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The Sellers’ Guide To Real Estate Attorney Fees

At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.

Selling a home is a major financial event for many people. If you’re like most sellers, you’d like to ensure that you’re getting the most money for your investment and protect yourself from loss. One way some sellers seek to mitigate risk is to hire an experienced real estate attorney to review the sale documents and look for errors and omissions that could potentially affect your sale proceeds. Real estate attorney fees are a small investment to make for a home purchase that could yield hundreds of thousands of dollars at the time of sale.

According to New York real estate attorney and founder of The Donaldson Law Firm, Stephen Donaldson, “the cost of retaining an attorney compared to the purchase price of an average home is usually nominal, at best.”

“For example, in downstate New York, even when a home is purchased for $350,000, a legal fee of $1,750 represents an additional cost of only 0.5%,” says Donaldson. “The majority of home buyers would not dream of purchasing a home without investing a few hundred dollars in a home inspection to make sure [they know the repair status of a home],” he says. “The same perspective should apply to retaining a real estate attorney to make sure no one attempts to pull the wool over their eyes.”

In this guide, you’ll learn how much real estate attorneys cost, the services they perform, and whether or not you need one.

What do real estate attorneys do?

Real estate attorneys possess the education, expertise, and licensure to prepare, review, negotiate and dispute important legal documents and issues related to the acquisition or sale of a property. Upon reviewing documentation, an experienced real estate attorney advises parties of matters that might need addressing and amending for the best interest of their client.

Some of the documents attorneys handle include:

“Sellers rely on real estate attorneys for the same reason airline passengers rely on pilots to get them where they want to go,” says Donaldson. “While the passengers know that they want to get from point A to point B, they lack the training, skills, and experience to fly the plane, communicate with the air control tower, anticipate weather conditions, etc.”

Services real estate attorneys provide for sellers

Real estate attorneys provide sellers with a menu of services, depending on their needs and the state where they reside. These may include:

How much do real estate attorney fees cost?

The cost for real estate attorney fees is based on geographic location, the attorney’s level of experience, type of services rendered, and the complexity of your real estate transaction.

Real estate attorneys charge $150 to $350 per hour, although some can bill up to $500 or more. They might also charge a fixed fee for preparing closing documents. Although some attorneys bill by the hour, Donaldson says it’s more common for attorneys to charge a flat rate.

“The vast majority of residential real estate transactions are performed on a flat or fixed rate basis, typically between $1,200 on the low end to $3,000 on the high end, depending on the type of property and any other special circumstances, for example, when the sale involves an estate.”

When sellers might need a real estate attorney

“Sellers get a bang for their legal buck because a good attorney helps to mitigate unwanted circumstances that could end up costing sellers unnecessary costs,” explains Donaldson. If you’re a seller, the following common and uncommon scenarios might warrant having a real estate attorney in your corner.

You agree to finance the sale of a property

“One out of the ordinary issue that arises, albeit infrequently, is when a seller offers to finance the sale of property, meaning the seller is also acting as the lender,” says Donaldson.

“In that scenario, the buyer signs a promissory note and mortgage over to the seller rather than to a bank; if a seller is going to go down that road (and you see it more commonly with distressed properties that have been on the market for a while) the seller absolutely needs the help of an attorney to make sure the note, mortgage, and any other closing documents are as airtight as they can be from a legal perspective.”

When you offer a concession to the buyer

“Another extraordinary issue is when the seller offers a concession to a buyer,” Donaldson explains. “This means that [the buyer] will agree to a specific purchase price but the seller will also allow a concession of several thousand dollars to help the buyer finance their closing costs,” he says. “For example, the seller will agree to accept $50,000 down on a $500,000 sale and also allow a $10,000 concession. Because the amount of the concession is in the contract, this allows the buyer to apply for a loan of $460,000 rather than $450,000, and the additional $10,000 is applied toward closing costs.”

