Haya and Yisrael, a pleasant couple in their 50s, fell in love with an apartment in a presale in a project by an Israeli development company in Europe. They paid a deposit into an escrow account in Israel, which was supposed to be transferred to the selling company once the building permit was received, and began to dream of the new life awaiting them. But two years passed, and the dream remained on paper. They received no update from the development company, and when they tried to get information they were met with the runaround. They came to my office so that I could try to check and explain to them what was happening with the project and their money.
“I don't understand why they are avoiding us,” Haya asked.
“Usually,” I replied, “it is simply uncomfortable for the developer to explain that he is stuck for some reason. I don't want to think of worse reasons. Give us a few days and we will check.”
“I don't even know the developer. All our dealings were with the salespeople,” she added anxiously. “I hope this wasn't a scam.”
The project in which Haya and Yisrael bought is not a scam, the money is still in the escrow account, but the project got stuck in the planning process and the delay was caused as a result. The developer asked for building rights beyond the local zoning plan and also asked for relief on various requirements. All of these caused the planning process to drag on beyond what is customary.
Tali and Yossi also bought an apartment in a presale, like Haya and Yisrael. In the project in which they bought, too, the planning process dragged on beyond what the developer had anticipated. However, the conduct of the developer from whom Tali and Yossi bought was completely different. Every month they received an update newsletter from the developer, who spared no detail and described the difficulties as well as the solutions. When they came to my office for advice they asked to understand what to do next - continue to wait, or use the clause included in the agreement and ask to get back the deposit they paid.
Two couples, two projects, two completely different approaches - and a world of difference in the customer experience.
These stories illustrate the critical importance of open and transparent communication between developer and buyer in real estate projects abroad. As Donald Trump says, “The most important thing in communication is hearing what isn't being said”. A developer who shares the challenges and the solutions with the buyers, even if they are unpleasant, builds trust and allows buyers to make informed decisions.
A study conducted by the “National Association of Realtors” in the US found that 90% of buyers value clear and honest communication from their agent. This is seven times more true in projects abroad, where buyers often feel distant and disconnected from what is happening.
It is important to remember that whoever buys at the presale stage, when the developer or contractor does not yet have a building permit, must take into account that delays are to be expected. Real estate is a good investment, and even a profitable one, but timetables in real estate investments are “fluid” and may stretch out, especially, as noted, when entering an investment at an early stage of the development.
Already at the contract signing stage, do not hesitate to ask the developer questions about the project, the timetables and the potential risks. There is no shame in asking for references on the developer, asking to speak with customers who bought in his previous projects, and looking for information on the developer's previous projects and his reputation in the market. Do not sign the agreement before making sure you understand all the terms of the contract, including the cancellation and compensation clauses. It is important to remember that real estate projects abroad (and not only) can take time. Be prepared for possible delays.
The story of Haya and Yisrael and of Tali and Yossi is a reminder that buying real estate abroad is not only a financial transaction, but also an emotional journey. Open and transparent communication can make the difference between a dream that comes true and a bitter disappointment.
In the end, Haya and Yisrael decided to cancel the deal and get their money back. The trust between them and the developer was broken, and they preferred to give up the dream of an apartment in Europe rather than keep living in uncertainty. Tali and Yossi, by contrast, decided to keep waiting patiently, trusting the developer and his transparency. Will their gamble pay off? Only time will tell.
Buying real estate abroad can be an excellent investment, but it demands careful planning and thorough due diligence. Open and transparent communication between developer and buyer is the key to success and peace of mind.
Don't give up on your dreams! Even if the road to realizing them is full of bumps, remember that there are always new opportunities on the horizon. And most important - don't compromise on open and honest communication, because it is the key to building trust and a true partnership.
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית