The Bad News about Square Meterage - שטח עיקרי ושטח שירות, שטח ברוטו ונטו

So as a follow up to my previous post on how to determine your square meterage I now have some bad news. Not all square meterage is created equal. There's a difference between main space, otherwise called שטח עיקרי, versus service areas like hallways or stairs a.k.a שטח שירות. Stipulating area only in terms of שטח עיקרי is referred to as שטח נטו whereas area that includes שטחי שירות is called שטח ברוטו.

A little background.

In the old days, building plans were relatively simple when it came to building rights. They might say something like building a 100 SqM house or being able to build 40% of what the plot size is. In either case, the amount stipulated was all-inclusive i.e. the marginal kinds of areas (like stairs or מרפסות or service rooms - שטח שירות) were counted the same as prime area - שטח עיקרי.

You could make a house of 90 SqM of עיקרי and 10 SqM of שטח שירות, or you could make it 50-50. it was up to you with no real distinction listed in the building permit.

Subsequently was passed the by-laws of תקנות התכנון והבניה (חישוב שטחים ואחוזי בנייה בתכניות ובהיתרים) תשנ"ב-1992. Therein the law clearly outlined many of the rules regarding how to calculate area including what to be considered שטח עיקרי and what to be considered שטח שירות.
Further more, in סעיף 9, it required all future תכניות to clearly delineate the building rights for עיקרי and שירות separately. 

As a result, many of the תכניות (and therefore in consequence building permits as well) subsequent to 1992 should breakdown the square meterage by עיקרי ושירות.  What it also means is that if you're looking at a source that predated 1992 (like a building permit or a Tabo that came from an old תיק בית משותף), you're looking at a Square Meterage that it's hard to know what exactly it includes or excludes...


Further complicating things is that there was large scale debate of what parts of the building are or are not considered part of an apartment. Below is a table taken from the Hebrew Wikipedia article on שטח דירה:

You'll notice that the שמאי standard #9 is highlighted in green and is seen as the standard that the country is striving to adopt but as of yet has still not been incorporated into טאבו by some of the רשויות מקומיות.

You'll also not that standard 9 includes קירות חוץ ומשותפים -- outer walls and joint walls. Earlier standards that were practiced in the 60's and 70's strictly included the inner walls only and excluded the thickness of outer or joint walls.

Consequently, you can have registered square meterage of a Tabo from the 60's and 70's that often will be less than the square meterage were the property to be registered nowadays. in these cases it's best to consult the building plans themselves to see what was or was not taken into the calculation.

How to find out your Square Meterage?

(ignore the weird changing of fonts, for some reason i can't fix it...)

Just about all land appraisal calculations revolve around the Square Meterage/Footage so it makes sense to discuss what are the ways to determine the area of your house or plot. 

Here's a list of what I know so far:


1. Surveyor - מודד   A מודד is definitely THE authority when it comes to the issue of Square Meterage for land or buildings. They bring cool tools like Total Stations and measure all kinds of things that I won't get into now. But I imagine the service is expensive and there are a number of easier sources to go to that are relatively inexpensive below and suffice for the purpose at hand.


2. Tabo - טאבו - נסח רישום מקרקעין   This is the most popular way known by the general public. Currently costs 15 Shekel and can be downloaded from here immediately. It's also probably the most inaccurate. Tabo gives sort of a snapshot of the legal registry of your property/apartment and is the highest level of judicial authority in determining ownership.

With that being said, it's actually the least likely source to be accurate when it comes to the actual area size of your property. This is because often the Tabo is the last thing to be updated administratively. Say you put in a request to add an extension to your apartment. First you'll put in a building permit request. Then you'll pay various fees. Then you'll have the building completed. And then you may have more fees and taxes to pay. And ONLY AFTER you've paid all your debts and taxes on the property will your local Municipality give you it's necessary permission needed for you to head to the Registrar (via your lawyer) and note the change in size to your apartment officially.

