Real Estate Conference of Real Estate Media (Niv Aaronson)
"I have no way to finish the month. From a situation where I generate a turnover of NIS 100,000 a month, I have reached a situation where I am taking out loans to finance rent. The situation is dire, and the market shows no direction of growth. If this continues for several more months, I will close the the business".
These words are said by a veteran real estate broker, and he is not alone - the dramatic decrease that has occurred in recent months in the scope of taking out mortgages and selling apartments, directly affects the pockets and turnover of quite a few factors in the chain: also many mortgage consultants, who until about a year ago, would have made handsome sums , are now attracted to customers and are ready to make significant discounts - provided that monetary oxygen enters the system. However, while these are crying over their turnover, a significant part of the public looks on with satisfaction at the predicament the industry has fallen into. Reactions like "they deserve it, they eat for free", or "one of the despised professions" There are" are just a few examples of the responses we received when we exposed the situation of the brokers in a Facebook post.
Why are so many satisfied with the difficulty the mediators have encountered?
How did a profession, which is considered respectable abroad, turn into an occupation that is perceived by the Israeli public as a parasite? And if we have already dived into the world of brokerage: once and for all - where is the line of demarcation between the rights of the broker and the rights of the client? We caught up with two senior officials in the industry: Itzik Levy , chairman of the National Chamber of Realtors, and attorney Raanan Marom, an expert in real estate law.
Abroad it is a respected profession. In Israel, brokers suffer a lot of scorn (Photo: ShutterStock)
Itzik, we understood that business these days is not something, to say the least.
"There is a 20% decrease in the number of brokers who have renewed their brokerage license. See - although many join the industry every year, the number of brokers remains relatively stable. From a national perspective, and I am talking about professional brokers who have been working for many years, many kneel under the burden and are simply in a financial situation It's very difficult. You have to understand that this is a job based on success. No one gives a realtor a minimum wage and people are in one of the most difficult times I can remember. There are almost no transactions. There is one public that buys apartments today and these are housing downsizers - people who move to cheaper apartments and don't need financing." .
Let's call the child by his name: real estate brokerage is considered by many to be a very problematic profession.
With a hand on the heart - what happened?
How did you get to this situation?
"There is no doubt that there is a problem and the bureau was established in order to deal with it and to restore to the real estate broker the status he deserves, as he is given in many places in the world.
The conditions for obtaining a real estate brokerage license are very problematic.
95% of the population can take the test and by the time they got into the thick of it and made the questions more difficult 90% of the test takers would have passed it.
Today the rate has dropped to 60%.
There are quite a few brokers who do not see the position as the fulfillment of a mission and are not committed to it, both professionally and in terms of integrity, but enter the field with the mindset of 'let's make Buchta in two years'.
The problem is that they don't have the knowledge and experience and they don't manage to close deals.
So some of them start resorting to all kinds of improper tactics, which definitely damages the image of the profession."
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Attorney Ra'anan Marom - Please, let's get things in order: Is a realtor allowed to present a valuation for an apartment?
"Following a lawsuit filed by the Real Estate Appraiser's Office in Israel, a ruling was recently issued by Judge Efrat Bosni in which realtors are prohibited from providing opinions or appraiser valuations regarding properties, and they are only allowed to conduct a real estate price survey. This is a trespass to the appraisal profession, so only a qualified real estate appraiser licensed by the Ministry of Justice may perform a valuation of real estate assets. "In fact, this ruling is added to two recent rulings, in which an order
was instructing brokers to refrain from giving an opinion dealing with the value of real estate and to refrain from performing valuations for real estate assets.
According to the ruling, a broker is not authorized to give an appraiser's assessment of the property's value, analyze rental income, analyze planning information or calculate the amount of the improvement levy.
However, Pashad recognizes that part of the duties and work of a real estate broker is to conduct price surveys,
Itzik, tell me, is there no real estate inflation?
More than 22,000 broker license holders are currently registered.
That's a lot.
"First of all, not all those who hold a brokerage license also engage in it. Many renew their license, but actually make a living from another activity. Second: every three months there is a test, which is taken by 2,000-2,500 examinees, of whom 60% pass it successfully. But in practice only 50% start working in the field and of those only a few percent survive the first year, let alone the second."
Until a few years ago, most brokerage transactions in the economy were paid at a rate of 2%. Today the reality is different, in the periphery we see more and more transactions that close at 0.75-1.25%. What is happening?
Levy: "This is a free market, and each broker is allowed to set his own Shekat rate, but my message is always that the higher the level of service provided, the more the client will pay you.
If you know how to create value - they will want you.
In general, today we see the future broker as a transaction manager.
Like a basketball coordinator who activates various factors and includes them: a mortgage consultant, an appraiser, a lawyer, a designer.
And we are also planning to open a special course for appraisers that will train them how to be a real estate transaction manager.
How to activate all the factors".
"There are quite a few brokers who do not see the position as fulfilling a mission and are not committed to it, both professionally and in terms of integrity, but enter the field with the mindset of 'let's make Buchta in two years'."
Itzik Levy (Photo: Daniel Amram)
There are a lot of young brokers, who after a career in waitressing, became in a short time "senior real estate brokers". Their business card says "real estate consultant".
About what and why?
Levy: "There is no doubt that the low threshold conditions bring into the industry those who do not deserve to belong to it. The problem is also that there is no practical training and after several months of experience, they believe that they have gained enough knowledge and practice to become professional consultants. Also in light of this pattern, and due to many other problems, The bureau I head. We work very hard to improve the status of the broker."
