Do I need a real estate attorney to sell my house?

Buying a home or commercial property is one of the biggest financial decisions of your life, and if you’re working with a good local real estate agent, it’s likely they can handle things just fine. An experienced agent is pretty familiar with the local laws and regulations, and can give you a heads up about any unique qualities of the property that could complicate the transaction.

But there are certain conditions where you should— or are legally required to— hire a real estate attorney to sell your house. A good real estate attorney provides a backstop for your real estate agent, finding loopholes in the purchase agreement, saving you money with contingencies, and maybe even insulating you from lawsuits years down the line. 

Let’s go over some of the situations where hiring a real estate attorney is a good move, the responsibilities of a real estate attorney vs. a real estate agent, break down the average real estate attorney fees, and look at different kinds of real estate attorneys.

• Do I need a real estate attorney to sell my house?
• Should I hire a real estate attorney if I don’t need legally need one?
• Real estate attorney fees and costs
• Residential vs. commercial real estate lawyers
• Real estate lawyer vs. real estate agents

Do I need a real estate attorney to sell my house? 

First off: if you live in one of the following states, you are legally required to work with a real estate attorney when you buy or sell a home.

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

If you live in one of the above states, it’s not really a question; you’ll have to work with a real estate attorney. But what if you live in a state that doesn’t require you to work with a real estate attorney? Let’s look at what a real estate attorney can do for you.

Should I hire a real estate attorney if I don’t legally need one?

Most experts agree that if you’re doing a “vanilla transaction,” then you don’t need a real estate attorney. So if you’re buying new construction, a pristine property, or signing a regular lease, using the standard forms and listening to your real estate agent’s advice should be just fine.

But if you have any questions involving real estate law or taxes, a lawyer is your best source for this advice; in fact, in most states, it’s illegal for a real estate agent to give tax or legal advice. And even if you live in a state where it’s legal for an agent to give legal advice, keep in mind that while agents are probably somewhat familiar with real estate law, they don’t have anywhere near the depth of knowledge that a real estate attorney will. The truth is, no one knows the law as well as a lawyer.

So what are some other reasons you might need a real estate attorney?

Things Are Getting Complicated

If you’re involved in a more complex transaction, it’s probably wise to involve a lawyer. The term “complex transaction” covers a ton of ground– everything from reviewing a co-op proprietary lease, to a developer-drafted new home contract, to handling documents like community interest development agreements. 

Or if you’re using private financing like a loan from a friend or family member, you’ll need to draft a contract from scratch. 

Another common situation that requires a lawyer is if you’re doing a joint purchase with several other parties; this requires a special kind of co-buyer agreement, and you’ll need to explicitly spell out how the title will be held.

There are also a lot of common gray areas that come up when people sell properties that need to be put into writing, for the protection of both parties. Let’s say the property currently has a tenant that needs to move out before closing, or the buyer wants to move their belongings in before closing, or the buyer is allowing the seller to stay in the property for a certain period of time after closing—  these situations shouldn’t be handled by handshake agreements. If something goes wrong, things could get ugly, if terms haven’t been explicitly spelled out in writing.

And finally, sometimes sellers run into unforeseen issues. Maybe they discover legal claims against the house at the last minute, or the title report uncovers problems with the property line, or an easement needs to be defined. These are all issues that should be handled by a real estate lawyer or attorney.

Protection Against Future Liability

The purchase agreement is a legal contract that outlines the rights of the seller and the buyer. A lawyer can review this contract and make sure you’re receiving all the protections and assurances that you should be. Signing an incomplete or sloppy purchase agreement can leave you vulnerable later, even if you abide by your state’s disclosure laws.

One example that appeared in the Seattle Times illustrates this problem. A seller’s home had a leaky basement, which he openly and fully disclosed to the buyer; he also showed them the permanent sump pump he’d installed in the basement to manage the leaks. They acknowledged the problem and bought the house anyway.

After their purchase, the buyer turned the leaky basement into a family room, and installed wall to wall carpeting. When a leak ruined their carpet, they hired a lawyer and sued the seller. Even though the seller had disclosed the leak, and wasn’t technically responsible for damages, his lawyer said that defending himself in court would cost far more than simply paying for new carpet. The seller ended up paying for new wall to wall carpeting, after the buyer agreed to sign an agreement absolving the seller from any future claims.

If this seller had worked with a lawyer, and drawn up a more precise purchase agreement that explicitly shielded them from liability, it would’ve saved the seller a lot of money and stress.

The same principle applies to buyers, too. The same article talks about buyers who purchased faulty homes, and may have benefited from hiring a lawyer. One woman bought a house with a concrete foundation, only to find out it was actually a thin layer of mortar over rotten wood. Another buyer, who purchased in summer, discovered the following winter that a large section of the house was unheated, because ductwork had been removed in a recent remodel.

Would a lawyer have caught these problems, or known to question the inspection? Not necessarily. But they could’ve drawn up a purchase agreement that explicitly protected the rights of the buyer, instead of relying on the vagaries of disclosure law, after the fact. 

While disclosure law is in place to protect buyers, there are a number of states (Virginia, for example), that are “buyer beware states,” meaning that the burden of uncovering problems with a property is almost entirely on the buyer. While these states have disclosure requirements for sellers, buyers are expected to have independent inspections done, and probably want to have inspection contingencies added to their purchase agreement. That will likely require a lawyer. (To be fair, Virginia does require a real estate attorney to be involved in all real estate transactions.)

