In a recent conversation with a fellow exclusive buyer broker, I found that we had different ideas about what is best for our buyer-clients. We both have been working only with buyers for more than ten years. We both learned our trade from another exclusive buyer broker. We disagreed entirely.
The subject was whether it is worth it for a buyer should hire a separate attorney to write their Purchase and Sales Agreement and to review their mortgage paperwork (especially the HUD-1 Settlement Statement) before closing. A buyer can have one attorney do both the P & S and conduct the closing for the lender. Because this is a legal question, we had an opinion only about the practical aspects of this decision. We always send our buyers off to discuss the pros and cons with an attorney or two. (For the record, I work with attorneys whose opinions vary on this topic. Not just attorneys who agree with me.)
Here are the options:
Why hire a separate attorney?
The attorney represents the lender at closing. Therefore, the attorney is not on the buyer’s side when he/she is reviewing the Settlement Statement. What if there is an overcharge?
The closing attorney makes a commission on title insurance. Can the buyer get a good legal opinion in this situation? Will the attorney be objective in advising the client about whether or not to buy it?
What if there is a different conflict of interest with the lender that only a lawyer would recognize?
Why use the same attorney?
The buyer can save money by having one attorney do both jobs.
The attorney has no conflicts of interest because the interests of the buyer and the interests of the lender run parallel. They both want clear title, accurate flood zone maps, smoke/CO certificates and such.
The closing attorney is in a better position to solve problems with the lender at closing.
The buyer’s attorney is redundant at closing.
Some of my buyers do it one way, some do it the other way. Either way has resulted in problems, in some instances.
Lawyers, what do you think? What do you do, and why?
Buyers, what did you do? Did it work out?
What problems or advantages do you see to either of these choices?
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