"Not long ago I was approached by a couple interested in purchasing a ground-floor duplex in a nice, two-story building on a hillside in Jerusalem's Pisgat Zeev suburb," recalls building engineer Yigal Bergman. "I did a preliminary inspection of the building and found various cosmetic cover-ups that hid the settling of the structure and cracks. A closer look revealed that the whole building suffered from the sinking of a corner foundation post, and was listing to one side. Repairing such damage is almost impossible, and the couple purchased an alternative property."

No one buys a car without having it thoroughly tested by an authorized testing institute, but many people make the most significant investment of their lives based on a visual survey. Israelis invest billions of shekels in purchasing residences each year, but contrary to all logic, they seldom hire the services of a professional beforehand.

For years the percentage of second-hand apartments that underwent pre-purchase inspections was negligible, compared to inspections of new apartments (bought from contractors) and to one-year inspection reports. The increase in demand for quality by the purchasing public, the rising awareness of structural defects and the entry of foreign residents into the residential real estate market are likely to boost the use of inspection services.

	Advertisement

"I just returned from inspecting an apartment in the community of Kadima," relates engineer Eliezer Gochman, of Hadas Building Inspection. "I discovered that the whole building is not connected to the sewage system, but rather ends in an absorption pit, and the seller did not mention this to my client.

"The owner of another house I inspected in Afula had built some additions without the requisite permits, which prevented my client from being able to obtain occupancy documents from the municipality. A few days ago I went to Zichron Yaakov with a resident of Rishon Letzion to check out five properties. I found signs of dampness, hollow spaces behind ceramic wall tiles, and cracks indicating the sinking of foundation pillars. What can you do, everyone is hiding something."

Gochman and Bergman, who founded Milav (the Hebrew acronym for Israeli Institute of Building Inspection), are among the most veteran building engineers in Israel in freelance construction quality inspection. Each month they provide dozens of reports on structural stability, signs of dampness, defective flooring, decaying plumbing, and loose facades. Even after decades in this industry, they are still operating as independent experts.

"A car is taken to a testing institute, but when people buy an apartment, they consult their relatives. Why? Because that's the way we are," sighs Avigdor Eshel, CEO of Bam Building Inspection. "The public prefers to save NIS 2,000 and make do with an external impression."

In the past few years there has been an increased demand for apartment inspections prior to closing real estate deals. Two factors are behind this trend: heightened public awareness of possible building defects and the importance of early detection, plus the wave of apartment buyers from abroad. "The arrival of buyers from France and the United States has certainly contributed to the upsurge in this industry," says Bergman. "In their home countries, pre-purchase inspection is a far more developed concept, and in some places is even a precondition for mortgage approval, as banks require an engineer's report on the soundness of the property." The rise in property prices and the demand for fair value for the price paid have also increased the demand for quality properties, and publications in the media regarding building defects have also led to increased demand for property inspections.

"When a child was struck on the head by a falling external wall tile, there was an increase in demand for inspections of building facades all over the country," recalls Bergman.

A young couple interested in buying an apartment in Rishon Letzion decided to ask Bedek Bayit, a building inspection firm, for a comprehensive expert opinion on the apartment. The apartment was found to be in good condition, but the deal fell through at the last moment - the "neighbors" section of the report revealed that one of the neighbors on the floor had a dog and two cats, making the desired apartment unsuitable due to the wife's cat allergy.

Bedek Bayit was founded about four years ago and coordinates inspections by some 30 experts in various fields. The company combines engineering inspections with information from the database it has compiled, which contains information on the physical and social surroundings of each property. Bedek Bayit offers customers a range of information, from the character of the neighbors to radiation testing. "Most residential real estate deals are second-hand transactions, so we concentrate on this market," says company founder and CEO, Tzachi Bardugo. "We found that most potential buyers' concerns actually focus on the issue of who the neighbors are."

Bedek Bayit identified the potential in relaying information on the social environment, hired surveyors, formulated questionnaires and began mapping the neighbors in apartment buildings with units for sale, so that they could offer clients a report that includes the age, occupation, the percentage of renters, problematic tenants (such as former criminals or noisy tenants), complaints and disputes. Bardugo says that about 70 percent of apartment dwellers are willing to answer the questionnaires, and the surveyors manage to obtain from them information on the building, the level of maintenance and possible defects in the apartment for sale. This data is cross-referenced with that from other reports about the property.

Bedek Bayit is currently building a database on various residential neighborhoods throughout Israel.

"I was approached and asked whether I could gather information on entire neighborhoods, since I was already inquiring about certain buildings," explains Bardugo, who soon discovered that the local authorities do not maintain an organized database on the neighborhoods in their jurisdiction, and that the Central Bureau of Statistics (CBS) has data based only on postal codes.

Bardugo's firm therefore decided to gather data from local authorities, the Central Bureau of Statistics, the Israel Police, the education, health and environment ministries and to build a profile on every neighborhood in Israel. Each profile includes the number of residents, their age range, socioeconomic information, ethnic origin, level of education and occupations.

"Our database is unique because it is the only one that offers statistical data on the neighborhood level, which is what people want," says Bardugo, adding that Bedek Bayit also offers an expanded neighborhood profile, including satisfaction surveys, common complaints and information on the local public transportation system. It is also possible to build a profile of whole towns, including reports on future development plans and building permits, cellular radiation and high tension cables.

Bedek Bayit's business model has proven itself; the neighbors' report has become a popular service, and lawyers have begun using the reports in the bargaining over property prices. Bardugo says that Bedek Bayit now issues close to 1,000 various reports.

"There is tremendous potential. We have set up a special department to provide information to lawyers, and I know that we will eventually have competition," says Bardugo. "Our main struggle, however, is still over the consumer habits of the Israeli public."

The apparent flourishing of the pre-purchase inspections sector is greeted with suspicion by veteran engineers, who hasten to warn consumers that it is fitting for payment to be made for the professionalism of the examiner, not for a pile of printouts. It is not the quantity of reports that is important, but rather the real need for them. Others caution against engineers who may have a conflict of interest, due to their professional affiliation with building contractors. Engineers can also be "know-it-alls," ostensibly involved in everything from checking elevators to electrical circuit boards.

Sharon Malka, managing partner at Tzuk, a building inspection and project company, advises against cutting corners because of a sense of time constraint or tight budget and to be wary due to the increase in fraudulent inspectors.

"Some of these engineers charge according to the extent of the defects the find, and tend to falsely inflate reports," says Malka. "Others are negligent or hasty in their inspections, or do not use regulation equipment that requires substantial monetary investment."