The vast majority of cases like these aren’t taken to court— even when buyers or sellers have a rock solid legal case to be made— because the cost of hiring a lawyer is more than the cost of the repair. That means your best bet, to protect yourself from these expensive situations, is to get ahead of the problem, by building protections into your purchase agreement. And that means hiring a real estate attorney to go above and beyond the standard-issue forms.

So how much does a real estate attorney cost, on average?

Breaking Down Real Estate Attorney Fees

Real estate attorneys are paid by the hour— market rates are between $150 and $350. You may be able to negotiate a flat rate, or a cap on the number of hours they work on your behalf.

Hiring a real estate attorney can be expensive, but it’s probably worth it. Many experts argue that one of the best reasons to hire a real estate attorney is that they’re the only party who isn’t working on commission – meaning that, since they don’t have a financial stake in the final sale price of your home, they’re the only truly neutral third party.

Residential Real Estate Attorney vs. Commercial Real Estate Attorney

Aside from the states where it’s legally required, hiring a residential real estate attorney depends a lot on circumstances. If you’re engaged in a complex residential transaction, a lawyer is probably a good idea. If you’re engaged in a straightforward, “vanilla” transaction, you can probably get by just fine without a real estate attorney.

This isn’t the case when it comes to commercial real estate. Commercial real estate deals are much more complicated and risky, and there’s usually a lot more money involved, so hiring a commercial real estate attorney for a commercial transaction is basically required. 

When you buy a residential property, you’re basically just making sure it’s in good shape, and that the title is clear. But commercial properties are subject to much more regulation– everything from zoning rules, to environmental regulations, to liens and easements, as well as multiple rent streams, each of which comes with their own unique lease. Compared to a residential property, the stakes are much higher, and the rules are much more complicated.

And if negotiations do get tough, a commercial real estate attorney simply carries more weight at the negotiating table than a real estate agent. An agent can ask for concessions, but there’s not much weight behind their words. But it’s understood a lawyer’s demands are backed up by the threat of costly litigation. Simply put, a commercial real estate lawyer can fight much more effectively on your behalf than a commercial agent.

Real Estate Attorney vs. Real Estate Agent

Before we compare the two, let’s be clear that a real estate attorney and a real estate agent aren’t mutually exclusive – you can hire both. But the fact is, they perform different, albeit occasionally overlapping, functions.

Think of it this way: an attorney protects your interests, while an agent pursues your interests. 

Let’s look at some of their respective pros and cons so we understand what they can— and can’t – do for you.

Real Estate Agent Pros 

Knows the Market

A good agent knows what comparable properties sold for, and understands where the local market is heading. They may even have insight into your prospective buyer’s priorities. Put that all together, and a good agent can negotiate the best possible price for your home— not because they’re a good negotiator, although they may be, but because they understand what the market will support.

Agents Offer Soft Benefits

A great agent doesn’t just help you buy or sell a property; they also offer a sympathetic ear, gentle advice, and all around emotional support. A huge financial transaction can be a huge source of stress, and a good agent knows how to reassure their clients.

Real Estate Agent Cons

Works On Commission

Because most agents work on commission, they make more money the higher the final sale price goes. That’s great if your priority is extracting every possible dollar from your sale. 

But sometimes sellers just want a quick sale, or want their property to pass onto someone who appreciates it. Most agents will work with clients, and give up potential commission— but there’s clearly incentive there for some agents to relentlessly drive up the price, regardless of the seller’s wishes.

On the other hand, agents can price your below market value when they want to earn their commission faster. Always ask for market comps in your area, and understand your neighborhoods average days on market so you don’t get taken for a ride.

We also recommend agents from Clever Real Estate, where they offer a flat rate of $3000 for homes under $350,000, or a 1% commission. 

Can’t Give Legal Advice

Many states explicitly bar agents from dispensing legal advice. So if you run into title issues, or are curious about an easement, they probably can’t help you. Or, in states that don’t forbid it, they’ll give you misinformed legal advice that’s only half-right.

Real Estate Attorney Pros

Their Words Carry Weight

Real estate agents may be skilled negotiators, but their leverage is limited. An attorney wields the threat of litigation, which is expensive and, if the other party is in the wrong, potentially disastrous. That means they wield significant influence in any negotiation. 

They Can Help You Now— and Later

Most real estate attorneys have seen a lot of strange cases— so they understand all the things that can go wrong with a house. A good real estate attorney can write an airtight purchase agreement that takes all the possibilities into consideration— and protects you from lawsuits three, five, or even ten years down the line.

Real Estate Attorney Cons

They Probably Can’t Help You On Price

While attorneys carry a lot of weight at the negotiating table, they don’t necessarily have the same nuanced understanding of the market that an agent does. If you have your real estate attorney try to negotiate the sale price, they’ll probably overshoot or undershoot the mark. 

Costs Can Spiral If You’re Not Careful

Three hundred dollars an hour can add up fast. Having a real estate attorney do ten hours of work on a purchase agreement for a $300,000 house means you’re paying 1% off the top just for legal advice. Always have a detailed conversation about billable hours with your attorney before they do the work. 

While hiring a real estate attorney is sometimes an option, working with a great real estate agent is always a must. Real Estate Witch has partnered with Clever Real Estate to give our readers a chance to have a world-class, full service real estate experience for a low flat fee of $3,000, or only 1% if your home sells for more than $350,000. Contact Clever today to set up a free, no obligation consultation, and take the first steps on your home selling journey!