Buying or selling a home is best done with some assistance. Real estate brokers have access to the Multiple Listing Service in their geographical area and have obtained the educational knowledge to assist you in the process. However, for their assistance, real estate brokers take a healthy commission – generally six percent (6%) of the sales price, split between the Listing Broker and the Buyer’s Broker.
Another option exists that allows you the benefits of the For Sale By Owner (“FSBO”) model without the lack of knowledge associated with lay people handling their own transaction. That option is to work with a seasoned real estate lawyer, who can draft the documents for the transaction and advise you throughout the sales process. There are many advantages to going this route:
1. Cost. Attorneys do not take a commission for this type of work. They earn their fees by the hour. As such, depending upon how much involvement you want a lawyer to have in the negotiation of the agreement, the drafting and review of documents, and the closing process, the fees generally run $1,000 – $3,000; this is substantially less than a 6% commission on the sales price;
2. Expertise. Whereas, by law, real estate brokers can only fill in the blanks on the MLS form Purchase and Sale Agreements, real estate lawyers are able to customize the language in your Purchase and Sale Agreement, if it is warranted. Real estate attorneys who litigate, as I do, have also dealt with many of the problems that arise in a sales transaction, beginning with the language used in a Purchase and Sale Agreement. As such, we can draft language that avoids the pitfalls others have fallen victim to, and guide you through a process that can be problematic for the unrepresented;
3. Your Interest is the Sole Priority. While there are many very qualified real estate brokers who represent buyers and sellers in real estate transactions, they all have an additional goal beyond making you happy. They need to get the transaction closed to get paid. Given that their commission is based on the sale closing, advising you to walk away from the deal or take more time and contemplate what is best for you over time always comes at a cost to themselves. Attorneys earn their fees based on the time we spend counseling you and working on your transaction. There is no extra money earned whether the transaction takes additional time to close or doesn’t close at all;
4. The Savings of 3% – 6% Can Be Used to Lower the Sales Price. If the commission is taken out of the equation in the transaction, the Seller does not have to charge as much for the home and the Buyer does not have to pay as much to cover that commission;
5. Review by a Lawyer is Recommended. Even if you decide you want to use the services of a real estate broker, having an attorney review the documentation and guide you, separate from the guidance of the real estate agent, with only your interest in mind is a recommended sounding board that takes the interests of the brokers out of the equation;
6. Low-Cost Listing Services for Sellers. If you are a Seller, there are brokerage services that charge a low flat fee for listing your home on the MLS. Using these services in conjunction with a real estate attorney allows you to have the marketing power of a real estate broker, with the flexibility, cost, and expertise of a real estate lawyer.