Over the past few years, there has been an increase in the number of people who think that they can save money if they negotiate their contract before they hire an attorney. In fact, a large number of real estate mentoring groups have sprung up, many of which tell their clients to get the contract squared away before they hire an attorney. So, can you save money by negotiating your real estate contract before you hire a lawyer? Let's find out.
For those of you who like to cut to the chase, the answer is "no." Not only will you not save money, but you can get yourself into a lot of trouble and find yourself locked into a contract even if the house has significant repair issues or you end up not qualifying for a mortgage.
Now I know what you're thinking, "of course an attorney is going to tell me that I need an attorney." Maybe many attorneys take that approach, however, for those of you who have been regular readers of this blog, you know that I tell it like it is. There are times when you can handle your own legal issue. For example, if you want to change your last name you likely don't need an attorney to do that. However, if you are buying or selling a home, a commercial property, you absolutely should have an attorney.
So what's so bad about negotiating your own contract and why wanted to save you money? First of all, despite many real estate contract being form based, there are complexities and nuances that nonlawyers don't know how to handle. Aside from that, experienced real estate attorneys always need to make changes to the form contracts to include additional provisions that protect their clients.
Just recently, we had a client who had negotiated his own contract. He figured that he would hire an attorney when the closing date got closer and assumed that he would save himself some money. Unfortunately for him, he did not insist on having specific Clauses in the contract, and when the home was inspected and the seller would not make the requested repairs, he found himself on able to cancel the contract. When he hired us, he was in quite a jam. The seller was insisting that he move forward with the contract but refusing to make the repairs. Fortunately, we were able to negotiate a resolution, but this is not the typical case.
I have seen far too many people try to save a few dollars by negotiating their contract only to end up on the other side of a lawsuit or with a home in need of major repair.
The second reason why you don't end up saving money by negotiating your own contract is that most attorneys offer flat fee rates for closings. Now I know that there are some attorneys out there that offer a very low flat fee and then charge you for all sorts of secondary services, but this is not what I'm talking about. For example, when a buyer or seller wants to hire us, we charge them a flat fee, with no hidden charges whatsoever. Because our prices are extremely reasonable, it is impossible for us to reduce the total cost if someone has already negotiated a contract. Separately, as we mentioned above, when someone negotiates their own contract it creates more work for an attorney as we have to try to remedy any issues created in the contract. By negotiating your contract without an attorney you can increase the cost and create delays in closing on the property.
So the best advice is to hire an experienced real estate attorney that offers you a fair and reasonable flat fee price and let the attorney handle the entire closing from beginning to end. You will end up saving yourself time, money, and aggravation. More importantly, you will be protected so that you don't end up in a situation where you are bound to the terms of the bad contract.
If you would like more information about this topic or have general legal questions, please feel free to contact me at (201) 904-2211 or via email at pl@pjlesq.com. We answer legal questions on a daily basis and would be happy to discuss any issues or questions that you have with you.
© 2017 Law Offices of Peter J. Lamont. LLC. This Update is provided for informational purposes only. It is not intended as legal advice nor does it create an attorney/client relationship between the firm and any readers or recipients. Readers should consult counsel of their own choosing to discuss how these matters relate to their individual circumstances. This Update may be considered attorney advertising in some states. Furthermore, prior results do not guarantee a similar outcome.