I have a client that purchased an apartment from a construction company in Israel at the preconstruction stage. He recently made a trip to Israel to check on the progress of the construction and here are a few of his first impressions:
- The apartment is so small
When my client came to look at the apartment the walls weren’t up yet and the floor had not yet been poured. He went to look at a similar apartment in the next building that was the same size and layout and that had a floor. He was taken aback by how small the apartment was. My client is living in a large suburban house and he is used to more space. Before signing the contract he had seen the plans. However the plans that he saw were in square meters not square feet.
The lesson to be learned is that you should have the plans translated into square feet if that is what you are used to. This can give you an idea of the size of the rooms.
It should be noted that the rooms always look very small at this stage. When the floor is poured and the walls are up and whitewashed things should look more promising.
- Upgrading Is Very Expensive
When you purchase an apartment from a construction company at the preconstruction stage, you sign on specifications and plans for the apartment. These “specs” set out what the apartment is built from, how many electrical sockets, what the tiles and floors are made from etc. The plans show the size of the rooms and the layout. If you want to change the floor plan, add electrical sockets or upgrade the tiles or closets be prepared to add a lot of money to the price of the apartment. My client discovered that many of the things he wanted to do in the apartment would cost a lot of money. He was basing his calculations of what he knows things cost in the States. He discovered that in Israel things were more expensive than he thought they would be.
My client had opted on moving the location of the kitchen only to find out that the porch next to the new kitchen location could not have a succah. The porch for the succah was closer to the original kitchen location. This was very disappointing to him.
The lesson to be learned is that it is important to consult with an Israeli interior designer before signing the contract. This designer can look at the plans and the specs, find out from the company what changes can be made and how much they cost and advise the purchaser as to what the upgrades will cost and whether this apartment can be made into the apartment that the purchaser wants. This way the purchaser knows before he signs on the dotted line what he can and cannot do and how much to expect to pay for changes. Based on the answers to these questions the purchase may decide to buy a different apartment.
- When Will the Dollar Stop Devaluating?
The price of the apartment was set in New Israeli Shekels (NIS). The NIS is legal tender in Israel not the dollar, the euro or the pound. In addition to this the prices of apartments purchased from construction companies are usually linked to the building index. This means that if the building index goes up one month by half a percent the outstanding amount of the price still owed on the apartment goes up by half a percent. It is therefore best to try to pay the bulk of the money during the months when the building index is low and not spread the payments out over a long period of time. It is also wise to convert your dollars or whatever currency you have to shekels when you have the money available and not wait for the currency to rise again against the NIS. It may rise and then it may fall and then you will have less NIS left after the conversion of the currency with which to pay for the apartment. My client did the above but there were times in which he speculated and held back on converting the money and this might have been a mistake.
Converting you currency into Israeli currency costs money and this expense should be factored into the cost of the purchase as much as you can.
My client is feeling disappointed right now but I am sure that as the construction progresses and his new apartment begins to take shape he will begin to feel the first excitement of purchasing an apartment in Israel. All it needs is some planning and good old “SAVLANUT” (patience).
A different client of mine purchased a second hand apartment. She does not live in Israel yet and she did the whole purchase while she was abroad. She gave me a power of attorney and I signed all the paperwork in her name. I opened up an escrow account and she wired all the money to this account. I converted the money to NIS and make the payments necessary for the deal. At the end of the transaction I did the walkthrough of the apartment with the seller and accepted the apartment for her.
She came to Israel a few days after the possession of the apartment was given over to me. She was very happy with the smoothness of the whole transaction. She had a good time buying furniture and appliances for her new apartment. I referred her to various professionals who helped her set up the apartment the way she wanted. I just recently finished the registration of title in the Israeli Land Registry and she is now the legal owner of her first apartment in Israel.
Some transactions run into problems but many run smoothly. If you surround yourself by good real estate professionals they can help you solve any problems you may run into.