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Are lawyers that expensive? People will not even pay a $1500 for an independent review of a $1million home purchase. Most just blindly follow their real estate

Are lawyers that expensive? People will not even pay a $1500 for an independent review of a $1million home purchase. Most just blindly follow their real estate agent's advice even though such agents are usually hopelessly conflicted because of their own financial interest in getting the deal done.

kirkules 8y ago
That's not a completely fair example, though, for a number of reasons. If you think there's an honest chance that a $1500 independent review could turn up something that would make you turn down the deal and try to find another, do you then expect to have another $1500 review done? What expectation should you, a non-expert in doing this kind of calculation, have about the total cost of having independent reviews done? Also, $1500/$1million sounds tiny, but nobody who thinks they can't afford a $1500 review buys a $1million house in cash; they get a mortgage and expect to pay $4.5k/month, and people in general don't save (or have the ability to save) as much as I do/would. So it's $1500/$4500 in the immediate future of having to make your first payment, on top of closing costs, etc., for benefit that is already unclear to a non-expert. And by definition we're talking about a non-expert, because that's why they would have the need to hire a lawyer to do an independent review. Anyway, it's not that I necessarily think lawyers are that expensive across the board, but the existence of that perception shouldn't be very confusing. A non-expert doesn't have the tools to accurately put a value on expert services.
- kazinator 8y ago
  Another scenario: say you have this $1500 review and it uncovers issues. You want the house anyway and try to negotiate the price down. Oops, the house goes to the next bidder who didn't bother with such a review. Basically, all you can do with the review is to "know what you're getting into".
  - pnw_hazor 8y ago
    In residential deal, the legal review comes after the offer has been accepted and the title co has provided a title commitment and proposed title insurance policy but before closing. Depending on the discovered issues, if any, your offer may be voidable or in a worse case you will have to forgo your earnest money. Still better than losing the whole house years later because of something like an incorrectly handled DIY divorce.
  - bradknowles 8y ago
    Depending on the jurisdiction, anything discovered in a detailed inspection of this sort will have to be disclosed to any future buyers. So, in that case, it would be to the best interest of the seller to reduce their asking price and/or fix the major problems that were found, so that they no longer have to carry this legal burden going forward. Yes, this happened to me and my wife (she's the lawyer in the family), and this resulted in us getting over $12,000 cut off the purchase price of our house, in addition to getting a number of major problems fixed before the deal actually went through. IANAL myself, and I can't make any claims that anyone else will necessarily benefit in the same way, but that detailed inspection of the house-to-be-bought can be worth 10x the cost you pay for it -- or more.
haberman 8y ago
Review of what? As I understand it, the title company reviews and insures everything related to the title. And the Purchase and Sale agreement is a standard form contract. What would a buyer need a lawyer to review?
- pnw_hazor 8y ago
  Here, for example, you overstated the responsibilities/duties of the title company. A title company's promise to insure real property titles/deeds comes with many (sometimes pages) of exceptions or disclaimers that depend on the state of the title history. Stuff they don't understand (confused records, muddled divorce/death histories, old easements, etc.) they will disclaim from the coverage. Title companies provide a several page title commitment that describes the state of the world as they see it and given that state-of-the-world they craft and issue a policy. They don't guarantee against things not included in the title commitment they disclaim them away. In most cases, especially in developed urban areas, the default works. But if there are edge conditions, the title policy often doesn't fix them because the policy disclaims around them. But if you read and understand the title commitment and trace the title history yourself (or hire lawyer to do so), you can challenge the title company to remove unwanted disclaimers or add additional protections before you close. Also, you can identify potential chain of title issues and have the seller fix them before closing. edit: s/misstated/overstated/
marssaxman 8y ago
A one-percenter buying a million-dollar house might well consider it reasonable to hire a lawyer to help out with something as ordinary as a home purchase, but the rest of us aren't buying million-dollar houses and don't routinely get legal advice about anything. When I bought my house, I had $30k to spend as a down payment; no way would it have made sense to waste 5% of that on unnecessary legal work. (What would lawyers have even theoretically been able to tell me, anyway?)
dsnuh 8y ago
Anecdata, but I spent about $30K in attorney and court fees during my divorce, and I got a reduced hourly rate and retainer because I was buddies with a guy that clerked for him. It definitely didn't feel like a bargain, but so much of what you are paying for is the knowledge of what needs to be filled, when, maintaining the case docket, serving discovery, filing motions, etc. and all of these can be incredibly puzzling for someone not familiar with proceedings of the court.