This is not an easy task.
"We take things very seriously, and currently, we are working on several levels: First, increasing the number of members in the chamber, who will be subject to our code of ethics and an arbitration mechanism in case of disagreements. Second, we signed a cooperation agreement with the Magid Institute in order to open a seminary that will train brokers and will give them a toolbox, in-depth understanding and practice in a number of fields, including: commercial real estate, urban renewal, etc., all at prices significantly cheaper than those currently offered by various parties in the market. Also, our eyes are on the future: we signed an agreement with A company that develops artificial intelligence technologies. We are in the process of establishing a very advanced system that will advance the world of brokerage."
Let's talk about a very painful point, which is responsible to a large extent for the negative opinion of the public towards the brokers:
The tenant does not turn to the broker of his own free will, but out of choice, because the broker is the one who publishes the rental ad for the apartment.
The broker clearly works for the landlord, but the tenant is still required to pay him a brokerage fee, usually equal to one month's rent.
What do you have to say in your defense?
Did the legislator seek to prevent this injustice?
"Where did you read that the legislator aimed at this matter? I did not see any such intention, and if there was, he would have amended the brokers' law. The courts have also ruled in favor of the brokers in this matter. I can understand why it creates indignation, but we act according to the law. If the law is changed , we will adapt to the law. At the same time, start from the assumption that the one who will suffer from this is the public of renters. If the owner of the apartment is obliged to pay the NIS, the rental prices will rise accordingly since he will reflect this in the price.
It will also harm the public of retirees whose only way to rent an apartment is through a broker.
They have no chance to go and show the apartment, especially if it is in distant cities."
An effective factor?
Attorney Marom: "In the Rent and Lending Law 1971 - 1971, it is established that the tenant of an apartment will not be charged brokerage fees that the landlord has committed to pay in the case where the broker acted on behalf of the landlord. At the same time, as long as the broker also acted on behalf of the tenant and the latter signed an order for brokerage services, Then the tenant will be required to pay brokerage fees. However, the landlord is not allowed to oblige the tenant to pay brokerage fees that the landlord has committed to pay to the broker and a clause in the agreement between the landlord and the tenant that the landlord's rent will apply to the tenant has no legal effect and cannot be disregarded."
Once and for all, what is meant by "the effective party in the transaction" and how does the court determine whether the mediator deserves payment?
Attorney Marom: "One of the common issues for which the parties come to court is whether the mediator was the effective factor.
The language of the law states that the broker must prove that there is a direct connection between the brokerage operations he performed and the execution of that real estate transaction, for which he requests a fee.
Over the years we have given a long series of rulings on the subject.
In fact, the court will determine whether the mediator was the effective factor, among other things, while examining the following aspects: what is the degree of closeness between the original proposal in which the mediator was involved and the final contract;
What is the degree of closeness between the original offer and the final contract in terms of payment terms and rates;
The length of time that has passed between the date of the original offer and the date of termination of the transaction;
the degree of intensity of the intermediary's actions;
The existence of another factor that assisted the parties in obtaining the contract, and the extent of his involvement;
Payment of brokerage fees by the other party to the transaction and their rate;
Is the presentation of the property enough to be perceived as the effective factor?
"It has already been ruled more than once, that the presentation of the property in itself may also be considered an effective factor, and it is enough that a mediator has brought the parties to a transaction to contract and is not obligated to take part in negotiations between the parties or to take additional actions beyond creating a relationship between the parties to the transaction.
Also, in 2016, the question of the entitlement of an 'exclusive' real estate broker to brokerage fees was discussed, in cases where he received exclusivity for the marketing of the property, but it is not clear whether he was the 'effective factor' in promoting the deal. According to the court's ruling, according to which, the law grants The sole broker has a better 'starting point' compared to a 'regular' broker in discussing this question - a presumption that insofar as he took reasonable marketing actions, the broker was an effective factor in the transaction - unless proven otherwise. The court ruled that 'the starting point is that the sole broker is the effective factor In the transaction that was signed during the exclusivity period, to the extent that he did perform the marketing operations required by law during this period,
Attorney Raanan Marom (Photo: Yaron Garzon)
Attorney Marom, the Israeli public is not innocent either, and some of them definitely try to mislead the brokers who work hard, and sometimes get into legal conflicts with reluctant clients. Let's give a tip to the brokers.
"One of the painful issues is whether it is mandatory to draw up an agreement for ordering brokerage services in writing. Section 9 of the Real Estate Brokers Law, 1996 - 1996 states: A real estate broker shall not be entitled to brokerage fees, unless the client signed a written order to perform a real estate brokerage operation, which included All the details determined by the Minister, with the approval of the Interior and Environmental Protection Committee.
The default is of course that a broker will not be entitled to brokerage fees in the absence of a written order.
At the same time, in several rulings of the court, it was ruled that there is room to flex the interpretation of the law, so that this does not constitute an abuse of those ordering brokerage services to avoid paying brokerage fees.
For example, to the extent that the court determines that the client received mediation services and refused to sign a written agreement, the client may find himself liable to pay mediation fees by virtue of the principle of good faith and fairness. Indeed, the court examined each case on its merits and only in special and exceptional cases is will be charged brokerage fees, in order not to violate the written requirement stipulated in the Brokers' Law.
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