The article began with a question about how to approach a transaction without a Realtor. "Are there individuals who will, for a fee, direct us through the needed paperwork and legal steps?"
The tone of the article started out rather well...
Answer: Yes, there are professionals who will handle the paperwork and legal steps in a real estate transaction, namely lawyers.
That may seem obvious, but you’d be surprised how many home buyers and sellers fail to seek legal advice in real estate deals involving hundreds of thousands of dollars.
When buyers are struggling to scrape together the cash to cover the down payment and closing costs for the purchase of a home, they hate to spend an extra couple of hundred dollars on legal fees. But in my opinion, that is money well spent — especially when you don’t have a real estate agent to represent your interests.
This was written by a real estate broker, and so far, so good... right? Then, this:
As a licensed real estate broker, I have occasionally helped my mortgage clients by drawing up a purchase and sale contract for them at a nominal fee when they were buying a home directly from the owner. In those cases, I was simply acting as a facilitator and not representing either party. The advantage is that I am using all the latest multiple listing association forms which are constantly reviewed and updated by lawyers, so the buyer and seller each have some level of legal protection. You may be able to find a local real estate agent who is willing to do this for you, but don’t pay thousands of dollars for this service. For example, I typically charge $1,000 to write up a purchase and sale agreement between a home seller and buyer after they have verbally agreed on the terms, and that fee is usually split 50/50 between the buyer and seller.
This is where my jaw dropped. He starts by saying that people "hate to spend an extra couple of hundred dollars on legal fees." Okay... I get that. It wasn't much of a surprise. But then he proceeds to say that he charges $1,000 to fill out a form! Wow!
First, I need to comment on another matter he raised, then I'll get back to the price. He said that he uses the "latest multiple listing association forms, so the buyer and seller each have some level of legal protection." In my opinion that isn't worth much (let alone, $1,000). Forms are great (as a starting point), but they are one-size-fits-all and not everyone is the same size, so to speak. A form isn't worth much, if you don't understand it and you don't customize it to fit each particular situation. And, if you make changes to the form, you are providing legal services.
Okay... that said, let's get back to the price. I was shocked that someone would charge $1,000 to fill out a form. And even more surprised that someone would pay that much for such a service.
I have prepared sales contracts for individuals who were entering a real estate sale without a Realtor. I typically charge $350 and I actually draft the Purchase Agreement... I don't use a stock form. Furthermore, I advise my clients about the required disclosures and liability aspects of the deal. For that fee, I also include the Inspection Addendum to the Purchase Agreement, the Lead Based Paint Disclosure Statement, the HUD Lead Paint Disclosure and Brochure, and the Ohio Residential Property Disclosure. And... for another $50, I'll even prepare the deed!
Maybe I'm selling myself short, but if I charged $1,000, even for all that I provide, I would not be able to sleep at night. Maybe this guy is in a more affluent area of the country than I am... maybe the cost of living is higher and, like all things, it just costs more. But I still have to say that $1,000 to fill out a form sounds out of line to me.
But... at least he is honest about it...
However, I still think that you are better off hiring a real estate attorney because for roughly the same amount of money you would be able to get some legal advice to protect your interests rather than just hiring somebody to fill out the forms for you.
Maybe I'm just off the mark on what such services cost these days... who knows. But, in any regard, I am pleased to see someone writing about the value of a real estate attorney in a land sale transaction. All too often, people forego legal advice in the single largest investment most of them will ever make.
I'm reminded of one of my early blogs, A Simple Transaction, in which a judge pointed out the complexity of real estate transactions and expressed surprise that lawyers aren't involved in them anymore.
Apparently someone has taken the advice of Dick the Butcher in Shakespeare's Henry VI, Part II and "kill(ed) all the lawyers." Nowhere in this transaction does there appear to be the participation of any lawyers... At one time a real estate transaction consisted of a deed, a note and a mortgage; took about fifteen minutes to complete; and had the participation of an attorney for all parties to the transaction. The last time the Court checked, we were still in the City of New York where people do not even verify the score of the Yankee game without consulting counsel, and yet, lawyers have effectively been eliminated from real estate closings involving the refinance of mortgages and secondary loans, including home equity lines of credit. One could conclude therefore that these transactions have no legal implications. That, however, would be far from the truth. The borrowing of money secured by a mortgage is often a complex transaction with serious legal implications for all of the parties involved, especially the borrowers who are pledging their home as security.
I do believe that it is a good idea to have legal representation at any real estate closing. The transactions and paperwork have gotten more complex and significant legal rights are at issue.
Robert A. Franco
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