It is time for another blog directed for both the buyers and sellers at there whose home is either on the market, or are thinking about doing so. The one thing everyone must be prepared to do is find an attorney that they like, and trust. Don't just pull someone out of the phonebook, either ask your real estate agent for a referral to one that they have worked with before. If you are a buyer, than you should be working with a buyers broker so your agent will be able to refer you to one as well.
Not all states require the use of attorneys during the purchase of a home, but even if you are buying a home out of state I always recommend you use a attorney to protect yourself from entering into a contract that is not in your best interest. That being said, it is time to get to the point of this blog which is why you should be using a REAL ESTATE ATTORNEY, notice those 2 words in the beginning says real estate. There is a saying, you can only do one job well. Attorneys can do many different things divorce, elder law, criminal law, family, ect. and each one of these areas have its own set of rules and quirks. Do not use an attorney who does not specifically work on real estate transactions, and I don't mean someone who does them whenever they are requested to. You should be using someone who does it every single day, because you want this attorney to know absolutely everything they may need to to help you during this transaction.
I happen to be very lucky and we have quite a few attorneys who are on our preferred attorney list, and they have only earned a place there because 1. They are real estate attorneys and 2. Our clients have told us what a wonderful experience they had working with them. We do not add attorneys to our list and let them stay there just because, if we get complaints they are removed. A common mistake is that people choose their attorney based on price, and I understand the concern over the money when your making such a large purchase but take into consideration that a good real estate attorney can cost anywhere from $800 - $1200 for the entire transaction, it is well worth it. Plus many general practice attorneys will charge a higher rate, or even an hourly rate for your file so you will end up spending quite a bit more if there is even the smallest hiccup.
I have worked on some very hard deals, and the only reason they closed was because of the options that the Real Estate Attorney offered to them, at the same time I have had attorneys almost kill a transaction over something completely avoidable just because they weren't aware of a simple resolution. Sometimes after the bidding is done, and the attorneys are involved your agent will need to step back in and play the middle man, you should never feel pressured by your agent but understand they are trying to be the glue that keeps you on track to either buying or selling your home and that is what you hired us to do!
Let me give you an example of the difference in what COULD happen during a transaction where a Real Estate Attorney was not involved.
A deal is made and signed by both buyers and sellers.
Seller agrees to close within 30 days on a cash deal, but the house will be sold as is.
Buyer agrees to close within that time frame, and agrees to the contingencies which go along with a cash transaction.
Attorneys are contacted and asked to send out the contracts to both parties.
Contracts come back and buyer is "requesting" home inspection with repairs to be made, and/or credits and adjustments.
You are always entitled to a home inspection but homes that are being sold as is, mean exactly that AS IS. Non real estate attorneys will often overlook this and send out a standard contract, and it will start a un-needed disagreement. This is something we commonly see with estate sales, short sales, and foreclosures.
The sellers opt to not sign into this contract because it does not meet the terms of the original agreement that was made, and the agent is not due to check in with the attorneys for another day or 2 and is not contacted regarding this hiccup.
Now if a real estate attorney a few things more than likely would have gone differently because
- The attorney would have taken specific notice to the terms/closing time and checked with his/her clients regarding what was being represented in the home and what was not.
- The attorney would have been in direct communication with the agent which would have allowed the 3rd party mediator AKA The Realtor to review original terms of the transaction with his/her buyer eliminating the problem in a timely manner before it escalated.
- If the issue was something simply fixed this can sometimes be done via a verbal agreement that does not require money held in escrow.
Please keep in mind this is just an example, sometimes transactions where non-real estate attorneys were used have gone thru with no issues at all BUT this is a big decision you are making. Would you go to your general practitioner if you were having a heart attack ? No you would go to a emergency room, sure the GP might be able to help but what if it doesn't ? This may seem extreme, but you have no idea what it is like to see someone lose their dream home!
There are 3 circumstances that you absolutely, positively must use a real estate attorney.
- Cash Deals: These deals can be tricky because they have very specific terms as far as what is being represented and your closing date.
- Short Sale/Foreclosure: Banks are hard to deal with, and in this case it is who you are not only buying your house from, but it is also whose financing your loan. There must be a direct line of communication to the banks, your lawyer needs to be educated on what these processes are.
- Estate Sales: This is where it gets tricky because there is usually more than one seller, it usually involves family members who are not familiar with the what is legal on the home and what is not, plus the condition is not always all that great. It also comes down to how the home is titled and who needs to be present for the closing, and what paperwork is required.
Now for those of you non-believers lets also look at another reason why you need to use a Real Estate Attorney, and it has nothing to do with the Attorney or his knowledge. An attorneys staff is also important, they are usually the ones drawing up the contracts and who is contacting all the parties involved. Keeping with the Dr analogy if you were having a heart attack, and the nurses assistant told you to just go home you would end up in quite the pickle but she may assume it was just a bit of heart-burn, even though she meant no harm it can cause a big problem for you!