So often what you'll have in say an old small apartment in jerusalem where the Tabo has it at 50 SQM and it's 70 or 80 SQM. In summary, Tabo isn't the best source.


3. Building Permits היתרי בנייה  The best way to see what what your LEGAL meterage is  would be by viewing all the various היתרי בניה in your תיק בניין.  Every היתר בניה should have a טבלת שטחים on it that details for you on every floor the שטחים that were given permission to build (the newer ones will even differentiate between שטח עיקרי ושטחי שירות). That's really the best way to know at the very least what the square meterage of your place should be legally. It's also a great way of identifying anything that could be illegal that can get you in trouble with the עירייה in the future.

Note: For apartment buildings, היתרי בנייה will only list the total meterage per floor, without specifying the area for the specific apartments. you can nevertheless use the Adobe PDF Measuring tools to perform a rough estimate approximation of the areas in question.

The downside is that it can be confusing to find and wade through. It used to be only available by going yourself to the Municipality archives in the אגף הנדסה and sifting through paperwork physically. Now that more and more municipalities are digitizing their archives so that it can be viewed by anyone online. Many of the GIS systems will often overlap and point you in the direction of finding the appropriate תיקי בניין for your purposes.


4. For Apartments - תשריט בית משותף  Every apartment building with 3 or more units is registered in פנקס הבתים המשותפים (as opposed to everything else which is registered in either פנקס הזכויות or פנקס השטרות). Alongside registering the Legal contract of the condominium a.k.a. תקנון הבית המשותף, you'll find the תשריט בית משותף along with the צו רישום which should delineate the square meterage of the units. It's actually from the תשריט בית משותף that the נסח טאבו derives (in apartments) so that again it will have the same shortcomings. e.g. possible additions added legally that were never updated.

Costs currently 33 Shekel. Can be ordered here.


5. מדידת ארנונה in the absence of anything else, or maybe particularly in cases where the property is clearly not the legal permitted area, checking with the local municipalities department of ארנונה can help. they perform separate מדידות of their own (irrespective of the legality of the structures) for the purposes of collecting ארנונה. I don't know how it is throughout the nation, but i know that atleast in Jerusalem it requires the owner himself or someone who has the owner's ייפוח כוח (power of attorney) in order to be given that info).


6. Graphical Measurements  standalone structures such as houses or duplexes can sometimes be roughly measured making use of the GIS systems with the aerial views in the background. ROUGH estimate only.


7. DIY method  purchase a laser measure and measure the rooms or building yourself :)

Some Math and Computer tools that are useful in Land Appraisal

There are some basic kinds of calculations that can be seen often in appraisals:

• The IVR formula - Income, Value, Rate. See illustration. In a nutshell:

• To find Income ("I") you multiply value by rate. So if you have a property worth $1 Mil and the going return on investment for similar properties is 8%, you should be receiving an annual net income of $80,000.
• To find Value ("V") you divide Income by Rate. See the example of Capitalization below.
• To find your Rate of Return you divide Income by Value. So if you're getting $80,000 annually on a $1 Mil property your rate of return is 8%.
• Capitalization of future cash flows - examples:
• say in 5 years a תכנית will come into effect that will increase the current property by 10 million dollars. It's necessary to discount what the value of $10 million in 5 years is worth today. assuming a cap rate of 8% the equation would be $10 mil/(1.08^5).
• say you're appraising an industrial or commercial property that has an average yearly net income cash flow of $100K. You need to capitalize that for a present value by dividing the income by your capitalization rate to give you the Value.
• Averages and Weighted Averages - sometimes multiple value sources will give competing values and you have a preference towards one over the other, in which case you make use of weighted averages.

In addition here's a compilation of some nifty computer tools that are very useful.

