Protecting Clients From Themselves
We all try to retain top professionals – be it doctors, lawyers, etc. – to protect our families. Similarly, My Israel Home has had the great pleasure and responsibility for the past half decade to protect our clients’ interests when buying and selling homes in Israel. Although most clients make level-headed decisions, we have witnessed a small minority of clients who have allowed their hearts, rather than their heads, guide their decision-making. Let’s focus on two recent experiences and try to glean lessons to make us better consumers.
Case 1: Our client asked us to sell his apartment. We determined that the unit was worth minimally 2,100,000 NIS and that we would bring the apartment to the market with an asking price of 2,300,000 NIS. We explained that the marketing process would take several months, and we were confident - based on recent comparable sales and the general direction of the market - that we would achieve the projected deal price. The seller retained us to represent him but carved out a neighbor from the exclusive agreement.
Within a few weeks, the neighbor offered 1,900,000 NIS and we implored our client to be patient and not accept the offer, as it was more than 10% below market value. Two weeks later, another potential purchaser submitted an opening offer of 2,100,000 NIS and indicated that he would go up in price to close the deal. We spent the next week unsuccessfully attempting to reach our client and convey the strong offer. The seller finally responded and informed us that he signed a contract with the neighbor for 1,950,000 NIS. Even taking off our 2%+VAT fee, the client left over $50,000 on the table.
Case 2: A client inherited a well-located Jerusalem apartment in need of renovation and, based on recent local sales activity in the vicinity, we valued the property at up to 2,400,000 NIS. The client went silent for a few weeks and then informed us that they sold the apartment on their own. We wished them congratulations and tried to figure out how they were able to achieve such a high price so quickly, as we expected that it would take time to unearth the right buyer who would appreciate the unit’s potential and pay the full price. A few weeks later, we got our answer: The transaction was registered in the tax office with a sale price of 2,225,000 NIS. They too left a sizable amount of money on the table.
Forecasting a future sale price is precarious business and we are not so arrogant to believe that we can always correctly pinpoint the expected sale price. We also understand that some sellers believe that agents often inflate expected sales prices in order to obtain sales exclusives. That’s why we always tell our clients: don’t trust a broker – make him show you recent comparable sales activity to substantiate his valuation.
This advice reminds me of my first transaction, the sale of a lovely three-bedroom unit in Kiryat Shmuel. The seller was informed by two seasoned real estate agents that her apartment was worth between 1,750,000 and 1,900,000 shekels. We felt that these price quotes seemed a bit lean and offered to give her an opinion of value. After reviewing recent comparable sales in the immediate vicinity, I prepared a one-page property valuation which included comps, and concluded with the following sentence: “I would recommend an asking price of 2,950,000 NIS, and would expect to receive 2,500,000 NIS - and hopefully higher.” Five weeks later, we signed a contract at 2,670,000 shekels.
In summation, we recommend that you retain an agent who will use market data to substantiate his values – be it for a purchase or a sale. In addition, if they’re helping you sell your home, make sure that they keep you firmly in the loop and provide you with regular updates of their marketing activities.
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 firstname.lastname@example.org.