A real estate appraisal is highly recommended before entering into any real estate transaction in Israel. Buying or selling a property or investing in real estate in Israel is a complex process and it is recommended to engage in comprehensive checks in an effort to unveil the characteristics of the property, uncover unanticipated “surprises” and eliminate potential dangers, while thereby averting hidden costs. This requires a strong understanding of the Israeli real estate market and familiarity with laws, taxes, and government regulations in Israel.
Comprehensive checks on property in Israel are generally conducted by a certified appraiser (“shammai” in Hebrew) or land assessor with experience in the field, who collates all the data on the property including thorough examination, analysis, visits of the property, and records the results of the checks in an assessor’s report. Failure to conduct comprehensive checks has in the past made some Israel homebuyers liable to cases of impostors, fraud, fake documents, and hidden damages incurring large sums in unforeseen expenses and costs.
Furthermore, a professional appraiser is hired to determine the value of the transaction to the buyer or the buyer’s bank. After all the checks are done, the appraiser provides the realistic price of the asset which could turn out to be lower or higher than the offer price of the same asset on the market. Appraisers will also take part in the assessment and negotiation process regarding improvement taxes and other land taxes. In the case that a mortgage bank in Israel has hired an appraiser it may still be worthwhile to take up the services of an independent appraiser for asset evaluation since the bank’s appraiser is foremost protecting the interests of the bank and not necessarily the buyer’s interests.
The appraisal profession includes the knowledge of universal rules of market valuation and use-value of real estate, legal aspects of the property, and taxes that are sometimes critical when considering the valuation of a property. The checks by appraisers will differ from one asset to another. For example, appraisers’ checks for new homes will not be the same as those done for second-hand homes. Among the general checks are property ownership, building deviations, building file (permits and rights), land taxation, mortgaging and liens, regional development plan, and value assessment. In the case of deals of new homes, especially if the property is still under construction, additional checks should include the financial strength of the construction company, assessment of potential depreciation in the property’s value caused by building defects or ongoing construction work, and the receipt of all permits and licenses from authorities in Israel.
Many companies in Israel specializing in the field, offer real estate appraisal and building inspection services including earthquake resistance valuation, valuation of non-repairable damage, and devaluation of a property, which can serve as expert testimony in court. In court cases, appraisers generally charge a percentage fee on the amount of damage claims.
Before making a decision over the choice of a real estate appraiser it is essential to check appraisers’ qualifications. Real estate appraisal is an independent profession in Israel, which is state-licensed and controlled by the Council of Land Valuers, which is a body within Israel’s Ministry of Justice. Hence all appraisers must be registered with the Council, which is responsible for the training and administers the national professional exams that are a precondition for receiving a license. Licensed appraisers in Israel include engineers, land surveyors, economists, town planners, agronomists, teachers, architects, and lawyers.
Most Israel real estate appraisers are members of the Israeli Real Estate Appraisers Association. This is a non-profit state organization with over 700 members. The Real Estate Appraisers Association in Israel provides arbitration and bridging services and offers its members ethics and legal counseling.
The writer is the Founder of Buyitinisrael and was previously the director of international clients at a leading valuation and appraisal firm in Israel. For valuation, appraisal, and investment advisory services, please contact us.