“On its face, it seems straightforward,” says Donaldson, “however, a seller should rely on the guidance of an experienced real estate attorney to make sure the concession provision is worded [in a way] so the buyer’s lender does not reject it, that the seller does not end up paying a transfer tax on the $10,000 concession.”

You’re selling an inherited property

Sellers can sometimes have a difficult time selling property they’ve inherited. Jeffrey L. Nogee, a New York City-based attorney, recalls a time when a deal fell through when he asked the seller for copies of co-op ownership documents.

“No one had done probate work on the estate and the son’s assurances that he was the only living heir wasn’t enough [from a legal standpoint] to allow the deal to continue.”

You’re selling a house from out of state

Selling a house from out of state — or overseas — can get tricky. Steven B. Herzberg of Vazquez & Associates in Miami, Florida, has needed to execute documents through notaries, often in home countries that required translation.

“This required reviewing local and international laws and working with the buyer’s underwriters to get approval to sign documents outside of the standard means.”

You’re selling a house with a lien

Liens recorded against your property can appear on your title for various reasons, including unpaid taxes, an unpaid mortgage, and unpaid contractor bills. If you need to dispute or negotiate the debt, a real estate attorney can be helpful.

Your home is in foreclosure or a short sale

If your home is in foreclosure, a real estate attorney can work with your lender or the bank to approve a short sale before you lose your home by:

  • Helping you file for bankruptcy
  • Gather the proper documents to prove financial hardship
  • Representing you at a foreclosure auction
  • Navigating short sale documents
  • Explaining whether your remaining debt will be forgiven, taxed, or needs to be paid

You’re going through a divorce and need to divide the proceeds

Going through a divorce comes with a set of complicated stipulations. Although an agent might have experience representing a seller who has gone through divorce, and can offer some guidance, an attorney can inform you from a legal standpoint about your state’s property division laws.

Your house has structural issues

Each state has its own specific guidelines about disclosing structural issues such as settling and sinking foundations. While a real estate agent will advise you to disclose the issue, a real estate attorney can clear up any specific legal concerns and inform you of your state laws to help reduce the risk of litigation.

In the South, there are a lot of people that still believe in making deals with a handshake or on the back of a napkin. I hate to see people get into situations where they’re potentially putting themselves at risk and liability.
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    Teresa Cowart
    Teresa Cowart Real Estate Agent at RE/MAX Accent
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    • Years of Experience 17
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What states require a real estate attorney?

Check with your state to learn  if they require an attorney for your sale because laws differ from state to state. While some states like New York require an attorney be present at closings, others require a lawyer to review the title, and some states don’t require an attorney at all, although your real estate agent might recommend one.

“In the South, there are a lot of people that still believe in making deals with a handshake or on the back of a napkin,” says Teresa Cowart, a top-selling real estate agent in Richmond Hill, Georgia.

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

How to find a great real estate attorney

The first place to look for a great real estate attorney referral is through your real estate agent or your agent’s brokerage. They may be able to provide you with a few names of attorneys they’ve worked with in the past they would be happy to recommend.

You can also reach out to family and friends, but if your search comes up dry, you can find real estate attorneys online where you can read reviews from past clients. The following websites make a good starting point:

  • Your state bar association website can point you to referrals near you by entering your zip code.
  • Avvo publishes attorney reviews for 97% of practicing lawyers in the United States.
  • FindLaw is a search engine database to find lawyers based on location. The site also provides valuable resources about state laws.

After locating a few attorneys (as a rule of thumb, speak to at least three), ask insightful questions to get a sense of the attorney’s experience, personality, and professional style.

Why hire a real estate attorney?

“If you hire an attorney, hire a real estate attorney,” recommends Donaldson. “While you may have had a positive experience with the family law attorney who handled your divorce, look for an attorney who works almost exclusively in the area of real estate when you’re selling,” explains Donaldson.

“You also want someone who works in the area in which the property is located rather than someone who has an office in the same state but a few hundred miles away where the local customs may be completely different compared to the area where you’re selling.”

Header Image Source: (Sora Shimazaki / Pexels)