What's a lawyer worth?

Good post Stacey,

Also, make sure they are a "real estate" attorney and that they offer flat-fee services.

Some attorneys/banks allow one attorney to handle buyer representation and bank representation, usually the attorney will give you a break.

If you like to use email, make sure your attorney does too.

Ask about their availablitiy during off hours. Offers and issues often pop up on weekends.

If your bank or re agent recommends an attorney, seriously consider hiring them.

Some attorneys can make simple deals nightmares and good attorneys will try to keep the deal moving as long as it is in the client's best interest.

On the house we just bought, the SELLERS didn't have a lawyer. Yet they had a real estate agent (who was worthless).

Our lawyer was dealing with the sellers calling him all the time asking what things meant. Of course, he refused.

I can't believe that in a transaction of this magnitude, they would want to skimp and save a couple bucks on a lawyer.

The process was drawn out more than it needed to be because they didn't have their own attorney answering all their questions for them. It was such a headache, unnecessarily.

I got my attorney for a flat $550 for everything--offer to closing. I'm bidding on a foreclosed home in Milton currently. I asked what happens if our offer is refused--nothing--I'd just use him for the next place I want to bid on. I won't owe him until closing.

I found the attorney through house-hunting and kept in touch. He also referred us to one mortgage broker, who is ultimately the one we're going with (Wells Fargo) after shopping around.

I'm finding that networking really pays off if you just talk to people/ask around, frequent boards, etc. Of course, be cognizant if there may be some alterior motivations or conflict of interest, but in general, things are going really well and I'm pretty pleased with the level of responsiveness.

You'd be crazy not to hire a real estate attorney; the last time we bought, the attorney we hired was awesome. She picked up things, even in the most basic contract, that completely went over our heads. The fee was very reasonable. She only charged us $350 for the review of the agreement and then, because we had her do the bank closing, she took $250 off her bill on the day of our passing! I don't know how they survive sometimes in this market giving services away. We love our house, feel confident that we were well represented, and know when we go to sell, we've got someone to rely on to get us into our next home! Oh, and buy the owner's title insurance too! I like to sleep nights and know that our hard-earned down payment won't be lost because of a defect in title that even the best lawyer couldn't find (like a forged deed!).

I had a similar experience. I am an attorney, and I handled it myself. The seller did not have one, but wanted a quick sale, and dealing with their agent on the P&S was useless. Ulitmately the sellers got a lawyer at the last minute, things went very smoothly from there and we closed very quickly.

Be careful with bank attorneys - they do not represent you, they represent the bank - never forget that.

You write that it's a South End buyer who asks this question. Any South End agent with experience can recommend an attorney who not only will represent the buyer but also the bank. I can think of 3 highly reputable attorneys in the South End I've worked with who will charge a flat fee to the buyer for negotiating a Purchase and Sale Agreement. Where legal fees become expensive is when you have a buyer or seller calling their attorney 3-4 times a day every day of the week. Needless to say, you're using up more of a professional's time that way but many wonderful people really do need that kind of hand holding. They just should similarly recognize they need to pay for it.

By the way, Ive never heard of a more expensive house costing more in legal fees than a less expensive one. My clients buying a $1-million+ home i the city pay the very same fees as ones buying a 300K home. The difference isnt home price, it's how many more issues there are for an attorney to deal with in the transaction. Expensive in no way means more complicated.

With respect to Dina's comment about using the same lawyer that your bank is using, please keep in mind that the buyer's interests and the bank's interests are NOT identical. For example, the bank probably will not care if a condo's by-laws bar pets, but you very well may.

On the other hand, banks do frequently use more than one law firm for real estate transactions, so you might want to consider using a different lawyer on their list.

Quote in post is a little pricey, but not crazy.

Almost all transactions should be flat fee, barring something weird. Residential real estate sales are actually as close to buying a roll of toilet paper as law gets.

I paid $1,500 for a lawyer to help me with a complicated foreclosure purchase. At first, my wife and I thought $1500 was high. But looking back, don't know how we could have done it without the lawyer's help. He advised us on the risks we were taking, what-if scenarios, researched previous owner's documents, negotiated problems with the title (and coordinated between the bank attorney, mortgage attorney, and condo association attorney), requested closing extension twice... all this before the actual closing.

In Boston and surrounding areas:

A Purchase & Sale review should not be more than $250.00.

A Seller Representation should not be more than $500.00.

A Mortgage Closing Attorney should not be more than $500.00.

I would recommend a "real estate" attorney for both buyer and seller.

If you are a buyer you should make sure your lender will allow you to use the same attorney you are using for the purchase and sale agreement as then you are able to receive a break in the price of both representations.

