How to Budget for Real Estate Attorney Fees When Selling a Home

DISCLAIMER: This article is meant for educational purposes only and is not intended to be construed as financial, tax, or legal advice. HomeLight always encourages you to reach out to an advisor regarding your own situation.

You won’t always need to hire an attorney when you sell a house. But let’s say you’re going through a divorce, just inherited property, or must resolve a complex title issue before closing. In these scenarios, you might want to lawyer up. Foreclosure sales and transactions involving homes with major defects could also call for an attorney on the seller’s side. If the buyer has an attorney, you may be more comfortable moving forward with your own representation.

So how much does a real estate attorney cost? When you’re already racking up commission fees, transfer taxes, and other charges on your final sales bill — to the tune of 9%-10% of the property value — you’re hoping, wishing, praying that it’s not a fortune. We asked a few lawyers who specialize in real estate to find out firsthand so you can know what to expect, when payment will be due, and which services you’ll receive.

Cash used to pay a real estate attorney fee.
Source: (Karolina Grabowska / Pexels)

Average real estate attorney fees

Legal fees for real estate transactions vary nationwide based on location, law firm, and the complexity of the home sale. According to Thumbtack, which collects millions of estimates their website visitors receive from local professionals for various real estate services, a real estate attorney costs $150 to $450 per hour. That makes a real estate attorney more expensive than a divorce attorney ($175-$325 per hour), criminal defense lawyer ($150-$300 per hour), and tax attorney ($75-$395 per hour).

But other real estate attorneys, including Steven B. Herzberg of Vazquez & Associates in Miami, Florida, charge a flat fee of about $950 for a straightforward property sale (homeowner to potential homeowner) up to about $1,500 for a more complex situation, such as where a property owner is a corporation or LLC. Costs can exceed that for commercial real estate or for complex situations such as representing a seller from outside the country.

Jeffrey L. Nogee, a New York City-based partner at the nationwide firm Tully Rinckey PLLC, charges from about $3,000 to $5,000 for a basic real estate deal. Like Herzberg, that fee is all-inclusive, from drafting and negotiating the contract, reviewing the title report, resolving title and permitting issues, and preparing the deed and related documents.

Real estate attorney fees will be due at closing and appear as a line item on your closing statement.

Which states require an attorney?

According to the GPS Law Group, a general practice Charlotte, North Carolina, firm since 1992, states that require a real estate attorney include:

  • Alabama
  • Connecticut
  • Delaware
  • District of Columbia
  • Georgia
  • Kansas
  • Kentucky
  • Maine
  • Maryland
  • Massachusetts
  • Mississippi
  • New Hampshire
  • New Jersey
  • North Dakota
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • Vermont
  • Virginia
  • West Virginia

Local laws can frequently change, so check with your real estate agent about whether your state requires an attorney and why. Your agent will also know whether local laws require an attorney on just the buy side or whether you’ll also be expected to hire an attorney as the seller.

Real estate attorney norms: Examples from 3 markets

Top-selling real estate agent Teresa Cowart of Richmond Hill, Georgia shares that in her market, the homebuyer hires the attorney, who technically works for the lender and handles the title work. However, the buyer can negotiate for the seller to pay the cost, Cowart says. She’ll encourage sellers to hire an attorney if they’re selling their home on their own or if there’s not a lender involved, such as in a cash deal.

“I hate to see people get into situations where they’re potentially putting themselves at risk and liability,” says Cowart.

“We are in the South, and there’s a lot of people that still believe in making deals with a handshake or on the back of a napkin. I think it does give the consumer a feeling of security to know that an attorney’s looked over everything.”

In New York, the lender has its own attorney, as does the buyer and the seller, says Nogee. An attorney isn’t required in Florida, but one of the biggest benefits to sellers who hire one is having dedicated legal representation on matters of contracts and title — which should not be confused with the services a third-party escrow company provides to all parties in a transaction.

“It is important to understand the difference between a title company preparing documents for a seller and a law firm or attorney giving actual legal counsel,” says Herzberg. “The level of responsibility and confidentiality is on an opposite spectrum.”

A plane used to sell a house out of state with a real estate attorney.
Source: (Jordan Sanchez / Unsplash)

Why might a seller need a real estate attorney?

