Appraiser’s opinions are used for many purposes, in accordance with the needs and request of the client.
The “Real Estate Appraisal” Department specializes in valuations of all real estate assets: residential, office, commercial, industrial, hotels, rental properties, sheltered housing, etc.
In addition, the department prepares opinions in a broad range of areas: market valuations, expert opinions for the court, construction defects and depreciation, real estate taxation, improvement levies, counter-opinions for the Israel Land Authority, pre-purchase inspections, speculative land, assumption-based opinions, severance of joint ownership, fair rents, sheltered housing etc.

The department also provides opinions on the subject of consolidation and division (balance tables) and combination transactions.

Expert opinion for the court

The real estate appraisal profession in Israel is regulated under the “Real Estate Appraisers Law, 5761-2001”. According to that law, only a certified real estate appraiser may undertake valuations of properties. In addition, a real estate appraisal written by a certified real estate appraiser is legally valid.

Appraisers’ opinions for the court are prepared for statements of defense and for statements of claim concerning appraisal disputes which are adjudicated in the court. The purpose of the opinion is to present all the facts and data relating to the property, thereby assisting the court to resolve the dispute.

The opinion prepared for the court is of great importance, since in many cases it can affect the amount of compensation awarded.

They say “Don’t be right, be wise”.

I recommend – “In life it is important to be smart, in court it is also important to be right”

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Market value estimates

An estimate of the market value of a real estate asset should express the consideration one would reasonably expect to receive upon its sale in a transaction between a voluntary buyer and a voluntary seller under free market conditions, with the parties acting knowingly, judiciously, carefully and without coercion.

There are 3 main approaches to valuing real estate assets:

The comparison approach (or the market approach)

An estimation is made of the market value of the property being assessed based on transactions which have been entered into in relation to other properties which are similar to it in terms of their location, character, the level of risk inherent in them and their degree of tradability. The assessment is made while using comparison coefficients relevant to the assessed property in relation to the comparative transactions. This is considered to be the leading approach.

The income approach (or the income capitalization approach)

An estimation is made of the market value of the property being assessed based on capitalization of the income which is received or which is likely to be received from it over time. The income is capitalized according to an interest rate which is determined, inter alia, by the character of the property, the level of risk entailed in the current income, the security interest rate in the economy, the quality of the tenant, depreciation, etc.

The cost approach (or the physical value approach)

An estimation is made of the market value of the property being assessed based on the projected cost of constructing another property which is similar to it in all respects. The value obtained by this approach is a summary of the value of the land (using the comparison approach) with the addition of the cost of building the structure in its current condition, and an appropriate profit for the developer.

It is accepted practice to combine and cross-reference data between the aforementioned assessment approaches depending on the purpose and circumstances of the assessment and the nature of the property. In different market situations (booming, recession, etc.), the result obtained by using each approach may be different. Under optimal market conditions, the use of any of the approaches shall produce similar results.

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Assumption-based opinion

An assumption based opinion, or to use its other names, a hypothetical/theoretical opinion, is an opinion based on working assumptions regarding the physical condition or planning situation of the property, at the request of the client, which affect its value.

The value of the rights stated in such an opinion is not the true value of the property, but the theoretical value subject to the requested hypothetical assumption requested which does not exist in reality on the determining date.

The object of such an opinion is to provide an in-depth understanding of economic feasibility for potential planning, which is inconsistent with the existing situation.


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Speculative land

In recent years, the phenomenon of offering land to the general public for purchase, while creating the impression, that in a reasonable period of time, its zoning shall be altered making it possible to build tradeable areas on it (dwellings, offices, commercial, etc.) has been increasing.

The marketing is based on a representation according to which, when the zoning changes and construction becomes possible, the value of the land shall increase by hundreds of percent. The significance of the representation made to the public, is that the land is being sold to the public for a higher price than its value, having regard to the planning situation applying to the land.

In many cases, the sales agents do not present to potential purchasers the full information required in order for them to make an informed decision. The purchaser does not have the tools to correctly estimate the likelihood and chances of the land becoming available for construction in accordance with the representation, as well as the risks involved in the required procedures. The potential purchaser is also unable to estimate the length of time and the costs involved in making the land available for construction, should such use be approved in the future.

Standard 22 requires the vendor/sales agent to present the potential purchaser with an appraiser’s opinion based on the Standard, which prescribes the minimum details and criteria which must be disclosed in real estate assessments for land being marketed to the public based on expectations. The purpose of the standard is to enable the potential public to obtain from the vendor or the sales agent full information and the complete picture for the purpose of making an informed decision regarding the entering into of the transaction.

We recommend that a real estate appraiser be hired to examine for you all the parameters in a professional and impartial manner, thereby verifying the economic advisability of the transaction and the risks inherent in it.

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Consolidation and Division

Within the framework of planning and construction regulation in Israel, consolidation and division, or, by their other name, parcellation, is a new implementation of a detailed plan or local outline plan for the consolidation of adjacent plots and their re-division in accordance with the new plan in order to enable maximum development and utilization of the area for the benefit of the landowners and the public.

