We all know someone who knows someone who knows an attorney. Like all professions with specialties, it is best to stay in your own lane. Would you trust an ophthalmologist to perform foot surgery? Hopefully your answer is no, but I know some of you are serious risk takers. For most, buying a home is one of, if not THE largest purchase you’ll ever make, so cutting corners on cost may sound appealing. There are many expenses that come with purchasing a house. On top of your down payment there’s an inspection, appraisal, lender fees, title fees, closing costs, attorney fees, commission, etc. While it seems like a good idea to hire your best friend’s uncle who is a litigator and will only charge $150, let me share 5 reasons why it’s important to hire a real estate attorney:
- Required by Law– First and foremost, it is a requirement by roughly 15 states to have an attorney for your real estate transaction. In these ‘attorney states’ the lawyer prepares documents, performs title searches, and closes the transaction. Even in states where it isn’t mandated, legal issues may arise that your real estate agent can’t answer.
- Understanding the Contract– Realtors typically prepare a form contract when you agree to the purchase or sale of your home. These contracts typically provide for a 5-7 day modification period during which either side’s attorney can request modifications to the contract and revoke the contract if an agreement on such requested modifications is not reached. In other words, the ‘attorney review’ period is where all the negotiating is done. During this period, your attorney will explain the contract to you and make sure that the actual terms of the contract match your understanding of the deal. Your attorney will bring his or her experience to ensure that the deal is fair to you. The goal is to protect your interests in case the deal falls through (specifically your earnest money), unforeseen problems occur between contract and closing or after the closing, or disputes arise after closing. Often the attorney modification and review process will end up saving you significantly more than the cost of the attorney.
- Managing Financial Impact– Real estate attorneys can be essential when helping you plan payments on a home or property. They can advise you on issues such as closing costs, viable mortgage amounts and the timing of payments. They can also help you take other factors into account that may be overlooked during the stress and excitement of buying a home, including the amount of money you have left in reserves after a purchase, how you may be impacted by unexpected expenses and the effects and realities of taxes. Real estate attorneys are well versed in avoiding surprising closing costs that can derail a purchase and factor in costs such as escrow, quarterly taxes, or PMI. Ultimately, hiring an attorney gives buyers a better picture of a home’s cost and paves the way for a more stress-free experience.
- 4.Clean Title – One of the key roles that sellers’ attorneys play in a residential real estate closing is to act as title agent. They work with the title company to ensure that the seller actually has the right to pass full title of the property to the buyer. If there are any obstacles to this right, the attorney will identify them and work with the parties and the title company to resolve any issues. Buyers’ attorneys review the survey of the land and the deed to make sure that the buyer legally receives the full property that he or she is attempting to purchase. This is highly technical work on both sides, and it is extremely important in order to protect the interests of both parties.
- Cost– Contrary to popular belief, real estate attorneys typically charge a flat rate and only if you close. Most real estate transactions can take anywhere from 3 – 6 months. That is hours of work spent on your transaction. All states and cities vary on what they charge; however, the average cost in the city of Chicago is from $600-$1000.
These are just highlights of why it is important to hire a real estate attorney for a real estate transaction. This is a time-intensive process even for experienced attorneys. Most likely, in the absence of an attorney, mistakes will occur that will cause the closing to be pushed back by several months or the deal to fall through entirely. If you are a first-time home buyer and don’t have the experience or education on the laws of real estate, take the stress out of an already stressful process and trust that your attorney will have your best interest in mind!
This article is written and provided by Deanna Ryan of the ryan LAW GROUP, Ltd.
DEANNA S. RYAN, Esq.
ryan LAW GROUP, Ltd.
2847 North Lincoln
Chicago, Illinois 60657
- 773.687.9064 C. 630.330.4017