Buying an apartment in Ashkelon

With Ashkelon being one of the most popular cities for real estate purchases in the country, people looking to buy properties ask if they should go through agents or buy direct. There are pros and cons to using an agent which buyers should consider before starting to look.

Dealing with the Seller

When buying a property, dealing with the seller can be direct, through a sales office or through an agent.

  • Direct negotiations with a seller are usually only possible in the case of sellers who do not have an agent representing them. This has the advantage of reducing the broken telephone that might exist, but also can add to the emotional reactions in negotiations that can occur and cause a deal to fail.
  • Sales-office staff are paid to get the maximum price for the builder. They are usually paid a commission based on the final sale price. Their interests are with the builder.
  • Agents work for the seller with the goal to sell the property at the highest possible price. They only make a commission if the deal goes through, so they might be able to convince the seller to lower the price to reach a sale.
  • Independent agents work exclusively for the buyer, and their goal is to get the lowest possible price for them. They usually have access to listings in a number of buildings and have leverage with the sales office or seller’s agent to get their client to lower the price or have the client choose an alternative property. Some independent agents also have connections with banks to help buyers get mortgages, and some even offer perks (example: free interior design services).

New Projects

In the case of new projects, many potential buyers are inclined to visit the sales office and to buy “direct” in order to save on the commission. At first glance, it seems that buying through an agent means unnecessarily raising the cost of the purchase. But many buyers do not realize that the price of buying through an agent may actually be lower than buying through a sales office.

Buyers don’t know what the lowest offer the project salesperson will take. An independent agent on the other hand might know from a previous transaction when a client negotiated a price that was accepted by the project and can use that figure, combined with the changes in the market, to get the best possible price for the buyer.

David Zwebner, from Ashkelon Properties, is a well-known English-speaking real estate agent and offers this advice: “Ashkelon is a very popular city for affordable seaside apartments compared with other coastal cities. Because of the popularity, I see projects raise their prices on apartments overnight despite the fact that the cost of construction and materials is not rising at the same pace. Project owners gauge the market and see what the market will bear, then raise their prices accordingly, sometimes by hundreds of thousands of shekels. The buyer might not be aware that the amount quoted was changed overnight and thinks that the price is what they have to pay. Through different methods, I try and get the project to lower the price. As an example, when one of my clients reserves a unit, but chooses not to make the purchase, I am able to negotiate a lower price for the new buyer based on my previous deal.”

The way sales agreements work in new projects can affect buyers’ ability to choose how to purchase the apartment. Once buyers deal with a project sales office directly, they eliminate the possibility of purchasing through an independent agent. So, the moment buyers walk through the door of a project sales office and get prices or a tour, they have made a decision to not take advantage of the services of an independent agent.

David Zwebner adds, “Occasionally, I have worked on behalf of buyers to negotiate a purchase of specific apartments in new projects and found that if they chose not to buy, the same apartments were sold directly to buyers at higher prices. The new buyers were trying to save on the commissions, but did not know that the apartment could have been purchased at a lower price. Recently I had a case where a buyer went directly to the sales office of a project and paid 200,000 ₪ more than the price I could have negotiated.”

Will My View Be Blocked?

This is one of the questions that is asked most frequently about properties with sea views. Buyers can pay hundreds of thousands of shekels extra in order to get a sea view. Will their view of the sea be obscured by new construction? What protection do they have for their new investment? While nobody can know for sure what the future holds, agents often research the area in order to tell clients what to expect. And as the city grows, the municipality might change the zoning on parcels of land to update the usage or to take an existing building and allow for extra floors to be added.

Here again independent agents with good reputations will try to protect their clients by explaining the possibilities of future building plans, which ultimately may affect the view. But agents can’t be aware of every single property and plan with the municipality. If in doubt, buyers have to do their own due diligence to determine what might be built near a building that could have an impact on the view. Often, agents have answers because they made enquiries, but plans are constantly changing and buyers need to decide for themselves.

Second-Hand Apartments

Since there is no Multiple Listing Service (MLS) or a centralized database of all available properties, buyers and sellers without agents might not be able to find each other. Buyers  who find an apartment that is being sold without an agent, and know that the asking price is reasonable, stand to save money on the real estate commission. In this case, does an agent bring value to the transaction? Mostly not, because the buyer and the seller have found each other, and both agree that the price is acceptable.

In Israel, second-hand real estate transactions that go through an agent are designed with the seller paying a commission and the buyer paying a separate commission (standard is 2% + VAT). Many Israelis selling their apartments prefer to sell direct because they want to get as much as they can by avoiding the commission. Since Israel does not have an MLS, there is no simple way of running comparisons with recent sales in order to determine a realistic asking price. Unrealistic expectations are a problem in the second-hand apartment market.

Consider a scenario of a fictitious Mr. and Mrs. Cohen, who want to sell their apartment. They would like to buy a larger apartment or house, but won’t buy it until they sell theirs. The Cohens understand that they need to come up with the difference between the amount that they will get for their beautiful unique “castle” and the price of the new property. A quick check of the current price listings on some of the popular real estate websites gives them an idea of what to ask. Since their home is gorgeous and stunning AND — as Mrs. Cohen likes to point out — Mr. Cohen went to the expense of changing the faucet in the kitchen and putting a new fragrance dispenser in the bathroom, therefore their apartment MUST be worth more than other apartments in the area. The Cohens believe that their home is worth more than the actual market value and without an agent to do a reality check or an MLS for real comparisons, they post their property for sale at an unrealistic price. Mrs. Cohen says, “If someone wants my home, they will pay what I ask.” They might put a sign on their balcony advertising the apartment and even get some nibbles. But unless the potential owners bargain the price down to the true market price, the unit may stay unsold for a long time.

Buyers who see the advertisement or the sign might check it out, but if they know the market, will walk away. Eventually, the Cohens may decide to lower their price or turn to an agent who will likely convince them to lower their price to something that will result in a sale. The same unrealistic expectation exists when buyers blanket a building with leaflets, looking for an available apartment.

Good agents who are very familiar with market prices and valuations can play a major role in convincing sellers that their asking price is unrealistic, while advising buyers that the price is an excellent investment or is on the high side.

Zichron Devarim

If the transaction looks good and if Mr. and Mrs. Cohen suggest that the deal be written up as a “letter of intent” (Zichron Devarim), so each side knows what is included and what is not, DO NOT DO IT! Yaacov Epstein, an English-speaking lawyer from Epstein & Co. Law Firm, recommends that all of his clients, without exception, should “not sign a letter of intent without legal review. The letter of intent is a contract, (a bad one that is lacking protection for buyers and sellers that are normally found in a contract) and contracts should not be signed without an attorney. He explains in detail in his article “Letter of Intent” Is It a Good Idea? David Zwebner adds, “It’s actually illegal for a broker to draw up any legal or quasi legal document obliging the two parties to transact.”

Good Agents/Not So Good Agents

The Israeli real estate market is very competitive and sometimes agents will do whatever they can to secure a sale. When contacting agents about properties that are listed on the internet, it is not uncommon to hear, “Sorry that property has already sold (Lo Relevanti), but we have others. What are you looking for?” Sometimes the ads are real, but the agent has not had a chance to take it down, but there are agents that post apartments that don’t exist. Sometimes ads show apartments with an incredibly attractive description and price. Let the buyer beware.

When buying second-hand apartments, some listings are direct from owner and some through an agent. In these cases, unless agents have an exclusive listing, they might be afraid that a buyer can go directly to the apartment owner and negotiate a sale without them. So, they often set up ads on different online real estate sites, or advertise a property at a different address or building number in order to prevent potential buyers from contacting the owner directly.

Another technique that might be used sometime is for an agent to find a listing that is advertised on a real estate website by the owner. They approach the seller and tell them that they will show the apartment and only take commission from the buyer. The buyer, believing that the listing is coming from the agent, agrees to pay the commission for an apartment that they could have seen and purchased without the agent.

Finding the right agent can be crucial to a successful transaction. There are many agents in the city, some are better than others. One of the best ways to choose an agent is through a personal recommendation from a friend or colleague. A personal experience of a satisfied customer is the best way to select an agent.

Galit Kelman, an agent with REMAX, specializes in second-hand apartments. She adds another reason that agents can provide listings that are not known by others, “Agents have access to information that the public is not aware of. They have discussions with sellers who are not ready to place their property on the market, but an agent, armed with that information, might be able to share that information as soon as the owner makes the decision, sometimes before the public knows.”

Knowledge is Power

While using an agent for a real estate purchase might seem counterintuitive to anyone looking to save money, in some cases, using an agent can result in substantial savings in both time and money. Every situation is different, but armed with the knowledge of how the real estate market works, buyers might be able to make some wise choices and ensure that they are getting the best value for their money.

Note: This article was researched and written in early 2022 for the Ashkelon market. Buyers should conduct their own research and decide which route is best for their situation. I am not a real estate agent. If you want more information on the Ashkelon community, contact Stephen Epstein at https://ashkelon123.com/contact/