Moti is an experienced developer. He has built quite a few buildings in Israel, and when the big wave of purchases in Romania came in the first decade of the century, he bought several plots together with his brother. I accompanied them at the time through the purchase process, and saw the hesitation before each purchase, the thorough checks they carried out, the questions they asked. I learned a lot from working with Moti. Over the years Moti improved the land he had bought and prepared building plans for each plot, at no small financial investment.
Over the years Moti received offers to buy the plots, or some of them, but the offers seemed too low to him, and so he was left with plots, some of which stand like a “white elephant” between buildings that have already been built. Every time a broker brought him a potential buyer he would not compromise on the price (even when I showed him, more than once or twice, listings indicating that the asking price in the area by other sellers was much lower than the price he was asking). Every few months he calls and tells me how desperate he is to sell the plots and about yet another potential buyer he is negotiating with, but nothing happens.
At our last meeting, Moti came to my office with a bag full of documents and a worried look. “Five years,” he said quietly. “Five years I've been trying to sell, and nothing.”
“Moti,” I said, “you feel you're protecting the value of your asset, but what is actually happening is that you're paying a 'waiting tax' that just keeps growing.”
Moti looked at me in surprise. “A waiting tax?”
“Exactly. According to a 2022 Harvard University study, properties that remain in developers' hands for too long lose value at an average rate of 4% a year - just because of holding costs, taxes and inflation. Add the opportunity cost, meaning the profits you could have made from the money in other projects, and the figure reaches 9% a year.”
“But the price they're offering me is too low,” Moti insisted.
“Too low compared to what?” I asked. “Compared to the price you hoped to get when you bought the land? Or the price you think it will be worth in the future? Or perhaps the price you would like to get?”
His silence was answer enough.
The consulting firm Deloitte published a study in 2024 showing that 78% of Israeli developers operating abroad suffer from the “endowment effect” - a cognitive bias that makes us overvalue our own assets simply because they are ours.
“Moti,” I continued, “think about the real cost of your decision not to decide. While you wait for the ideal price, your assets not only sit unused, they also lose value. Meanwhile, the market changes, new competitors enter, and new regulations may affect your building plans.”
“My experience shows that successful developers in international markets are characterized by 'strategic flexibility' - the ability to respond quickly to market changes and adjust the strategy accordingly. One of the factors that hinder this ability is 'decision paralysis' regarding sale prices.”
“Maybe it's time to think about a different strategy,” I suggested. “Instead of insisting on a price the market is probably not willing to pay, perhaps you should consider strategic partnerships, phased construction models, a combination deal (exchanging land for a share of the built apartments), or even a partial sale that would let you free up capital for other projects.”
Moti was silent for a moment, then said, “But if I sell at a lower price, it will be a failure.”
“On the contrary,” I replied. “The most successful developers are those who know when to enter the market - and when to exit it. They understand that the real return comes from the cycling of capital, not from insisting on a single deal.”
At that moment I saw Moti looking out the window, gazing at the bustling city below. A new energy came into his eyes. “So what do you suggest I do now?” he asked.
“Let's start with an updated, objective valuation of the plots,” I suggested. “Not what we hope to get, but what the market is truly willing to pay today. Then we'll build an exit strategy with clear targets and defined timeframes. We'll set a minimum price you are willing to accept, and also a target date for the sale.”
Moti nodded slowly. “You know,” he said, “for years I was sure I was protecting my interests by waiting for the right price. But now I understand that what I was doing was simply postponing a decision.”
Three months later, Moti signed an agreement to sell two plots at a price 10% lower than he had initially expected. But as he told me excitedly, “I freed up almost half a million euros, already invested in a new project in Slovakia. And just as important - I sleep well at night.”
Developers, and not only Israelis, suffer when operating outside their own country from the “procrastination effect” - the tendency to postpone difficult decisions until they become more and more tangled.
Because in the world of international real estate, a delayed decision is often money wasted.
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית