Q: I just finished reading your book for first-time home buyers and found it very informative. You mentioned that real estate attorneys are rarely used in California. What is the explanation and rationale for this?
A: There are a bunch of states in which real estate attorneys are rarely, if ever, used to close residential house deals. The idea appears to be that the broker or closing agent can do everything and you don’t need individual representation.
The real estate brokerage community, which tends to believe that attorneys simply mess up deals, has sold this idea to the public by saying real estate attorneys are a waste of money. In truth, in the states in which attorneys are commonly used, you pay a flat fee, usually between $350 to $1,000.
For this you get someone to shepherd your deal through from start to finish, including negotiating the language of the contract. You also have someone who can disapprove a contract in case the deal turns out not to be what you thought. The attorney is completely on your side of the deal, with no interest at all in whether or not you close on the property. Everyone else in the deal only gets paid when you close, so they have a vested interest in seeing you close.
In addition, using an attorney can save you money. Some attorneys negotiate better deals with local title companies, giving their clients a break on expensive fees. Attorneys who specialize in residential real estate can spot many problems (and resolve them) before they become huge headaches.
I don’t understand why residents in Georgia, Indiana, Ohio, California, and Arizona, to name a few no-attorney states, put up with this. Our society is way too litigious, and people get scammed every day. And of course, when you’re buying your single biggest purchase of a lifetime, the stakes are very high.
I always encourage every home buyer or seller, no matter what state, to protect themselves and hire a real estate attorney to assist them with their transaction.