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The Pros and Cons of Buying a Home "On Paper"

 When buying a home in Israel, there are three types to choose from: brand-new, second-hand, and on-paper.

Buying on paper means the house or apartment is still in the planning stage. In some cases, the developer has already built part of the project or neighborhood, so you can see the quality of construction and speak to earlier buyers. If the developer has yet to break ground, you need to rely on architectural drawings and imagination.

Either way, you’ll want to hire professionals (lawyer, interior designer and/or architect) who have your interests at heart.

Before buying on-paper, consider the pros and cons.


The Pros:

  • Your home will be brand new.

  • The on-paper purchase price will generally be lower than the price of an already-built home.

  • On-paper purchases may be a better investment than second-hand homes because they almost always increase in value the moment they are built.

  • You will be part of the planning process and can request that walls be moved, more electrical outlets installed, under-floor heating put in. You can choose the tiles, cabinets, and so much more.

  • Wheelchair accessibility. Most new projects have elevators. Make sure the elevator will accommodate a wheelchair and that your rooms and doors are equally accommodating.

The Cons:

  • You won’t be able to live in your on-paper home until it’s built, but you will still need to pay a sizeable down payment and regular installments. Remember that mortgage payments begin during construction, not when you move in, and that you may need to pay rent in the meantime.

  • Changes to the building plan and upgrades like additional sockets, higher-quality bathroom fixtures, and thicker doors are rarely free and are often expensive. “Extras” can add tens of thousands, even hundreds of thousands of shekels to the price.

  • Many on-paper projects are not completed by the deadline cited in the contract.

  • Just because your home is ready doesn’t mean the new neighborhood school or health fund is. The area you purchased your on-paper home might not have shops or bus lines yet.

How to Mitigate the Cons

In Israel, anyone who has ever bought on-paper will say the same thing: visit other projects the builder has built and speak to the apartment owners. Their second piece of advice: hire a real estate lawyer and designer and/or architect with solid experience in on-paper projects.

On-paper purchases are subject to strict rules. Your lawyer should make sure your contractor provides you with the proper bank guarantees, has the proper insurance, and that you receive full rights to your property. Your lawyer should also tell you about any taxes you must pay.

Your contract should also specify a penalty if your home isn’t ready on time, and that this penalty should be upfront, not an eventual discount on what you owe.

Hiring an interior designer or architect to examine your building plans and compare them to your contract is a good idea, even if you’re not planning any structural changes. It’s far easier and cheaper to prevent problems than fix them later. If you’re revising the plan, a professional can spot problems like insufficient space or lack of plumbing.

Finally, before moving into your new home, hire a construction engineer to check that everything is up to code and that you’ve received what you’ve paid for before paying the last installment.


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