Buying an apartment in Israel is no simple story and often causes tension and quarrels between spouses, and buying an apartment in a foreign country can be even harder in that respect. Differences in culture, custom and practice can make things very difficult for anyone who wants to buy an apartment overseas, as can the lack of sufficient information and familiarity with the law and regulation, and even with real estate prices. Every Israeli child knows that prices in north Tel Aviv are higher than in south Tel Aviv, but is that also true for Athens? Porto? Warsaw? Or Sofia? Possibly. And what is the price per square meter for a second-hand apartment in the Kolonaki neighborhood of Athens compared with a new apartment or one being renovated by an Israeli developer? And will the price be the same in the Pagrati neighborhood? One may assume not.
Yehuda and Ilana are a retired couple who want to buy an apartment in a European capital city “because everyone is buying abroad now,” as Ilana put it.
On a friend's recommendation they met with a company that buys buildings, renovates and upgrades them, sells to Israeli investors and operates the apartments for them through a management company. They were very impressed by the company's offices in Tel Aviv, by the presentation, and by the price, which sounded reasonable and fair to them. They agreed on the commercial terms and, on the company's recommendation of a lawyer, contacted me and asked me to handle the legal side with the developers.
“What are your considerations for choosing this particular city?” I asked.
“The proximity to Israel, it's only about a two-hour flight,” Yehuda replied. “The price seems fine to us, and we also saw many advertisements with offers of projects and apartments in the city.”
“Have you visited the city? Did you fly out to see the apartment in question or the project?” I pressed.
“We toured the city about ten years ago,” Yehuda replied.
As I pressed them with questions, they began to understand that they didn't really know much, and were in fact entering a deal without understanding all their needs and the limitations of the country, the city and the location of the property.
After a few days and correspondence with the marketing company's representatives, after we received the draft sale agreement, I had to hold a phone call with Yehuda.
“My friend, as you can see from the emails, the company is not in such a hurry to send us documents or explanations. I asked to see their deed of title to the building and have not yet received it.”
“That worries me a bit,” he replied.
“What worries me more is that, from a short inquiry I made online, with the local partner, and with a few other companies that market in the city, the price per square meter is high for the area and the promised return is below 5% even before tax. I think that if you specifically want this particular city, better deals can be found,” I explained.
At the end of the call Yehuda decided to announce that he would not buy the apartment and to start researching more where it would be worthwhile for him to invest. I suggested to Yehuda that we hold another meeting so that we could understand their goals, examine their needs, and then advise them in an informed way on how to carry out the purchase.
Everyone knows the “herd phenomenon,” and during the years we have been accompanying investors abroad we come across the phenomenon again and again. Yehuda and Ilana, too, were swept up in the “everyone is buying abroad” trend without examining the market, the property and the development company in depth. The result? They almost fell into the trap.
Don't rush. Buying an apartment, in Israel or abroad, is a significant decision. Don't let social pressure (“everyone is buying abroad”) or aggressive marketing influence you. Take the time to research, understand and weigh all the options.
Start by defining your goals: why do you want to buy an apartment abroad? For residence, investment, vacation? A clear definition of the goals will help you find the most suitable property.
In the next stage, research the real estate market in the country and the specific area that interests you. Understand price levels, taxation, ownership laws and potential returns. Combine a physical visit to the property, walk around the neighborhood, understand who lives there, check with local agents the purchase and renovation costs (if needed).
Be patient - finding the right property and completing the deal can take time. Don't compromise on an apartment that does not meet your needs.
Buying an apartment abroad can be an excellent investment, but it is important to do it in an informed and safe way. Use professionals, do thorough research, and don't let outside pressure influence your decisions.
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית