Real estate appraisal and loss of value

Do I need a real-estate appraiser or an engineer to find construction defects? The line between the two often isn't clear. Here is what a real-estate appraiser contributes for anyone who wants that information.

Loss of value

A licensed real-estate appraiser determines how much value an apartment has lost and translates that into shekels. Loss of value means a drop in the value of the land or the building compared with its previous condition, or the condition it should have had. There are two main types:

A. Loss of land value from a newly approved town building plan. The claim is filed with the local committee under section 197 of the Planning and Building Law, within three years of the date the plan was approved; compensation covers the full value of the harm.

B. Loss of value from construction defects, which itself has two different sources:

1. Loss of value from substantial construction defects, or from the contractor's failure to meet the sale contract or its promises. This applies when the defects cannot be repaired, or repairing them costs more than the defect is worth. In most cases, it pays to first order an engineer's report from a home inspection company to locate and diagnose the defects, before commissioning the appraiser's loss-of-value report.
2. Psychological loss of value: even a substantial defect that has since been repaired can still depress the value, because buyers know it was once there, for example a building whose foundations settled and were later fixed. See ruling A/00/012158, Haifa Magistrates' Court, dated 07/11/2006.

Inspecting a property before purchase
The appraiser helps a buyer on two main fronts:

1. Planning: checking whether the surroundings could change for the worse, for example an open lot turning into a school, or a green area becoming a transportation hub with a train or bus station.
2. Unused building rights: whether the land still carries building rights that have not been used.

Inspecting a property before sale
When selling, does the seller know all the taxes and levies due once the rights are realized? Many sellers get caught out here: real-estate taxes and levies in Israel can reach 30 to 40 percent of the property's value, and it pays to know this before signing the sale contract.

Lawyers are often not versed enough in this to check what the owner will actually owe at the time of sale. It is also worth bringing in an appraiser to file a counter-assessment whenever the seller receives a betterment-levy demand, against the assessment made by the local planning and building committee's own appraiser. The counter-assessment must be filed within 30 days of the date the demand reached the seller.

The appraisal department at Arad Bedek Bayit
Given how complex the subject is, our real-estate appraisal department offers packages tailored to different needs.

For buyers of new and resale apartments:
– Environmental land use.
– Property value assessment (its real market value).
– Checking the property's building rights.
– Licensing check (built area against the permit).
– Ownership check (the nature of the rights: land registry extract, etc.).

Taxation:
– Betterment levy: preparing an alternative assessment as an objection to the committees' assessments.
– Permit fees to the Israel Land Administration: preparing objections regarding payment of permit fees.
– Betterment tax: preparing an opinion for objections and appeal committees.

Loss-of-value compensation, expropriations and town building plans:
– Estimating compensation for land expropriation.
– Estimating loss of value from harm caused by a town building plan
(section 197 of the Planning and Building Law).
– Preparing balance and allocation tables for consolidation and division plans.
– Advising on objections to a town building plan.

Opinions on market value and collateral:
Property valuations for banks and mortgage collateral.