As a buyer it is recommended that you obtain owner's title insurance especially if it is new construction.

Good real estate agents always make sure that everything is taken care of before a weekend as most attorneys are not available.

We chose a lender that would allow us to bring in our own attorney, who we trusted and had worked with before.

The cost of the property should not affect the attorney's flat fee rate. I treat a $125K condo in Lowell the same as $3.9M house in Carlisle. And there are some real estate attorneys who work on the weekend (myself included). :)

I agree that it is imperative that a buyer and a seller have a real estate attorney representing their interests. It also makes perfect sense in most cases for the buyer's attorney to represent the lender as well. However, shopping for an attorney by price is a bad idea. You may get quotes for as little as $400 for a real estate closing, but rest assured that your file will not get the attention of an attorney. Instead, you will be serviced by a paralegal or secretary. Now, these people may have some knowledge about the mechanics of a closing, but they will not have the legal knowledge that you presumably are expecting when out-of-the-ordinary issues arise.

I'm sure the people suggesting you use an attorney recommended by your real estate agent are the same people who, two years ago, were recommending you use a "creative" mortgage broker suggested by your agent.

If you follow this advice, you deserve everything that's coming to you.

Does anyone know if curtains/blinds are mandatory in the purchase of a house? I heard that it is MA law that it is but I cannot find it on the web.

There is a big conflict of interest problem when either a buyer or seller hires a lawyer. The lawyer only gets paid if the deal progresses. Therefore, no matter what conditions the other side sets, if they make it a deal breaker, it is in the lawyer's financial interest to convince you to go along.

In fact, even having extensive discussions that end in successful resolution is a waste of the lawyer's time. The optimal effort is to do just enough work that you can't refuse to pay them.

I know this doesn't apply to every real estate lawyer in every situation. But if you follow the money, that's where it goes.

Real Estate professionals sometimes team up so your Realtor might know people, or your mortgage broker etc. It may be beneficial to have a team with a working relationship pair up.

Other than that, if your deal is cut and dry, I wouldn't worry too much. If there are complexities, it may be better to invest a bit more and do some homework to make sure that the lawyer has experience in the nature of the complications.

Lastly, I believe that lawyers get a decent commission on Title Insurance, so knowing it before hand will help you understand why they might give you the hard sell on that.

My lawyer did a few things to me that I didn't appreciate:

First, he forwarded draft purchase and sales agreements to the seller without my consent and without me even knowing.

Second, he tried to play my wife against me when I asked him to let my offer expire.

Third, he tried to negotiate terms of one aspect of a deal with a seller without my consent.

Fourth, the day before the closing, he hadn't pinned down the time and location of the closing.

Fifth, he tried to add to his fee and I had to negotiate it back down before the closing. He was trying to get money for the time he spent on a prior deal doing things I did not want him to do.

Sixth, he told me that I needed to "Chill out" when he saw me at the closing.

Seventh, he tried the hard sell on the Title Insurance and put it on the HUD Statement despite the fact that I told him not to do so.

I didn't get too upset at all of it because I knew and trusted my Realtor, who had a relationship with the lawyer, so I knew I had a ciruit breaker built in. Also, sometimes a professional might think they have to operate with a certain range that is beyond your knowledge so they have to do things to represent your interest that might seem counter to your thinking. Regardless, I thought he should have had discussions with me prior to some of his actions. They work on pretty short fees so that's another reason why it is hard to get that upset. You do get what you pay for.

What's funny was that my Realtor told me that the reason why he liked this lawyer was that he met him at a closing where a deal had some major issues that manifested themselves during the closing and this lawyer was able to make the deal go through (He could fly by the seat of his pants). My disposition is to have all your ducks in a row before hand and I wasn't comfortable with the unpreparedness and it was hard to "chill out" when you were trying to schedule a moving truck and crew and you had no idea where or when your closing was going to be the day before...

My advice is to listen to the people you trust. Talk to your family and friends about who they used for their attorney, I certainly think your Realtor is someone whom you should ask and listen to. He or she will be familiar with who is good and who is not. And please do not hire a Criminal Defense Attorney to represent you or a Personal Injury Attorney, make sure the Attorney is a Real Estate Attorney.

As for what is a reasonable fee, I would echo past posts, it all depends on the type of transaction. I always charge a flat fee and have the client sign an engagement letter prior to starting any work, so there are suprises when its time to close. And dont forget to ask your loan officer if they have any programs with their Attorney for first time home buyers or other matters, there are many programs offered that can reduce attorney fees and or title insurance fees.

Existing Single Family homes are not the same as new conversion/construction condominiums or multi-family properties with tenants.

I would advise all potential buyers and sellers reading this blog to understand that no one transaction is the same as the last.

Do NOT accept a recommondation from a real estate agent. Typically, the lawyer relies on that agent for business. Often, the lawyer will show more loyalty to the agent rather than the client, maybe conciously, maybe unconciously. The real estate agent will always want the deal to close for her commission. But sometimes, closing might not be in the client's best interest. Hire a real estate lawyer on your own, and make sure it's someone who doesn't take orders from real estate agents. Remember, agents are trained to show houses, not to give legal advice.

I think price depends on how you use the attorney. If it is simply paper prep and review, you have a lower cost and the flat fee system works. The complexity of a deal is also going to change your cost.

Our first purchase was straight forward and we paid $500 to our attorney. Our recent purchase experience was a completely different story. We had an attorney lined up for our sale and our purchase. He was involved in 3 offers we made plus the one on our house we decided to accept. Total cost was $3500. That may seem outrageous, but it was the best money ever spent. It saved us tens of thousands of dollars when our buyer defaulted on the P&S. It saved us from putting an offer on a home that turned out to have a septic system that should never have received Title V and had indications of other high ticket items we weren't prepared to handle. Our attorney helped us navigate through a complicated offer from our buyer that was tied to a commercial sale. And, he was adept at mitigating a high pressure sales agent and helping in negotiations.

So, consider why you want an attorney and what they will provide you rather than solely determining based on cost. What we found in this market compared to 10 years ago is that things are more prone to problems with buyers, sellers, and banks. A good attorney provides more value and piece of mind than most agents you'll deal with. Not the place during a home sale/purchase I would personally skimp. I wonder if we would be in such a housing crisis if more people used attorneys to help them understand their mortgage commitments and buy within their means.

Be proactive! Many buyers feel obligated to use the bank's attorney. Please remember that you are the consumer and are paying the closings costs. Do not be intimidated by your Lender. Shop around and compare closing costs. Most Lenders will allow you to choose your own attorney.

Please be mindful that real estate transactions are extremely complex, and that each one is unique. Seek out an attorney who has extensive experience in real estate transactions.

It can work either way. Your RE agent can probably recommend a good attorney at a good price. I've seen prices as low as $0 for the P&S when the attorney is also the closing attorney and they make their money on the title insurance. Sometimes they're not very involved with the whole deal if it's a simple deal. Sometimes it's well worth it as they once said they're doing 3 times the work for 1/3 the pay when it's complex like a foreclosure. One thing to be sure of is to negotiate a flat fee ahead of time. I've heard of sellers that were supposedly getting a "deal" from a family friend that didn't turn out to be any kind of a deal, they paid well over a thousand when a flat fee attorney would have just been a few hundred.

It somewhat depends on the deal. If you're doing a foreclosure or some situation where there's multiple offers, getting your own attorney that can negotiate hard on your behalf probably won't do much good because they'll have other offers that they can go to. Also if you're well experienced and don't have a lot of questions, a flat fee attorney would also be good as they typically don't have that much time available. The key part would be to determine how reachable they are and by what methods, the flat fee ones make it up on volume and if you don't need the services, there's no point paying extra for them. Of course all this is hard to know about ahead of time, but maybe a good RE agent would be able to figure it out.

Also it's very clear that the closing attorney represents the bank, I've seen buyer's lose a closing credit because they didn't have an attorney and other attorneys have explained it to me that they'll do that because it doesn't bother them that the buyer loses money they could have somehow retained because that way they don't take on any extra liability that they're not compensated for. They lost several times what a flat fee attorney would have charged.

I recommend hiring an attorney who is also a broker. Buyers can avoid having to pay legal fees by using an attorney who is a broker because the attorney is paid half of the commission given by the seller. Sellers can also avoid the legal fee by using an attorney who works with a brokerage. For instance, there are attorneys affiliated with Raveis' offices in Newton and Sudbury.

Reading the comments, I wonder whether some change in diet has caused massive, widespread organic brain damage in the American populace.

We are in the middle of the largest housing market collapse in recorded history, global in scale. So large, it may cause the failure of the global financial system. At its root were bad transactions that should never have taken place, involving buyers who now complain of "bad loans" that they "didn't understand" and clamor for a bailout. As reported this very week, the cost of that bailout may double the national debt and essentially bankrupt the treasury of the United States of America.

And in the wake of all that reckless risk-taking, here come commenters suggesting we save a couple of hundred bucks on huge purchases by choosing lawyers who represent, and are paid by, somebody else.

Forget lawyers. Talk to your doctor.

