| Last update - 01:25 04/07/2005
The ten plagues of apartment prices
By Arik Merovski
Today's apartment market is brutal, demanding and uncompromising. Buyers
grasp at any shred of an excuse to pressure apartment owners into lowering
their asking price. Still, there are factors that really do affect an apartment's
price. It is hard to estimate the effect of each of these factors on the
price of an apartment - it all depends on the specific circumstances and
the apartment's location.
The figures below were provided by assessors and real estate agents.
1. Stairs. One of the most damaging factors in assessing an apartment is
stairs. They are tedious to climb, and the higher the apartment, the lower
the price.
"Until 30 years ago, no one viewed stairs as a drawback,"
says Ran Vernick, chairman of the Assessors Association. "Just the opposite
- the higher the apartment, the better the view, so in some cases, the prices
were even higher."
Now that elevators have become standard in almost all apartment buildings,
stairs have become a drawback. About 10 years ago, they reduced an apartment's
price by 5 percent, 5 years ago this figure rose to 15 percent, and today
it stands at 20 percent or more.
2. Non-registration in tabu (land registry). Many apartments are not registered
but are managed by housing companies, so this does not pose a problem. The
story is different, however, regarding apartments that have not been registered
because, for example, the original contractor went bankrupt. Buyers who
demand ownership papers are not willing to make do with cautionary notices
or documents that serve as substitutes for a land registry extract, since
they are afraid of unpleasant surprises concerning the apartment.
It is hard to assess the risk involved in purchasing an unregistered apartment,
but it can lower the price, somewhat justifiably, by as much as 20-30 percent.
3. Environmental nuisances. This refers primarily to noise from main traffic
arteries and, most recently, proximity to cellular antennas. The effect
of these issues on an apartment's price varies according to location - from
15-30 percent next to Tel Aviv's Namir Road, for example, to slightly less
in Jerusalem and Haifa.
It has become clear that cellular antennas do deter potential buyers, and
can reduce an apartment's value by dozens of percent. Meanwhile, there is
no clear proof of the effect of bad smells and air pollution on the price
of an apartment.
4. Damaging building plans. Apartment prices are affected by plans for the
construction of a multi-story building or a new main road nearby. One of
the most extreme cases is in Holon, where a huge acoustic wall was built
between apartment buildings and the adjacent Ayalon Highway, and the value
of the apartments fell by dozens of percent. Other cases depend on the type
of plan, how much it affects the environment, and the proximity of a construction
project to property.
5. Maintenance. Is the apartment well maintained? Are the walls next to
the bathroom marred by damp spots and mold? Does the apartment lack air
conditioning and need more than a cosmetic face lift? The apartment's price
could plummet thousands of dollars if the answer to these and other questions
is yes.
6. Facade. When the building does not look good, when the signs of age are
evident in the flooring, the stairwell and the outside walls, do not expect
an apartment to fetch the same price as an identical apartment in an adjacent
complex that is newer.
7. Neighbors and neighborhood. An unfriendly neighbor or a neighborhood
with a poor reputation also harms an apartment's price. A neighborhood known
for violent incidents chases away buyers. On the other hand, neighbors who
tend the garden, make sure the stairwell is clean, spruce up the mailboxes,
and upgrade the front entrance and parking area make the apartments much
more attractive, and therefore, more valuable.
8. Parking spot, storage room, veranda. If an apartment has none of these
extras, there may be a problem. Sometimes buyers are forgiving, and in older
neighborhoods, such a reality is understood. But in newer complexes, buyers
view such deficiencies as a clear drawback, which affects the price they
are willing to pay.
9. Area. Starting in the 1970s, apartments have been steadily getting larger.
Once a 3-room apartment was 75 square meters (1,350 square feet) and a 4-room
apartment was 90 square meters. Now, the average 3-room apartment is 90
square meters, while 4-room apartments are 110-120 square meters. Most of
this additional space is used for bathrooms (once, there was only one bathroom,
whereas now there are two or three), and a bigger living room. Today, the
population prefers larger apartments, and those that do not meet such expectations
will lead to lower bids.
10. Accessibility. An apartment and the building might be great. However,
accessibility to a neighborhood can impact on prices in the area. When everyone
leaves for work in the morning and returns in the evening, are there traffic
jams at its entrance? The distance to the nearest school, supermarket and
medical clinic can also affect an apartment's price.
There are probably other factors that negatively affect an apartment's value,
but these are usually related to a property's specific circumstances. Even
if an apartment has one or more of the above shortcomings, there is no need
to despair. The first rule for owners of such apartments is to accept the
reality and try to counterbalance it with other advantages.
Therefore, for example, owners of apartments on upper floors can invest
more in them, perhaps thanks to the money they saved at purchase time. Also,
there is no disputing a beautiful view.
"Quite often, I am asked
to sell apartments that the market doesn't like," admits realtor Jossef
Sionov of Home Land in Tel Aviv. "I view them as a real challenge, and also
get nearly no competition from other agents. From my point of view, it is
no great feat to market good apartments. Anyone can do that, and in such
cases, there is no need for an agent."
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