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Don't "Discount" the Value of a Good Real Estate Attorney

By
Managing Real Estate Broker with Howard Hanna Rand Realty License # 49FA1074963

New York is an attorney state, and in our area they also prepare contracts. Having a good attorney is crucial, for many reasons, not the least of which is obvious: the other guys have one, and you don't bring a knife to a gunfight. Lawyers examine title, advocate, and draw up addenda, pre possession and rent back agreements, and in general partner with the brokers to shepherd the transaction to a closing. Like them or not, they are inextricable to the sale of a home. If I refer an attorney, I like and trust them. 

All too often, I'll see people who shopped around for a good mortgage and hired the best agent suddenly decide that it is better to save $500 on their attorney and risk peril because they think they are being smart.

Famous last words: I'll use my cousin the patent lawyer. What could go wrong?

Answer: Plenty.  

In Westchester County, the median sales price of a home in 2010 was $630,000. The mean? $827,900. A typical attorney fee is $1200. 

In my book, that is one of the best bargains going considering the copious work that closing a transaction in 2011 takes. Just today, a lawyer I know told me she preferred divorce work, because it is about the same amount of work for far better fees. Amazing, but she's right. Making deals happen these days is hard! And buying a home being on par with a divorce would be unthinkable in years past. 

There was a time when real estate was far easier than divorces. But with the layers of caution from the lenders, the ever-increasing demands from buyers and the overall freaked out nature of many sellers, those days are gone. Yet the model of fees for New York lawyers is still based on an era when real estate closings were, relative to today, a rubber stamp. 

If I were buying or selling a house today with the gigantic money changing hands, I'd find the best lawyer I could and offer them TWICE their quoted rate, just to make sure I was given white glove treatment. If you think that's crazy, consider the fact that $1200 is really just a speck of change with the enormity of home prices we pay in New York. Of course, you don't have to be me, but you also have a choice about trading a few hundred dollars for inferior representation. 

At the very least, I would avoid a lawyer that came gratis through my union or advertised a cut rate, because I have never, in 14 years and 300+ transaction seen those lawyers be the zealous advocate that consumers need in this market. And oh, how I dislike working with inept or unresponsive attorneys! Yet there are people who trust the largest business transaction of their life to a guy who advertises a low rate, never returns calls or even addresses the crisis de jour. It is a big deal. There are no "do-overs" in real estate. Retain a specialist. 

I cannot believe I am saying it, but it's true: real estate lawyers in New York are vastly underpaid. Quibbling over their fee in light of the high stakes is the epitome of being penny wise and pound foolish. 

Hamburger fees get you hamburger representation. I want my clients to get filet mignon advocacy, and I'll be the first to say that it is worth every penny. 

Christine Smith
Buyers Brokers Only LLC - www.BuyersBrokersOnly.com - Canton, MA
Exclusive Buyer Agent & Attorney, Canton, MA

I agree with you 100%, but of course, you are preaching to the choir here.  The advantage to my buyer clients is that they actually get a "discount" on a experienced real estate attorney when they use my services!  I will also add, there is nothing worse than  negotiating a transaction with  the "uncle" who is not a real estate attorney.

Jan 20, 2011 08:31 AM
Alan May
Jameson Sotheby's International Realty - Evanston, IL
Cicadas are coming! Cicadas are coming!

What is this... "double JPF on the feature blog roll" day?  (nicely done).

Jan 20, 2011 12:08 PM
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

Good post and information here today. I've always believed "you get what you pay for!" 

I've bookmarked this for future reference.

 

Thanks,

~Patricia/Seacoast NH & ME

Jan 20, 2011 12:15 PM
Steve Ewing - Keller Williams Realty
Keller Williams - Stockton, CA

Anytime a client wants legal advice I go right for the real estate attorney card.  We are not lawyers and I will be darned if I am going to act like one.  I agree that getting it right at the first is the right answer rather than trying to do corrections.  Thanks for the blog.

Jan 20, 2011 01:51 PM
Brian Morgenweck
Power Realty Group, LLC Bergen County, NJ - Hackensack, NJ
Broker/Owner, GRI, CRS, ABR, SRS

AMEN! Many attorneys in NJ are pulling away from real estate closings over the last year or two for several reasons. I'm sure the low pay-to-hours ratio is one. But, much work expended and a lower probability of transactions closing is certainly another, lately.

I had a seller client around '04 (an upper-tier Wall St guy), who insisted, against my chiding, on using his friend (a probate attorney). Well, his buddy agreed to everything the buyer's attorney asked for & rushed it out of attorney review, I guess because it was a full-ask-on-day-one deal. On what would have been day 2 of Attorney Review, I had an offer from one of my builder clients for $50,000 over ask! It was under contract & the attorney didn't know what to do, so $50K blew off the table & out the door...

