The Right Questions to Ask
During The Purchasing Process
(This article is based on CapitIL’s CEO & CO-Founder Ben Levene’s personal market experience and opinions.)
To get the best deal, it is necessary to ask the right questions in order to obtain the most relevant information.
However, coming from abroad, my clients are not always sure of the right questions to ask, as the process is quite different here in Israel.
This blog goes through a few questions that you should think carefully before asking, and instead ask the more relevant questions in place of these questions.
Don’t Ask: What is the average price per square meter in the prime areas of Jerusalem?
Why: Looking at average prices from 3-12 months ago has no relevance to the market today. The market is constantly moving and is not staying stagnant. By setting your parameters for your budget at the wrong price level, it will be extremely difficult to find a suitable apartment.
Do Ask: What are the average prices in similar apartments, within similar buildings, in areas that have sold in the last two months?
Don’t Ask: Will the seller come down 5-10% in the price?
Why: As soon as you ask this question to the seller or the seller’s agent, they will in 90% of cases immediately write you off as a buyer.
Apartments have been selling at asking and even above asking price in most residential areas that Anglos have been purchasing in currently.
The moment a buyer comes in with an offer significantly below the asking price, it will hurt the buyer during negotiations.
For example, I was negotiating a deal last week for a client, and the asking price was 5,350,000 NIS. My client wanted to put in an offer for 5,000,000 NIS, and I warned him that the seller would reject it and that there would then be very little room for negotiations.
I suggested putting in an offer of 5,120,000 NIS, which my client agreed to, and we ended up getting very close to what we offered. We are now at contract for the deal.
Understanding the market and listening to your expert’s advice is crucial to getting the best deal possible. Sellers currently believe that there is likely another buyer who will pay their asking price, so they do not feel pressure to accept the first offer they receive.
Do Ask: What is a sensible offer that will likely help us get the best deal?
Don’t Ask: Can I bring several people such as a designer and an engineer to the house before making an offer?
Why: In Israel, the process is very quick. You see a property, you put in a good-faith offer, and within a few weeks, you have probably signed a contract.
The proper time to bring in engineers and designers is after you have made an offer and the seller has accepted it. Once the seller accepts, you are now in your due diligence period where you must do all the necessary checks before signing the contract.
Remember there are no contingencies so it is crucial to do all checks before signing!
If you bring in these professionals before making an offer, you might lose out on the apartment. During the time you are spending making a decision of whether to put in an offer, someone else may get in before agreeing on the price.
It is also not worth spending money on experts until, in good faith, the property is off the market.
Do Ask: When is the right time for me to bring in experts to check the apartment?
Don’t Ask: Our engineer found a list of small things that need to be fixed in the apartment. Are you willing to fix them or can I get a reduction in price?
Why: Bringing an engineer to the apartment that you would like to buy, whether new or old, is crucial. However, the role of the engineer in this Jerusalem seller's market is not to point out little things that need to be fixed.
The sellers will generally not agree to fix anything, nor will they lower their prices. The role of the engineer is to ensure that there are no significant structural issues with the apartment that would change your mind about purchasing it and to make you understand which small issues you will have to fix, assuming you go through with the purchase.
For example, if there is a real issue with dampness and mold in the apartment, although the seller may have told you that it is cosmetic, if the engineer determines that it is a significant issue, you may want to walk away from the deal or you may negotiate with the seller although that is usually difficult to do.
Another example is if there is an A/C that is broken, and you want to negotiate 10,000 shekel from the seller to fix it, that may be possible. Sometimes, this is a reasonable request and you may be able to negotiate it, but it depends on the situation.
With new builds, there are many guarantees that come with the apartment. Therefore, when you bring the engineer, you will be able to see which issues are covered under your warranties, and therefore the list of issues is important.
With older apartments, it is generally not going to assist to come to the seller with a list of small things that need to be fixed and demand he pay for them. That is not how the process works here in Israel, and you may end up losing the deal.
Do Ask: Which issues found by my engineer are reasonable for them to fix and which are not?
These are all relevant questions to ask during your property search in Jerusalem.
While there are no “wrong” questions, asking them in the correct manner, will allow you to get the right deal for you.
Each case is individual therefore listening to advice from your broker and lawyer will enable you to approach purchasing with the right tools and mindset.