Good point about the attorney who is also a broker. In this state, all attorneys can become brokers simply by filling out a form, no test to take or anything.

The only thing is, I've seen attorney use real estate brokers to purchase their home because while they were familiar with the legal process, they knew nothing about home inspection, use of MLS, getting comps, and general knowledge of the real estate market because they're not doing showings all the time. My question would be: Are they better as attorneys or as a real estate brokers?

As for sellers avoiding fees by working with a broker, I'm not sure where the attorney makes any money because there's no title insurance purchased by the seller, that's typically done by the buyer so in essence the attorney would be doing it for free or the listing firm would be paying the attorney a fee. Attorney's representing buyer's don't have to charge a P&S fee because they still charge the bank attorney fee plus they make money on the title insurance and maybe the title search if they do it in house. The rates for seller representation is typically lower, they don't go to the closing and just do the P&S and prepare the deed, maybe as low as $200-$400 if it's simple.

That's a new trend to have the lawyer be the real estate broker. We used Anseris Group in Winchester and they did not charge any separate fee for legal work because they are owned by a lawyer. The only thing was that we needed to sign something that said if we get in a fight with the real estate agent that their lawyer could not be our lawyer - kind of makes sense.

Title insurance is a odd thing, it looks really expensive and it is, but with lots of money in the down payment why would you risk it with a lawyer working from their kitchen for $200 - I can't imagine chasing the cheapest lawyer on the block to give me back my $300,000 down payment!

psmith,
Those fees you quoted are NOT the norm in Boston and please stop the advertising. Aren;t you in north andover anyway?? Please do not cheapen the profession but merely charging $250 for a P&S review. There is huge liability and as lawyers we should be compensated for that. Brokers make a fortune and are often paid 10X more than our meager fees and can not be bothered to even attend the closing. When a client tries to bargin with me on fees I stand my ground, if they are complaining about $200 on a $400,000 purchase they have issues that I do not want to deal with. I refused to cheapen the legal profession and become the gentle dental of real estate attorneys. By charging more I am selective of my clients and able to invest more time on each client rather than getting paid off of volume.

We hired an attorney through our last home purchase 15 years ago. It was recommended that we do so by a friend and I'm glad we did.

We had paid off our previous mortgage a few years before we sold it. When it came time to sell the home the bank said we still owed the full amount that we paid off a few years before.
The attorney took care of it all with a phone call in a few minutes saving us much distress.

I would recommend an attorney for the unexpected.

QF,

Buyers can hire any attorney they wish for the purchase of a house. However, I always insist they hire a real estate attorney because otherwise many things can go wrong or delayed because the attorney is not experienced in that kind of law and may not even have the right kind of documents. I strongly discourage going with a relative or friend who happens to be an attorney, unless they are a real estate attorney. It just doesn't go well, generally.

I have an attorney I prefer to work with because she does her job which I can totally rely upon so I can do my job. I never have to worry that she is not working on her clients behalf or that she won't communicate properly with me. So while I don't insist my client choose her, I tell them about her and why I like her and let them decide.

I have had clients choose other real estate attorneys and sometimes it works out and sometimes it doesn't. The closing attorney is usually the mortgage company attorney. I always suggest to my clients to also have their own attorney because that attorney is for the lender.

Fees will vary by your needs. If you want quality work and dedication to a specific outcome, expect fees to be hourly and substantially more than those quoted. If you are not looking for true legal protection, but simply a review for compliance with legal minima, expect fees in line with those quoted. It is very true that the lender's interests are somewhat misaligned with those of a buyer. In sophisticated transactions, one should hesitate to rely on the bank's attorney. You will always be given a notice that the bank's attorney is not your attorney. The lender's counsel owes no (or very little) duty to protect you. Generally, this is one's biggest investment. It is not the place to be penny-wise and pound-foolish. One should usually seek quality and experienced counsel, expecting to pay for it in accordance with reasonable hourly rates. Some realtors may be good sources for referral of such attorneys. Certainly, the real estate bar will be able to provide a quality referral. Do not hesitate to interview several candidates before selecting counsel.

2 points.

I do not agree with the first part of 31. There is excellent legal work available from flat fee lawyers. As a lawyer, I'm perfectly qualified to judge that.

Second, I'm a lawyer, and I still hire real estate lawyers. Its a silly place to save money on, everyone should have one. $6-800 in the context of a real estate transaction is nothing.

I'd never hire a "free" lawyer who worked for a real estate office.

Even flat fee lawyers make plenty of money, they just make it on title insurance. The markup on title is absurd. But you'd be crazy not to take it, nonetheless