Great post, Phil.

All the best!

Jan 20, 2011 02:06 PM
Elliott S. Topkins
Topkins & Bevans-etopkins@topbev.com - Boston, MA
Massachusetts Real Estate and Title Atty

Hey Phil--I am going to re-blog this post to my flock, so the point can be made without my writing a premise that is obviously in my best interests. I am a Massachusetts real estate lawyer, and I have been one for 42 years. When you call my office, no one will tell you that I am in Court or at a deposition. I am either at a closing or at the registry of deeds or doing legal research on a real estate issue. This is my craft; this is what I do. I have learned from many mistakes, and I am still learning. It is a wonderful life.

Jan 20, 2011 02:28 PM
Brian Morgenweck
Power Realty Group, LLC Bergen County, NJ - Hackensack, NJ
Broker/Owner, GRI, CRS, ABR, SRS

Hey...OJ coulda' saved a few bucks by using the Public Defender...

Jan 20, 2011 02:29 PM
Lana Robbins Realtor ® Licensed Real Estate Broker
Aloha Kai Real Estate - Clearwater, FL
Licensed in Florida, Washington, and Hawai'i

Hi J. Philip. Unlike New York Florida is not an attorney state though we have many attorneys in this litigious state. It is highly advised to have a good attorney read the contract. I even suggest that to my clients.

Jan 20, 2011 02:34 PM
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Philip, I like in our state the Broker Lawyer committee generates standard forms and then going "off form" you get the attorney. But I agree, the good attorney role is invaluable.

Jan 20, 2011 03:22 PM
Fred Griffin Florida Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker


Great advice, Philip. 

Every Realtor should cultivate relationships with a couple of good Real Estate Attorneys.  keep them on speed dial.

Jan 20, 2011 04:01 PM
Yolanda Hoversten
Self Employed - O'Fallon, IL
Referrals for O’Fallon, IL & the Metro East

Chicagoland is an attorney area, but not here in Southern Illinois.  I do suggest to clients that they are more than welcome to consult with an attorney.  We have an 11 page contract with barely room to "write" anything freestyle.  Congrats on another feature!

Jan 20, 2011 04:49 PM
K.C. McLaughlin
RE/MAX United - Cary, NC
Realtor, e-PRO, Homes for Sale - Cary, Raleigh NC

You are so right - you get what you pay for. It is worth it on such an important item to get the most qualified attorney to get the job done...smoothly.

Jan 20, 2011 11:34 PM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Phil, we are not an attorney state. However, I always use an attorney who I know and trust to conduct the closing.

Jan 21, 2011 01:31 AM
Gay E. Rosen
Julia B. Fee Sotheby's International Realty - Larchmont, NY
As Real as Real Estate Gets!

Hi phil: You are filet mignon - I love your wit . Well said....Gay

Jan 21, 2011 02:07 AM
Donna Galinsky
Allen Tate Company - Cornelius, NC
Make Lake Norman Your Home!

How true.

I am always carefu to askk if they have a REAL ESTATE attorney, otherwise I will recommend one.

I have had deals ruined by using a non RE attorney - it seems they just don't "get it"  

Jan 21, 2011 03:03 AM
Jerry Morse
The Morse Company - Janesville, WI
BBA,GRI

I agree that a Good Real Estate Attorney is important.  However markets vary considerably from state to state.  In our state the real estate agents draw the agreements on a state provided standard form, so the attorneys do not get paid that much.  Also, our local average price is $120,000.  Thanks for the post.

Jan 21, 2011 03:19 AM
Ryan Case
SCA Real Estate - Anaheim, CA
877-828-0710

You get what you pay for with attorneys. The great ones don't come cheap, but they do garner the results you are after!

Jan 21, 2011 03:28 AM
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

Hello Phil.........yes a Real Estate Atty can be valuable. I recommend speaking to one to all my buyers.

 

Patricia / Seacoast NH & ME

Jan 21, 2011 06:28 AM
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

Hi Phil -- I wonder what the breakdown nationwide is.  In Washington, DC., when I was licensed there, with high-priced homes, attorneys were not involved in general residential sales (apart from the title end of things which they did).  Here in Greater Cleveland, Ohio, they aren't utilized either for normal residential transactions. We have board approved purchase agreements that many brokerages use, that were written by local real estate attorneys, with limited fill in the blank options.  It's not to say they may not get involved or review contracts on the side, but it's not common.  Great to hear how things work in NY.  I agree, a competent real estate attorney is worth every penny.

Jan 21, 2011 02:00 PM
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Jan 08, 2012 10:09 PM
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