Why zero equity is so dangerous
A weekend column in Globes warns against 'zero equity' real estate deals, explaining that they transfer risk from the developer to the buyer, not a gift. The author cites examples from Gindi, Hagag, Israel Lands, and Melisron, and warns of difficulties in obtaining a mortgage on delivery day due to a reduced appraiser valuation.
In a weekend column in Globes, Dror Marmor warns against 'zero equity' deals offered by real estate developers, explaining that they are a financial trap, not a gift. The author describes a publicity blitz for apartments in Israel and abroad with no down payment, and warns that the contract is not a cancellation option but a full commitment. He notes that the Bank of Israel limited bank financing in 2012, but the gap is filled by non-bank credit and developer loans. Examples: Gindi allows payment in 12 years, Hagag in Bucharest claims 'crazy demand', 'Israel Lands' promises up to 400% profit, and Melisron allows mortgaging parents' property. The author emphasizes that on delivery day, the appraiser may value the apartment at less than the purchase price, requiring a high equity completion.