Should You Hire a Real Estate Agent or Lawyer to Buy a House?

by ECL Writer
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Real estate brokers receive hefty commissions, which is common knowledge. The expense of the commission may be indirectly passed on to you, for example in the shape of a higher list price, even though it is typically paid by the seller rather than the buyer. Additionally, real estate attorneys bill outrageous hourly prices. This begs the question: Do you require a real estate agent or lawyer to assist you in purchasing a home?

What the Law Says About Home Buyers Hiring a Real Estate Agent or Attorney

The real estate laws in the United States vary from state to state. Most of the time, a real estate agent’s assistance is not legally necessary, but they can assist you with chores that have legal undertones, such as creating a property purchase contract. With attorneys, it’s a different situation. Only a lawyer is permitted to prepare the property purchase agreements, do a title search, and/or complete the transaction in a few jurisdictions, including New York and Massachusetts. There are still a lot of chores left for the real estate agent to complete, but some teamwork will be necessary. Any real estate agent can inform you of local customs.

Reasons for Home Buyers to Hire a Real Estate Agent

The majority of customers discover that working with an agent makes the complicated process of buying a home easier to navigate. There will be a little tornado-like outbreak of paperwork. Hiring inspectors, haggling over who will pay for necessary repairs, maintaining excellent ties with the sellers (through their agent), and more will all take place rapidly as part of the process. A real estate agent with expertise does all of this naturally. Additionally, knowledgeable agents frequently have connections with reliable inspectors, mortgage loan officers or brokers, and other individuals who can simplify the purchasing process. Additionally, they are aware of the customs and practices that are acceptable in your locality.

Don’t Use the Seller’s Agent

The fact that the sellers are probably going to use their own agent and you want to prevent that agent from controlling the process is one of the finest justifications for hiring a real estate agent.

In a “dual agency” arrangement that largely serves the seller’s interests, the seller’s agent may even exert pressure on you to allow them to represent both the seller and the buyer. If only one seller’s agent is participating in your transaction, it is reasonable to presume that the agent is siding with the seller (less scrupulous sellers’ agents fail to disclose that they are representing both parties). Dual agency is preferable to having your own agent, or, according to some experts, having no agent at all.

Even With a Real Estate Agent, You’ll Want to Take an Active Role in the Buying Process

The only person who truly understands what you want in a home is you. There are several benefits to looking through listings and, if you can, going to open houses yourself, even if your agent is doing the house hunting for you. (After the COVID-19 epidemic began, certain regions of the U.S. restricted or discontinued traditional open houses in favor of private tours with an agent; however, they are again making a comeback.)

You might even find that your realtor doesn’t fully get your demands or won’t take you to see “FSBO” (for sale by owner) listings, in which case you’ll want to be proactive throughout this process.

Learn More About Buying Real Estate

It’s a good idea to educate yourself as much as you can about the home-buying process, even if you use a real estate agent (or a lawyer). Researching the market value of nearby homes that are comparable, for instance, helps shield you from pushy agents who could advise you to make a large offer on a certain house. Studying the contents of the various real estate contracts beforehand may also help you avoid misconceptions and lessen the tension that comes with being ordered to “sign here.”

Reasons to Hire an Attorney to Help With Buying a House

An attorney’s assistance is not necessary for a typical real estate transaction, except in jurisdictions where it is required. The majority of people in your state will utilize the exact same purchase contract (often created by the state real estate agent’s association), simply filling up a few spaces, as real estate transactions have become so conventional by this point. Your real estate agent might not be able to respond to legal questions, nevertheless. You’ll need an attorney’s assistance in that situation. Despite their extensive knowledge of the negotiating and contracting aspects of the process, skilled agents are unable to provide legal advice.

What would happen, for instance, if your potential new home had an unpermitted in-law apartment with a tenant who you wanted to evict so that you might rent it to a friend? If your plans are viable, only an attorney can say with any certainty. Or what if you wanted to rent the house for a long time—say, a year—before you were forced to buy it? That will necessitate creating a unique lease. You could also want to have a lawyer review the documents if you’re creating any non-standard language for the purchase contract or have questions about any terminology in your mortgage.

How Real Estate Agents Are Paid

Normal compensation for real estate agents is in the form of commissions. They only get their share once your property hunt is completed, the contract has been negotiated, and the sale is finalized. (Frequently, they wind up working hard for nothing because the purchasers lose interest or are unable to complete the transaction.)

Typically, the seller will share the fee between the seller’s agency and your agent, normally at a rate of about 5% of the sales price (sometimes evenly, sometimes favoring the seller’s agent, who handles the majority of the work). However, this percentage is not set in stone. For instance, if the house is especially pricey, the seller might agree to reduce the overall percentage. (Also, the commission for probate sales is decided by the court.) It has also been reported that some buyer’s agents will give the buyer a portion of their commission at closing. There are various variations of the conventional commission structure. Some purchasers, for instance, prefer to work with an agency but pay their own commission, reasoning that this will increase the agent’s loyalty to the buyer’s interests and provide them a reason to negotiate a lower sales price. Less frequently, you might find a real estate agent ready to take on a smaller number of duties in exchange for an hourly rate as opposed to a full commission (in which case you should also urge the seller to reduce the sales price correspondingly).

How Real Estate Attorneys Are Paid

Typically, lawyers bill by the hour, with charges ranging from $150 to $500. Additionally, some lawyers offer fixed rates for particular services, including creating real estate closing documents. Although many lawyers prefer to handle the whole case with a “blank check” for the number of hours to be put in and the duties to be completed, you’re hiring the lawyer, so you get to make the decisions. You can bargain this if you choose to work with an attorney exclusively for a certain number of hours or for particular jobs, such as answering a legal query or evaluating a document (and should record your agreement in writing).

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