• Microsoft Excel:
• It goes without saying the basic use of operators and basic functions are important (SUM, AVERAGE, ROUND, etc.
• I've found also that the functions LOOKUP and VLOOKUP can be helpful as well
• PIVOT TABLES - are A-M-A-Z-I-N-G for doing any analysis of large swaths of data. Literally dozens of applications.
• Elasticity or Sensitivity Tables ניתוח רגישות - After having decided say on $5,000/SqMtr for your appraisal calculation, you may want to see how the final value sways and changes were you to have chosen 5,100 or 4.900 etc. I don't really know what buttons you push on an English excel, but in the hebrew excel it's under the ניתוח מה אם button which is under נתונים.
• Adobe PDF:
• Measuring area or distance - I only just recently discovered this. if you're viewing a PDF format of building plans and you want to know a particular area you can do so with the PDF. I don't have time to give the step by step now - look for it in youtube. essentially though you first set the scale according to the document you're viewing, often for me it's 1:250 cm or 1:2.50 meters, and then you can sketch the area you want and adobe will automatically tell you the area.
• Misc
• the SNIPPING TOOL in Microsoft Windows is indispensable for me as a land appraiser. allows me to show snapshots of what i'm looking at.

List of GIS tools for various municipalities - רשויות מקומיות

This is a partial list of various GIS tools i've used in the past.

Generally speaking you can find them in the אגף ההנדסה section of the municipalities website.
You'll further notice that a number of munic. host there systems through the same provider TalDor, which has a similar interface and layout across all their platforms.

The ideal ones include not only תצלומי אויר and גושים וחלקות, but also layers for viewing various levels of תכניות i.e. (מקומית,  מחוזית, ארצית) plus access to רישוי info such as תיקי בניין and היתרי בנייה.

Some will even allow you to generate a comprehensive report of all the data including what building rights and/or restrictions you have that apply to your given property (i think ramat gan has that if i'm not mistaken).

Without further ado:

רשימת אתרים למערכת הממ"ג של רשויות המקומיות - GIS

• באר שבע
• בת ים
• חולון
• חיפה
• ירושלים
• 
  
• 
  
• מועצה אזורית מטה יהודה - for all the small יישובים in and around jerusalem
• פתח תקווה
• רחובות
• רמלה
• רמת גן
• רעננה
• תל אביב

What's the difference between a land appraiser and a R/E agent? שמאי לעומת מתווך?

So here's a comparison I like to give to describe the difference between a R/E agent and an Appraiser.

a foot soldier v.s. a general commander in the army.

A soldier "knows the terrain" personally. He's walked it back and forth thoroughly. That's a lot like what a real estate agent is. They generally pick a particular radius of expertise (whether it's a neighborhood or a city) and just focus on knowing everything that's going on in that neighborhood. Checking out exclusive listings of other agents or private sellers, walking around the neighborhood handing out flyers and talking with people. And if they last in the business long enough they've seen houses being sold through the entire "sale cycle", from the beginning of putting it on the market until many months or years later until it's sold.

The land appraiser is quite the opposite. He relies mostly on all pertinent data available to the property and the land. He's less interested in whether the property has been remodeled or it's directions of air and sunlight and more interested in the stats - i.e. size of property legally, potential building rights, price per square meter in comparison to the average among the properties in the area. This allows a שמאי to be more versatile than an agent in that he can appraise any land anywhere in the country if he does enough due diligence in founding out all the details necessary.

שמאים actually have by-laws prohibiting them from how they can advertise themselves (see תקנון שמאי מקרקעין - אתיקה מקצועית and סעיף 2 there), whereas Real Estate agents have no such limitation. As a result the general public is more familiar with מתכווים than שמאים.

Additionally, while מתווכים are prohibited from officially giving appraisals of value for Real Estate it doesn't stop them from using indirect language such as "free consultations, estimations, etc" which essentially leads the general public to think it's the same thing anyway.

Below is a freehand list of pros and cons of a שמאי.

