Buying On Paper: A Success Story
Four years ago, we were approached by Africa-Israel, one of the largest developers in Israel, to do pre-sales in Savyoney Arnona, a new 200-unit project located in the Arnona section of Jerusalem.
We liked the project as it was situated in an “up and coming” neighborhood, the handsome buildings had upscale touches, the floor plans were well-designed, and pricing was reasonable. Most importantly, we felt comfortable associating with the developer due to its sterling reputation in the industry.
The developer was awaiting receipt of the building permits to begin construction, and desired a successful sales kick-off event to generate market momentum. We grasped the opportunity and were excited for our clients to “get in on the ground floor” and cut great deals while the developer was particularly hungry to sell.
The existence of a bank guarantee – an insurance policy assuring completion of the project should the developer go bankrupt – gave us confidence that our clients were protected from downside risk while enjoying the opportunity to profit from the project’s upside potential. In addition, the developer was contractually obligated to pay rent should the occupancy date be postponed, which is exactly what happened: the project was delayed by a number of months and the developer, honoring its commitment, has been sending monthly rent checks to the purchasers.
We traveled to the US and pre-sold eleven units at great prices. To give you an idea of savings, sales prices for the last remaining apartments are currently over 25% higher than the first batch of sold units.
Pre-Sales Are Not For Everyone
After the pre-sale event was over, we continued to sell apartments in Savyoney Arnona. Interestingly, some clients preferred waiting until the delivery date was within a year of contract signing. A number of other clients wanted to better understand the demographics prior to purchasing, to ensure that they would be comfortable living in the complex.
On the topic of demographics, a client who purchased an apartment in Savyoney Arnona gave me one of the best compliments when he asked me, “do you know the greatest value that you give your clients?” After rejecting my first two guesses “honesty and trustworthiness” and “fighting for best price,” he explained that, while both of those qualities were true, my greatest value was that I was creating special communities. Through my relationships, I was bringing in wonderful families to buy together and be the nucleus of the next amazing community.
The first building in Savyoney Arnona is finally complete and the buyers are now receiving the keys to their apartments. Sales in the second building, which will be ready for occupancy within the next six months, continue to be brisk due to the project’s good name, owing to the excellent roster of families who have purchased in the project.
Soon after we did pre-sales in Savyoney Arnona, we were fortunate to do the pre-sales in another Jerusalem project called Bustan Baka, which will be delivering keys to the first apartments within the next few months. Based on these two successful experiences, we have built a reputation in the industry as the pre-sales specialists, and we are constantly on the lookout for the next great development project.
We are currently working on a number of exciting projects, which we hope will become available for sale over the next half year. If you have the temperament to buy “on paper” and the patience to wait a few years to receive the keys, stay tuned, as we have some interesting opportunities in the works.
Gedaliah Borvick is the founder of My Israel Home (www.myisraelhome.com), a real estate agency focused on helping people from abroad buy and sell homes in Israel. To sign up for his monthly market updates, contact him at email@example.com.