If you're purchasing a home for the first time, you'll likely be dazzled by the number of professionals that need to work together to bring the deal to a close. From mortgage and real estate brokers to appraisers and title companies, every piece has a role to play in the larger transaction. The idea of adding a real estate attorney to an already crowded team may therefore seem excessive to some.
While not typically required, a competant real estate attorney may be useful in certain situations. We take a look at some of the reasons you might need to hire a real estate attorney; the advantages they offer and how much their services might cost.
Should I Hire a Real Estate Attorney?
Depending on where you live, the law generally doesn't require you to hire a real estate attorney to purchase a home. Like any other legal matter, you have the option to represent yourself. However, some states may require an attorney to be physically present at a real estate closing, or restrict the activities you may handle as part of a closing without the assistance of a legal professional.
If you decide to forgo hiring an attorney for your home purchase, the mortgage company, title company or seller may provide one as a legal requirement of the closing. However, that fact that an attorney is present at the closing does not mean they are there to represent your interests. In fact, an attorney hired by another party in the deal cannot give you legal advice. Keep that in mind if you have any questions or concerns you would like answered prior to closing.
What Are the Advantages of Hiring a Real Estate Attorney?
An attorney can be a valuable partner throughout the home buying process. During the early stages of shopping, your attorney can assist in selecting potential properties and reviewing any contracts or documents you need to sign from your real estate broker or mortgage lender. Once you've selected a property, your real estate attorney can negotiate and draft your contract of sale, which helps ensure that your interests are protected, and educate you on any of the inherent risks in the transaction.
After you've selected a home and entered the contract phase of your purchase, your real estate attorney can help you navigate through the nuances of the contract stage to closing. They can help clear up any title issues with the purchase, work through problems with your financing and confirm that the seller has met all their contractual obligations. At closing, your attorney can help you understand your loan package, negotiate and draft agreements to account for any issues that were noted during your final walkthrough of the property and confirm that the title is free and clear of any liens or burdensome restrictions.
As an example, let’s say you want to purchase a condo in New York City. Prior to or during the contract negotiation stage, an experienced real estate attorney will review the condo’s operating documents (the declaration, bylaws and house rules), financials and board minutes. This process helps shed light on what it might be like to live in this building. The attorney will highlight any known issues like leaks, noise complaints or ongoing developments. They can also assess the financial stability of the condominium development, and judge whether or not an increase in condo fees is imminent. The additional due diligence provided by a competent real estate attorney can help you avoid unexpected repair costs or monthly expenses that might pop up after you've purchased the property.
Another situation where a real estate attorney may be helpful is if you are purchasing a damaged property or fixer upper. Let’s say you hire an inspector to examine the home for defects and they find electrical issues, possible problems with the foundation or an underground oil tank that may not have been properly decommissioned. At this point, a good real estate attorney can negotiate repairs or credits for these issues on your behalf, and draft an addendum to your purchase agreement that can help resolve any issues between you and the seller to your mutual satisfaction.
How Much Does a Real Estate Attorney Cost?
Attorneys can charge vastly different fees depending on the location of the target home, scope of services provided, or even the unique traits of the property you're purchasing. Many attorneys may charge by the hour, at rates typically between $150 to $350 per hour, while others may work off a flat fee retainer, which typically range between $500 to $1,500, although that may run higher depending on where you're located.
Fee considerations are especially important for major metropolitan areas, where fees can easily reach $5,000 or greater. Attorneys who charge higher fees are usually influenced by higher average property costs in an area; pricier properties pose greater liability to attorneys, leading them to charge more for their services. Finally, the complexity of a transaction also plays a large role in determining fees, as it determines how much time and resources an attorney needs to commit. Examples of this might include unique transactions that involve multi-family homes, zoning issues or direct purchases from an estate or bank.
Purchasing a home is a costly endeavor and the potential value of a seasoned real estate attorney should not be underestimated, especially given the intricacies of a transaction that may be difficult to detect to the untrained eye. Paying several thousand dollars to engage a real estate attorney may seem like overkill, but the sound advice and skills of an experienced real estate attorney may end up paying for themselves, particularly on large complicated transactions where hundreds of thousands, or even millions of dollars are on the line. Use your own judgement to determine whether your real estate purchase (or sale) is convoluted enough to warrant the skills of an attorney.
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