Appraiser Pros:

• has a comprehensive understanding of the property, i.e. building rights, legal and illegal structures, future building plans that can affect the property positively or adversely
• is the exclusive capacity for deciding on R/E value in Israel. anything relating to the govt (Municipality taxes or payments to the מינהל) must go through a שמאי only and therefore any appeal to be counter-argued requires you to get a שמאי
• extensive education and training (14 tests + 1 year of intership). This is in comparison to the single test taken by מתווכים which focuses on a very limited scope of laws pertaining to land and contract law.
• versatile to any location in israel
• has accepted methods for calculating values that are not "real" in the market. e.g. calculating the land value component of a property that has a structure built on it, or calculating the percentage of the market value that derives from potential building rights versus the percentage derived solely from the current structure per se (this last one is needed often in issues pertaining to payment to the Tax Authority for Capital Gains Tax מס שבח).

Appraiser Cons:

• doesn't have personal knowledge of the sales data beyond what's saved or recorded in רשות המסים. Basing his values over the aggregate average values of  transactions without "knowing" the neighborhood or houses themselves
• isn't accustomed to give much weight to various subtle or psychological amenities in a property that a potential buyer might give, such as general sense of aesthetics or "feel" of the property. 
• Has no good method for quantifying the value of boutique properties that have no real comparative transactions. Particularly in "trendy" or "artsy" kinds of properties, the data itself gives way to large degrees of variance, and makes it very difficult to assign a particular value with any degree of certainty. The large mansion with the helipad on it's roof can go for $10 million or $15 million, depending on the unique dispositions of the buyer and seller.
• similar to the above, the שמאי is entirely based on the data of past transactions. as such, it's really the market itself which is determining the values. The Achilles heel for a שמאי is in markets where the rise or fall is happening so fast that past sales do not contribute to understanding what the property can be sold for today.

Agent Pros:

• A good agent "knows" the neighborhood. the people, the stores, the schools, etc. he may be aware of particular advantages to potential buyers that can increase the properties added-value.
• The agent is offering sales and marketing services (for seller) or negotiating skills in regards to the purchase price.

Agent Cons:

• The commissions nature of the agent and more importantly the desire to secure "exclusive rights" from the property owner create a vested interest for the agent to suggest a market value that may not be objective.
• No training in understanding Building Plans or Permits. Agents selling or buying properties do not know how to check for illegal structures or expansions that in theory should not be given value (on the assumption that eventually the עירייה will discover the illegal building and demand it's destruction and/or give fines to the owner).

Hope this helps. Pls feel free to comment if i've missed anything.

Introduction to this blog

Welcome to Land Appraial In Israel (or i guess "LAII").

As I progress myself in my knowledge of land in Israel I figured why not share some knowledge with others and hopefully make the world a better place, (and help ease living in israel at the same time :)).

A little background. I'm an oleh from America but had very little knowledge of Real Estate back there. Learnt just about everything I know here. So I may cover topics that to the reader are maybe obvious general R/E knowledge.

After a short stint as a ReMax agent here in israel i was disappointed from the lack of knowledge required therein and turned my attention to studying land appraisal - שמאות מקרקעין, while i'm currently an intern land appraiser - מתמחה בשמאות מקרקעין.

Disclaimer: I'll be weaving in and out of English and Hebrew in this blog. Just the nature of the subject and my laziness in giving every hebrew term a translation.

Where to begin? -- there's so much to talk about really... not sure where to start.

Let's just start with a bit of a running list of what i'd want to cover:

• 3 dimensions of R/E: משפטי, תכנוני, רישוי
• היתרי בנייה - building permits and how to find them
• Copy of Registration "Tabo" - נסח רישום מקרקעין, טאבו
• building condominiums - בתים משותפים
• תיק בית משותף - תקנון, תשריט וכולי
• רשות מקרעי ישראל/ מינהל מקרקעי ישראל
• Capitalization Rates - שיעורי היוון
• The subjective aspects of R/E appraisal
• land appraisers - שמאים vs. real estate agents - מתווכים