How To Choose A Real Estate Attorney

In keeping with the theme of picking your real estate team let’s talk about how you go about finding an attorney. To start with it’s helpful to understand why you need an attorney in the first place and what exactly a real estate attorney does.

Whether you are a buyer or a seller you need an attorney to represent you in the transaction in order to take care of the following matters:

  • Review the sales contract and disclosures and propose modifications as necessary
  • Provide official notice of issues covered under contract contingencies – e.g. inspection, attorney review, mortgage
  • Deal with the attorney on the other side without getting outwitted
  • Negotiate with the seller’s lender in a short sale (seller’s attorney)
  • Ensure that all pre-closing steps are completed and documents prepared – e.g. condominium documents, water certificates, title checks, surveys, zoning and flood certificates
  • Review your mortgage documents (not all attorneys do this)
  • Help prepare the closing statement (HUD-1). This includes figuring out the allocation of taxes and ensuring that all bills are appropriately paid.
  • Keep an eye on the fees being charged by various players – e.g. title companies – and get them removed or reduced
  • Explain to you at closing what the documents you are signing mean
  • Take care of recording of deed, mortgage, and releases
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For all this you pay $500 – $750 typically plus a portion of the title insurance (it could easily be $1500 or more) usually goes to the seller’s attorney for doing some of the title work. It’s a relative bargain – especially when compared to what some real estate agents make (at least the traditional ones).

From the above list you can tell that there are a lot of steps that need to be managed and there are lots of opportunities to make mistakes – and mistakes are unfortunately made all the time. And when mistakes are made either money is lost or deals fall apart or closings are delayed. For an attorney to be any good in this business they have to do a lot of transactions and get a rhythm going. They have to know the protocols for working with the other side and they have to know what is worth fighting about, what is not worth fighting about, and which players can be pushed.

So how should a buyer or seller go about finding a good attorney? Well, let’s start with how NOT to find one: friends or family members. This is probably the worst basis for choosing an attorney – unless you have direct knowledge of their capabilities as a real estate attorney. Quite often clients will tell us they want to use a friend or relative and it sends shivers down our spine. Why? Because we have had horrible experiences – on both sides of the table – with attorneys who are friends or relatives and often the reason it’s a problem is that these attorneys don’t do a lot of real estate transactions. Remember what I said above about having to have a rhythm going? Invariably, a friend or family member that is brought to us to act as an attorney is rather clueless. I could tell you stories but I won’t. So when a client brings up this possibility we very delicately ask how much real estate business the attorney does and usually we are assured that they do plenty but then when the transaction is underway we find out otherwise.

That’s why we keep our own ever changing list of attorneys that we’ve encountered in our transactions that we would like to work with again. When we have a good experience with an attorney they go on our list and when they disappoint us they are removed from our list. And just to be clear, disappointing usually means dropping the ball during the process or being unresponsive. So once we have a signed contract we always ask our clients if they have an attorney in mind. If not we provide them with our referral list of attorneys but I suspect that many clients are skeptical about getting an attorney recommendation from their realtor. After all, isn’t there a risk that the attorney is in the realtor’s pocket – more interested in staying on the realtor’s list than taking care of the mutual client? I guess that is a risk but it’s one that can be guarded against by asking a few simple questions about how the referral list was created and asking for specifics about why the realtor recommends these attorneys. But if the client can get past this concern they should keep in mind that their realtor sees a lot more attorneys in action than they do so they shouldn’t be too quick to dismiss their recommendations.

But in the end you are going to need a recommendation from someone – a realtor or another acquaintance – and then what? How do you determine if the referred attorney is in fact any good? Obviously, you need to get them on the phone and ask them a few questions to see if there is a fit. Here are a few questions to get you started:

  • How many real estate closings do you typically do in a month?
  • How many closings are you currently working on (too many can be a problem)?
  • Do you have an assistant? What will his/ her role be?
  • What services are included? If you would like your attorney to review
    your mortgage terms then be sure to ask whether or not this is included.
    If you are selling short be sure to ask if he/ she will negotiate with
    your lender.
  • What/ how do you charge? What happens if I have a lot of questions?
  • What experience do you have with [fill in the special circumstances of your transaction – e.g. short sales]?

In addition to the specific answers to these questions you will want to pay attention to such things as how they treat you – e.g. are they in a rush to get you off the phone, how long did it take for them to call you back – and how articulate they are. Inarticulate attorneys are going to have a hard time communicating with the other side. What is their attitude? Are they arrogant? Are they approachable? And finally, do they appear to be smart? As in real estate, experience is nice but there is no substitute for intelligence when it’s time to improvise.

0 thoughts on “How To Choose A Real Estate Attorney

  1. Buyers and sellers should begin working with an attorney prior to the time they have a signed contract, not afterwards.
    Sellers should have their attorney review and negotiate the listing agreement with their broker. It’s a very one-sided document that contains a number of pitfalls that leave a seller at the mercy of an incompetent, lazy or neglectful broker.
    Buyers also need to ask whether their attorney is affiliated with a title company and receiving any payment

  2. OK. So I’ve had this title company commission conversation with attorneys before because it concerned me. I don’t think the buyer’s attorney would get a commission – not sure why/how they would. But the seller’s attorney often does. The way the attorney I spoke to explained it to me is that they are a title agent for the title company and they actually do the title search for the company and that’s what they are getting compensated for.

