Recently a friend of mine asked me if it was better to use a Real Estate Attorney instead of a Real Estate Agent. What came to mind was an interesting transaction that I handled back in 2007. If you enjoy Real Estate stories and details, read on, if not, skip down a couple of paragraphs.
It was a pretty unusual situation. The occupant of the home no longer owned the home as it had been foreclosed upon. The bank sold the home (sight unseen, and uninspected) to 2 cash investors. The investors were trying to evict the occupant so that they could take over the home that they now owned, fix it up and re-sell it. The occupant was a terminally ill man who happened to have a wealthy friend that owed him a favour (and who was part of an institution). The wealthy friend agreed to purchase the home back from the investors for cash. This is the point at which I was brought into the transaction. We had 14 days to close the deal before the investors would throw the occupant (and his 7 exotic birds) out onto the street.
The investors knew that the occupant was in a very bad place, and they took advantage of the situation by demanding a price of $300,000 OVER what they paid at the auction. But that is another story...
Anyways, one of the investors was a newly licensed Real Estate Agent (His mother had been a veteran in the business). He was also an attorney.
We agreed to meet at my office in Beverly Hills. I arrive and the investor produces a hand written contract that he wants my client to sign. I explain to him that we have existing "boiler-plate" forms that have been carefully created (and updated) by the California Association of Realtors (CAR). Besides the fact that as the buyer, we can produce our own Purchase Agreement. The investor (who was admittedly suffering from anger management issues) went through the roof. He had a little tantrum and insisted that we do things his way and that he had spent days crafting this document. After he wore himself out, I provided him with the correct document and explained that I would be handling the rest of the paperwork going forward. He left in a huff. As an aside, later that day I received a bouquet of beautiful flowers along with an apology note from him. Ha.
On the buyer other side of the transaction, an attorney was brought in to represent the institution that was buying the property (along with myself as their agent). Long story short, the institution went over the agreed upon contracts and vetted the deal. In the end the use of attorneys caused many hours of extra work, including meetings, conference calls, and the need to explain documents multiple times. The use of attorneys cost the buyer an extra $10,000 in fees. None of the issues/concerns that the attorneys brought up were justified and at the end of the day, we closed in 13 days. I worked around the clock as the buyer from the institution lived overseas, and I had to work on her schedule.
In my opinion, attorneys are hired to work out scenarios and "what ifs". In a situation where there is an organized process everything gets worked out naturally, provided that you have a qualified and professional Real Estate agent working for you.
Lastly, we Realtors only deal in buying and selling property. It is our specialty. If you hire an attorney to do the job of an agent, it is overkill and more unnecessary work will have get done. I have seen a few deals implode with the use of an attorney in place of a Real Estate Agent. The attorney attempts to reinvent the wheel, although the wheel is already in place and working well. Most Real Estate attorneys that I have come across are not actually familiar with the ins and outs of the residential buy and sell process. They specialize in practicing Real Estate Law and are usually litigators. The approach that I have seen is that they typically come at the other side of the transaction in a combative manner, causing the other side to have to take a defensive position. In my opinion, buying and selling of property should be approached in a manner where both sides work together to achieve a result that is satisfactory to all. There is definitely a time an place for the use of Real Estate attorneys, such as when a dispute arises, or when you need to evict a tenant. If you are going to buy or sell, your first stop should definitely be to speak with a licensed Real Estate Agent.
