Deciding whether or not to use a Realtor to help you buy or sell your home is a big choice. It’s also mainly a financial one.
While some people might decide to sell their home on their own or purchase a home without a Realtor, when it comes to the nitty-gritty legal aspects, you need a second pair of eyes.
Because of this, you might wonder, “is it cheaper to hire a real estate lawyer than a Realtor?”
Realtor or Real Estate Lawyer: Which Is Cheaper?
Want the short answer? The real estate lawyer is cheaper. But in most situations, the savings still come at a high cost. Here is everything you need to know about making the best financial choice for your situation.
Following the Law
There are different laws in different states. Usually, you do not legally have to use a Realtor to buy or sell a home. However, in some states, only a lawyer can do things like preparing the contract of sale, perform a title search, and officially close the deal.
Why Do I Need an Agent, Anyway?
When buying or selling a home, most people do not realize just how complex the process is.
There is lots of paperwork. There are lots of small details that can’t be overlooked. Things like inspections and negotiations move quickly. Because of this, it can be helpful to have a professional with years of experience and connections in the field on your side.
Someone who can be an advocate for you to ensure you get the best price in the shortest amount of time. And, one can hope, with the least amount of stress.
But these services are not free. Sometimes people feel like an agent’s commission (typically around 6% of the final sales price) is not worth it. So they choose to strike out on their own.
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Buying without an Agent
A quick caveat for those planning to purchase a home without a Realtor: do not use the seller’s agent. If you come to the negotiating table without an agent, especially if you are planning on simply using a real estate lawyer during the closing process, you have to stand your ground.
Often, if you have no representation until closing, it might feel like the seller’s agent is totally in charge of the process. Whatever you do, do not agree to a “dual agency” relationship. This is when the same agent represents both the buyer and the seller of the property.
This is because this is rife with conflicts of interest.
Staying in Control
If you are buying without an agent and only want to use a real estate lawyer for closing, then it’s important that you remain calm and in control of the whole process. As you stave off a dual agency agreement, be sure to be proactive about the kind of house that you want.
If you are selling without an agent, be sure to stay on top of market trends in your area. This way, you will be aware when a reasonable offer comes your way.
In both cases, remain calm and consciously educate yourself about the market and legalities of property transfer. This way, you can avoid simply being told to “sign here” without really knowing what you are getting.
Why Do I Need a Real Estate Lawyer?
Is it cheaper to hire a real estate lawyer than a Realtor? Usually. But you get less support. In most states, you do not technically need either a lawyer or a Realtor to successfully complete a real estate transaction.
But sometimes, it’s a good idea to have both. This is because while many parts of the property transfer process are now standardized, certain legal situations can arise that both you and even the most qualified Realtor will not be able to give advice on.
Things like renting a home before you own it or purchasing a home with a tenant are just two of these situations.
How Much Do Real Estate Lawyers Charge?
Lawyers famously charge by the hour.
You can expect to pay between $150 and $350 an hour for a basic real estate attorney. However, there are also typically representatives who will charge a flat fee for a service like preparing documents of sale or reviewing a contract.
When working with a lawyer, you are in control. You can decide beforehand how many hours you are willing to pay for. This way, don’t need to just write a blank check and hope you don’t go over budget.
Even with this high hourly fee, it is cheaper to solely work with a real estate lawyer than a Realtor, but this is because he will do less work for you.
How Much Do Realtors Charge?
Realtors typically charge a 6% commission off the final sales price. The commission goes to the seller’s agent. He then splits it with the buyer’s agent for introducing a customer into the deal.
Then, the seller’s agent has to pay his brokerage firm or home real estate office, as well as any agreed upon fees in relation to the sale of the home.
So, for a sale of a $200,000 home, the commission is $12,000, or $6,000 for each agent.
Of course, when you work with only a real estate lawyer, you will be paying significantly less than that. However, the time and energy invested in the transaction due to this choice might not be worth the savings.
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