both sides.
If a person thinks he’s going to “chap” the buyer or seller with some complaint (which is often unfair or even far-fetched), the person who thinks he “won” will ultimately pay for that win. If the other side feels cheated, he’ll rip out light fixtures, take down cabinets, and do other things to make the buyer “pay” for his “victory.” (I’ve seen this and can tell you the stories!) So, do your research, examine the real value, and take future trends into account. Often, you’re not overpaying at all. The real “win” is when both sides win.
Apartments are priced per square meter. Is it true that a lower price per square meter is clearly a better value?
Not necessarily. Often, a lower price per square meter means you are getting a lower value for your money. When there’s a lower price, there’s usually a reason. So, if a particular place is cheaper than others in the area, take it as a red flag that it needs more investigation.
I once heard that a Note of Interest has no real legal significance. Is this true?
No. A Note of Interest, which indicates your strong consideration of purchasing a particular property, is an officially binding contract with legal ramifications. If you signed such a document, you are liable for the terms therein.
And regarding the mortgage, is it correct to assume that the shorter the term of a mortgage, the better?
Less isn’t always more. Just because one mortgage term extends over more years than another doesn’t mean you’re paying more for it in interest. An understanding of inflation reveals that the longer a mortgage is, the less you end up paying, if that mortgage isn’t linked to the inflation rate. The amount that sounds so high now will be less significant in the future, as the money will be worth less and you’ll (hopefully!) be earning more.
What’s the point of a buyer’s broker and advocate?
Imagine a tourist and a local each taking taxis to the Kosel. Will their experience be the same? Price? Conversation?
Right; they’re as incomparable as gefilte fish and chraime Pringles and pitzuchim.
So, too, when a chutznik buys a dirah in Israel. No matter how well he knows his way around, there are always people looking for greenhorns.
Furthermore, someone who doesn’t live here can’t get the same results as some who’s done it hundreds of times. They won’t have absorbed nearly as much information on the topic as someone who’s done it before, and there’s no way to be aware of all the available options from a distance. And then, of course, there are the fine details that require deep, inside knowledge of the Israeli system.
A real estate advocate will share all this information with a buyer, so his client can make informed decisions based on knowledge and facts. Buyers who make decisions with all the information are sure to get the best value for their money—and to be happier with their choices in the long run.
I’m an experienced buyer and already have a good lawyer, so is it really worthwhile for me to engage the services of a buyer’s advocate? Isn’t this just an extra expense?
Every buyer – no matter how practiced – benefits from having someone by his side, walking him through the complex process of an apartment purchase, from the initial contract phase to the mortgage stage, from the first and last inspections to final registration. Having an advocate guide you through this maze is the difference between having an expert defense attorney with you in the courtroom and just fighting for yourself. In Israel, knowing “the system” isn’t just a perk. It’s a prerequisite. When you look at it like this, you’ll see that advocacy services aren’t an “extra,” they’re essential, and they’re not an “expense,” they’re an investment.
How is a real estate advocate different from a lawyer?
A lawyer will read over the contract presented to him or her and make sure everything in it makes sense and is fair according to the law. A lawyer can add in clauses that the buyer or seller requests, and so on. An advocate stands with the seller throughout the purchase, working on the negotiations, developing a solid contract, and including appendices to cover many nuanced areas of the purchase.
Advocacy is also about making sure the buyer understands exactly what he or she is getting, what the true value of the purchase is, and under what terms it’s being acquired. The advocate accompanies the buyer through the entire process, even after the contract has been signed, to ensure that the final stages proceed as smoothly as possible.
This article is not a substitute for professional or legal advice. The author does not guarantee that the information contained herein is accurate, and does not assume any liability for any loss or damage caused by errors or inaccuracies in this article.