  3. OK. So I’ve had this title company commission conversation with attorneys before because it concerned me. I don’t think the buyer’s attorney would get a commission – not sure why/how they would. But the seller’s attorney often does. The way the attorney I spoke to explained it to me is that they are a title agent for the title company and they actually do the title search for the company and that’s what they are getting compensated for.
    Buyer attorneys sometimes try to negotiate their title affiliate into the contract, on the theory that the buyer should have the right to choose who he receives his insurance from. That is how they would get in a position to be compensated.
    As a seller I would always concede this to the buyer’s attorney on these conditions: 1) that the buyer agree to pay the difference between what Chicago Title charged me and what the inflated charges would be from their attorney’s affiliate; 2) that the buyer sign a disclosure acknowledging that the attorney’s affiliate had a fraction of the capitalization / premium reserves of Chicago Title; and 3) that the buyer acknowledge the affiliate’s history of challenging valid claims rather than paying them. The attorney alwasy backed off his request.
    Perhaps the industry has changed since my days as a seller, but I firmly believe that attorneys have no business peddling title insurance.
    The title search services that the attorney provides are largely fictional, paying lip-service to RESPA when RESPA’s really being violated. Old-time stiff-backed guys like me consider the way the system operates to be unethical and unprofessional. I’d never use an attorney who suggested using his title services.

  4. Joe, I think what you are saying is important, but as a newbie to the real estate world, I need a translation. Can you repost or send me a private message breaking it down a bit more simple-like

  5. The comments above fail to acknowledge 2 key issues. First, as a real estate attorney myself, being on a “recommended list” kept by a realtor is not a good thing. Why? Because when you rely on your realtor too much to send you business, whose interests do you really look out for? The client who may buy and sell 3 or 4 properties in a lifetime? Or, the realtor who sends you 3 or 4 new deals every month? This creates an ethical dilemma for most real estate attorneys.
    Second, the fact that the attorney for a seller receives compensation from a title company does not make the guy evil or incompetent. The sad reality is that most people do not value the services of their real estate attorney and actually think he or she can do their closing for a flat fee of $300 to $500. This is what the market has valued our services at. So, in order for us to feed our families, we have to rely on the compensation from the title companies when we represent sellers. Also, I guarantee you that it is more expensive to close a deal with Joe than with an attorney who receives compensation from the title company. Why? Because the attorney is getting money for his services in examining title to the property, he can offer a lower rate for his attorney fee. And, by the way, there are many, many other title companies that are cheaper than Chicago Title.
    I agree with Joe that real estate attorneys ought to stay out of the title insurance business and should simply raise our fees. But, the competitive pressure in the Chicago market has made this virtually impossible. If you don’t enter into the title insurance business as a real estate attorney, you will have to charge your clients more in the form of a higher attorney fee. The client will still pay the same for title insurance. The net result is that the client pays more for the same service.
    Also, I like being involved with examining title to the property that my client is selling. Why? Because I have caught numerous mistakes made by title companies and have saved my clients millions of dollars in title insurance claims simply because I knew the transaction more intimately than the title company and was able to solve problems before they turned into title insurance claims. I am proud to say that because of the involvement of attorneys in the title insurance business, Illinois is one of the states with the fewest title insurance claims AND the lowest cost for title charges.

  6. Hello Joe:
    It appears that we have a debate. I don’t think that it is fair for you to say that just because I didn’t provide any references, you must assume that there is no substance to my claims.
    For your review, here is a link to an objective webisite showing Illinois as having some of the lowest title insurance charges nationwide (I think 5th lowest is where we rank):
    I do agree with you in the sense that it is funny that people do not value the services of their real estate attorney. I think we are underpaid and we devalued ourselves. But, that is a discussion for another time.
    Quite honestly, I am curious as to why you believe an attorney cannot receive compensation from the title company and not represent his clients as effectively as if he did not receive such compensation.
    Oh yeah, as for your question about comparative rates. The cheapest title company in Illinois is going to be Golden Title. They are much cheaper than Chicago Title and their owner does a very good job looking out for his clients. I do believe they have never had a title insurance claim. They charge $295 for an owner’s policy on a $200,000 house. Chicago Title charges $1,220 for the exact same product. Oh yeah, and did I mention, Golden Title is owned by a real estate attorney.
    Also, here is a copy of the disclosure letter that I am required to provide to my clients when I order title for them on their sales.
    This is the form that I am required to use by law. Please note, this is not the title company that I use, but I just happened to find their form the quickest.
    Finally, I honestly believe Illinois is a state that offers title insurance for less because we as the consumers do not have to pay to staff the title companies with attorneys and their bloated salaries, pensions, vacation days, etc. The consumer pay their attorneys far less than what it would cost to staff the title companies with their own attorneys. This is just my opinion, but I think there is evidence to support this (see link above).

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