Some common reasons to have an attorney in your corner as a seller include:

Selling inherited property:
The attorneys we interviewed have run across people trying to sell property after a relative died that legally doesn’t belong to them. Nogee says one such deal fell apart after he asked to see copies for the underlying ownership of a co-op. The owner had died a decade ago, but no one had done probate work on her estate. The son’s assurances that he was the only living heir legally weren’t enough to allow the deal to continue..

Selling a house from out of state:
“I have dealt with multiple sales this year that we have had to go through various alternatives in executing documents whether remotely, through local notaries in the home countries, and using translations,” Herzberg says. “This requires review of local and international laws, and working with the buyer’s underwriters to get approval to sign documents outside of the standard means.”

Selling property during a divorce and needing to divide assets:
A divorce decree has its own complicated stipulations. Although an agent with experience in divorce sales can be helpful, a real estate attorney also can provide valuable advice regarding your state’s property division laws.

Selling property with a history of liens or title issues:
Title red flags might not come up until you’re near closing, but they can be knotty issues that an attorney is skilled to unravel. Herzberg sorted out a situation where a death certificate hadn’t been filed with a quitclaim deed to a family member 20 years prior. Nogee arranged for a building inspector to examine work on a historic home from an open permit from 1942. He’s also coordinated official water meter readings because outstanding water charges in New York can prohibit a sale.

Selling property with structural issues:
States have specific guidelines about disclosing known structural issues, such as a damaged foundation. While real estate agents also err on the side of disclosing more than less to avoid potential liability, a real estate lawyer can clear up any questions for you and address whether any repairs affect what you disclose.

Selling property that’s under foreclosure or in the midst of a short sale:
If you’ve fallen behind on your mortgage payments, a real estate attorney is a good resource to help you navigate the details of these transactions. Your lender or bank has to approve your short sale, so you’ll have to provide detailed records supporting your financial hardship. An attorney can help you by:

  • Representing you at a foreclosure auction or when filing bankruptcy
  • Sifting through the contents of short sale documents
  • Explaining your personal liability after completing a short sale
  • Understanding whether your remaining debt will be forgiven, taxed, or require augmented payments

Sort out what happens to the earnest money if a deal falls through.
An earnest money deposit is a buyer’s good-faith gesture that they’re serious about buying your home; it counts toward the down payment. But if they breach the agreement after you’ve fulfilled all the contingencies or fail to meet deadlines set out in the contract, a seller could get to keep this deposit. “This is the rarest form of issues we deal with, but it does happen once or twice a year,” Herzberg says.

How to find a real estate attorney worth their fee

The best way to find a good real estate attorney is through a referral from someone who has worked with this person before and recommends them highly. Like Cowart, your real estate agent can suggest attorneys they trust. Nogee says many of his clients come from real estate brokers who have worked with him previously. Mortgage brokers also are good sources of referrals, Herzberg says.

Friends or relatives in your area who recently bought or sold a home can point you toward a good attorney (or direct you away from one you won’t want to use). Attorneys also tend to know or know about each other, so if you know a lawyer who doesn’t specialize in real estate, ask them about anyone who does. You can check their ratings and credentials through a reputable directory such as Martindale-Hubbell, which since the 1880s has evaluated attorneys on their ethical standards and legal abilities through a peer-review rating system.

Before you hire a real estate attorney, our experts say to ask:

  • How many transactions do you handle a year?
  • How do you charge (by the hour or a flat fee)? Do you have a retainer?
  • What does your fee include?
  • What if my property has title issues, or a buyer whose financing falls through? (Ask your real estate agent about other potential problems so you can gauge the attorney’s response.)
  • Can you supply references (such as other real estate agents who have worked with the attorney, or clients who wouldn’t mind speaking with you)?

“Many attorneys may have ‘real estate’ on their website or say they can take care of it for you, but it is important that whoever you use has experience in conducting real estate transactions on a daily basis,” Herzberg says. Using a title agency instead of an attorney could save you a few hundred dollars, but that’s just one aspect of a home sale — and what troubles might arise. “Ultimately, … [you’re] protecting the sale of what to most is the biggest investment they have.”

Header Image Source: (Sora Shimazaki / Pexels)