Buying an apartment?

Get an appraiser even before signing

Most apartment buyers hire the services of a real estate appraiser after purchase and due to the bank's guidance, but an appraisal is one of the first actions you should do

Saar Peled, guest column

25/07/2022

Monday, July 25, 2022, 1:02 p.m

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On video: press conference to present the government's solution to the housing crisis (photo: LAM)

Most of us have purchased a car at one point in our lives.

Did we test it before the purchase at a testing institute, or did we first purchase it and only then send it for testing?

The question itself sounds strange, doesn't it?

It doesn't even make sense, but in fact this is what many apartment buyers do when they come to purchase their residential apartment.

Many make transactions to purchase real estate for millions of shekels without checking what they are really purchasing, this despite the fact that these transactions will often be the most complex that a person will make in his lifetime. The fact that real estate prices only increase year by year makes the decision-making process regarding the purchase of real estate even more difficult .

Would you buy a car without checking it?

So why an apartment? (Photo: Reuven Castro)

A real estate transaction consists of many parameters, starting from the search phase to the time of signing and taking the mortgage from the bank. The sales agreement signed by the purchasers with the sellers also consists of many clauses referring to the legal and planning status of the property. One of the well-known clauses in sales agreements is a buyer's statement, stating that it has been given He has the opportunity to check the legal, registration and planning status of the apartment. Is this really the case?

Without a real estate appraiser it is not possible to complete the tests in full. The appraiser visits the property and checks compliance with the building permit (without it the buyer may purchase a property with a construction exception), the legal identification check (checks compliance for drawing up a condominium and many other documents and verifying them with the actual situation), and additional tests beyond determining the property's value.

For example - a pre-purchase inspection carried out for an apartment in Tel Aviv.

In this case, the buyer has lived in the apartment as a tenant for several years and now wants to purchase the apartment from the landlord.

On the face of it, he knows the property inside out, but still preferred to do a thorough inspection before signing the purchase agreement with the seller.

After a comprehensive inspection of the property, which as mentioned is used by the buyer for his residence, it became clear that the property is listed in the building permits as a heating room and cannot be used for residential purposes.

Another case was learned from an inspection carried out regarding a residential apartment registered in the tabu as an apartment with a separate subdivision.

The inspection revealed that the apartment is actually part of a larger apartment according to the building permit, that is, a split apartment.

In a pre-purchase inspection, the real estate appraiser reviews and checks all of these parameters and warns of possible problems and/or existing problems in the sale, which can affect the buyer's decision to purchase the property.

These problems can be substantial problems that, if the appraiser had not alerted them, the buyer would have discovered this only after signing the contract, when taking out the mortgage or when he sold the property.

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It is important to note that when taking out a bank loan, the financing body requires a real estate appraiser's report for the purposes of making the loan. The main problem is that at this stage the buyer has already purchased the property, and if there are problems with the property he may not be able to meet his obligations and duties, which he signed in the purchase agreement To the seller, this may be considered a breach of contract and even legal proceedings will be opened against him. To avoid such situations, the buyer should perform a preliminary assessment according to standard 19 which includes a reference to his condition (planning and ownership) prior to the purchase of the property, including the value component.

The value, of course, affects the bank financing of the future borrower.

If the property is valued at a price lower than the purchase price (sometimes due to construction anomalies and other problems), the financing percentage in such a case increases.

In many cases, a pre-purchase appraisal can also be performed to check a real estate property that does not include a valuation (standard 20 of the appraiser regulation).

This report includes data about the identification of the real estate, an examination of the planning and licensing status of the real estate, as well as information about the property rights therein. Because there are cases in which the buyer discovers that the property he was about to purchase, does not match what was marketed to him in the first place, and therefore does not wish to carry out the transaction regardless of the component The value.

It is very important that such a report be attached to every transaction, as it reflects the reality to the buyer and with its help he can make an informed decision and not invest huge sums in the purchase of a property without the required basic inspection.

In fact, only a pre-purchase appraisal leads to a secure transaction.

• Real estate

• in Israel

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• assessments