kirkules 8y ago

That's not a completely fair example, though, for a number of reasons. If you think there's an honest chance that a $1500 independent review could turn up something that would make you turn down the deal and try to find another, do you then expect to have another $1500 review done? What expectation should you, a non-expert in doing this kind of calculation, have about the total cost of having independent reviews done? Also, $1500/$1million sounds tiny, but nobody who thinks they can't afford a $1500 review buys a $1million house in cash; they get a mortgage and expect to pay $4.5k/month, and people in general don't save (or have the ability to save) as much as I do/would. So it's $1500/$4500 in the immediate future of having to make your first payment, on top of closing costs, etc., for benefit that is already unclear to a non-expert. And by definition we're talking about a non-expert, because that's why they would have the need to hire a lawyer to do an independent review. Anyway, it's not that I necessarily think lawyers are that expensive across the board, but the existence of that perception shouldn't be very confusing. A non-expert doesn't have the tools to accurately put a value on expert services.

kazinator 8y ago
Another scenario: say you have this $1500 review and it uncovers issues. You want the house anyway and try to negotiate the price down. Oops, the house goes to the next bidder who didn't bother with such a review. Basically, all you can do with the review is to "know what you're getting into".
- pnw_hazor 8y ago
  In residential deal, the legal review comes after the offer has been accepted and the title co has provided a title commitment and proposed title insurance policy but before closing. Depending on the discovered issues, if any, your offer may be voidable or in a worse case you will have to forgo your earnest money. Still better than losing the whole house years later because of something like an incorrectly handled DIY divorce.
- bradknowles 8y ago
  Depending on the jurisdiction, anything discovered in a detailed inspection of this sort will have to be disclosed to any future buyers. So, in that case, it would be to the best interest of the seller to reduce their asking price and/or fix the major problems that were found, so that they no longer have to carry this legal burden going forward. Yes, this happened to me and my wife (she's the lawyer in the family), and this resulted in us getting over $12,000 cut off the purchase price of our house, in addition to getting a number of major problems fixed before the deal actually went through. IANAL myself, and I can't make any claims that anyone else will necessarily benefit in the same way, but that detailed inspection of the house-to-be-bought can be worth 10x the cost you pay for it -- or more.

haberman 8y ago

Review of what? As I understand it, the title company reviews and insures everything related to the title. And the Purchase and Sale agreement is a standard form contract. What would a buyer need a lawyer to review?

pnw_hazor 8y ago
Here, for example, you overstated the responsibilities/duties of the title company. A title company's promise to insure real property titles/deeds comes with many (sometimes pages) of exceptions or disclaimers that depend on the state of the title history. Stuff they don't understand (confused records, muddled divorce/death histories, old easements, etc.) they will disclaim from the coverage. Title companies provide a several page title commitment that describes the state of the world as they see it and given that state-of-the-world they craft and issue a policy. They don't guarantee against things not included in the title commitment they disclaim them away. In most cases, especially in developed urban areas, the default works. But if there are edge conditions, the title policy often doesn't fix them because the policy disclaims around them. But if you read and understand the title commitment and trace the title history yourself (or hire lawyer to do so), you can challenge the title company to remove unwanted disclaimers or add additional protections before you close. Also, you can identify potential chain of title issues and have the seller fix them before closing. edit: s/misstated/overstated/

marssaxman 8y ago

A one-percenter buying a million-dollar house might well consider it reasonable to hire a lawyer to help out with something as ordinary as a home purchase, but the rest of us aren't buying million-dollar houses and don't routinely get legal advice about anything. When I bought my house, I had $30k to spend as a down payment; no way would it have made sense to waste 5% of that on unnecessary legal work. (What would lawyers have even theoretically been able to tell me, anyway?)

dsnuh 8y ago

Anecdata, but I spent about $30K in attorney and court fees during my divorce, and I got a reduced hourly rate and retainer because I was buddies with a guy that clerked for him. It definitely didn't feel like a bargain, but so much of what you are paying for is the knowledge of what needs to be filled, when, maintaining the case docket, serving discovery, filing motions, etc. and all of these can be incredibly puzzling for someone not familiar with proceedings of the court.