There are 2 types of consolidation and division plans:

Consensual consolidation and division – which may also be undertaken by any landowner who wishes to settle the re-division of his land.

Non-consensual consolidation and division – where not all the landowners agree to carry out the unification and division. In such a situation, the special provisions prescribed in section 122 of the Planning and Building Law, 5725-1965 apply.

The process of consolidation and division is created with the assistance of forced consolidation of all the landowners, the re-planning of the area, and subsequent severance and proportionate division between all the landowners. The land is divided in accordance with the principles prescribed in Standard 15 “Minimum Details Required in the Allocation and Balance Table Prepared for a Consolidation and Division Plan”.

Our firm offers advice and guidance from a real estate appraiser for urban building plans which include consolidation and division, checking balance and allocation tables, and filing objections in cases in which the plan undermines the proprietor’s rights.

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Importance of a pre-purchase inspection of real estate assets

Purchasing an apartment, house or any other real estate asset is probably the most complex, expensive and stressful transaction that most people will ever enter into during their lifetime.

It is therefore advisable to have all the requisite inspections carried out by the appropriate professionals, i.e., a building inspector, real estate appraiser and real estate attorney.

Signing the sale agreement after all the necessary inspections have been made may save the purchasers future mental anguish and large pecuniary losses.

A pre-purchase inspection is one of the important tasks of a real estate appraiser.

The appraiser’s opinion includes essential checks and reference to a range of parameters in accordance with the Appraisal Standards. The data presented in the opinion provides

professional information which plays an important role in the decision-making process prior to entering into the transaction.

The following are the main checks incorporated in the pre-purchase opinion:

– Inspection of the property’s surrounding area – Characterization of the immediate vicinity

and distant surroundings of the property.

– Planning inspection – Calculation of the constructed area and the balance of the unutilized

construction rights in accordance with the approved plans.

– Licensing check – Verification of actual construction against that which was

approved in the construction permits.

– Legal review – Analysis of the rights and the chain of agreements pertaining to the property.

– Economic examination – Analysis of the value of the property which takes into account all

the considerations presented in the opinion.

An example to conclude with,

In 1999, 6 relatives purchased four building plots in Arsuf. After the purchase, they were shocked to discover that the land was defined as a “national park” construction on which was prohibited. In 2007, they filed a NIS 6 million lawsuit against the lawyer who represented them for misrepresentation, deception and professional negligence. According to them, the decision to purchase the land was made after the lawyer had described the deal as attractive and encouraged them to purchase the land, maintaining that the public had not yet noticed that it would soon be possible to build in the area.

Conversely, the lawyer claimed that the allegations against him were an “imaginary plot” invented by the plaintiffs in an attempt to make an easy pecuniary profit and unjustly enrich themselves, while trampling on his honor and good name. The lawyer did not deny that the plaintiffs had purchased the plots on his recommendation, and according to him, he had himself purchased a plot of land in the same area and hence “fully shared in the plaintiffs’ expectations that the zoning of the land would be changed from agricultural to residential.”

In 2013, the District Court judge ruled that “we were not dealing with an imaginary plot, but with half-truths, representations and assurances that induced the plaintiffs to enter into transactions for the purchase of land for building on, which since it had no chance of happening, caused them compensable pecuniary damages.”

The judge ordered the lawyer to pay the plaintiffs total compensation in the sum of NIS 3 million and litigation costs in the sum of NIS 100 thousand.

In 2015 the Supreme Court upheld the lawyer’s appeal and overturned the District Court’s ruling, holding, inter alia, that “because the plots had remained in the purchasers’ possession to this day, this is overcompensation which violates the basic principle of restoring the status quo ante”. The Supreme Court also held that the lawyer genuinely believed that the deal was advantageous and had even invested himself and purchased a plot.

As you can see, a pre-purchase check would have put the issue in front of the purchasers and enabled them to think matters through in a clean and disinterested manner, and hence they may have decided not to enter into the transaction.

Our firm provides pre-purchase opinions for all types of real estate available on the market.

They say “act last, think first.”

I recommend – “purchase last, check first!”

קרא עוד

Construction defects and depreciation

What are construction defects?

Construction defects are a range of flaws, faults or failures in a structure which may undermine its value, integrity, appearance, the enjoyment of its users and their safety. In general, a construction defect is defined as a discrepancy between the design and actual implementation. Defects can be in the planning, in the materials, in the work itself or in the systems. Implementation defects are usually caused because of the contractor’s inability to build according to what was defined in the planning.

A common example of depreciation resulting from construction defects is the construction of an apartment in an area that is smaller than the area signed in the contract.

In such a case the purchaser may sue the contractor for the difference between the price which the purchaser paid and the true value of the apartment.

Another common example of devaluation caused by construction defects is in the area of underground parking. While the Standard defines the regular width of an underground parking space, but plans and the reality are two different things. Many people find themselves receiving a narrow and almost unusable parking space, certainly by large vehicles. In such a situation the purchaser may sue the contractor for depreciation as a result of the inability to use the parking space.

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