How to Value the Price of an Apartment in Israel?

How to Value the Price of an Apartment in Israel?

How to Value the Price of an Apartment in Israel?

In the previous article we presented the 9 most important variables in evaluating the value of an apartment. This article offers an overview of the different methods for undertaking research in the Israeli real estate market. By combining methods one can make the best informed decision and understand how much the apartment is worth relative to market price.

The most accessible resource is the internet. Getting information off the internet is simple and can be done from the comfort of your home. It is recommended to do a preliminary market research on the Internet, though the info should be taken with a pinch of salt.

Online Price Lists

Many websites actually boast the title of “apartment price list”, but are they a reliable source?

In fact, what most of these sites do is provide a transparent view of the Betterment Tax site which we will explain below. There are currently numerous housing price lists and actual transaction prices including: Bank Mizrahi Tefahot Real Estate, on the Yad 2 website, and on the WINWIN website in cooperation with Levi Yitzhak.

However, finding the price of an apartment is more complicated than a brief glimpse at the “Apartment Price List”.

Israeli Tax Authority

Determining the price of an apartment according to the Israeli Tax Authority’s website is probably the most reliable online resource. Every real estate transaction that takes place in Israel is reported to the tax authorities and updated in the online database. This data is freely accessible and the apartment price database is in fact the most comprehensive and well-established database available to the public.

Online Real Estate Listings

In the distant past before the Internet era, listing an apartment cost money. Apartment sellers therefore advertised apartments at actual prices and deleted the ad if they failed to sell. Today most of listing sites such as Yad2 are free. The free listing of apartments may have contributed to the rise in housing prices.

Checking apartment prices in the various online listings is the only technique that is free, so comparing properties is usually the first method used by potential buyers trying to determine the value of the asset they wish to buy, but take into account that usually the asking price on these websites is higher than the actual value of the property. You should take into account that there are variables such as building rights or ‘urban renewal’ agreements that affect apartment pricing but do not appear in online listings.

The internet has its pitfalls and some experts even claim that they have contributed to the real estate market price surge. Moreover, many foreign residents do not speak Hebrew – the language of most of the websites. This is why it’s important to involve professionals when evaluating the price of the apartment.

Evaluating Apartment Prices by Realtors

Professional brokers actually understand the market in the best and most comprehensive sense. A professional and reliable broker can provide an accurate price estimate based on market conditions and knowledge of similar assets sold in the area. A good, efficient broker can save time and focus your search on relevant apartments. An effective broker also helps negotiate and reduce the price of the apartment so that the commission paid is often less than the original price of the apartment.

But wait, there’s a catch

Real estate brokers have an interest: to sell the apartment as fast as possible. This can sometimes cause them to give a price evaluation different from the actual value of the apartment.

Evaluating Apartment Prices by an Appraiser

Real estate appraisers are actually the only professionals who go through extensive training and are certified to value a property. A professional appraiser can provide an accurate and conservative estimate of the real price of the property based on a large number of sources and a deep understanding of real estate market.

Another option is to obtain a price estimate through the bank – when applying for a mortgage; the bank will appoint an appraiser to the property. Obviously, the appraiser’s goal is to protect the interests of the bank. In fact, the most accurate way to understand how much the property is worth is through a real estate appraiser. Unfortunately, many times I have come across foreign residents trying to be penny wise but ending up pound foolish, making the purchase at a price significantly higher than the market price due to deception, naiveté or lack of understanding. These people tried to save on the appraiser; a negligible amount relative to the total cost of the transaction, resulting in a considerable loss.

Strategies for determining the price relative to the time of sale and the market situation

I presented a number of sources that can help you estimate the transaction price. The next step is to cross-reference the information between the different sources.

Word of Mouth

The simplest but often very effective way to obtain information about pricing is to talk to people and business owners who live in the area. Occasionally you will be surprised to find that the neighborhood grocery store owner knows quite a lot about the state of real estate in the neighborhood. Also, ask people that live in the area and if you have friends or relatives that are familiar with the community you should definitely ask them. Crowdsourcing is a proven method to dig out valuable information.

Summary

We have provided a number of methods for examining the price of an apartment in Israel. Non-Israelis looking to purchase an apartment should use a combination of tools and tactics, as each one has its advantages and disadvantages. It is recommended not to dismiss the services of an appraiser on your behalf, and to find a trustworthy, professional real estate agent who is reliable and is well familiar with the local market.

Remember! The asking price of an apartment is just the starting point of negotiations and the better you are informed, the more likely you are to get a good deal.

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