(Are We) Oil and Water?

In a comment to a post on Financing Contingencies, Reba baited Craig and I to write a post on the uncommon relationships between real estate agent and attorney.   She said,

“Maybe it’s worth another blog post to discuss why some agents seem to feel that they are diametrically opposed to attorneys when it comes to real estate transactions. I constantly hear people say “if an attorney gets involved this deal is dead

56 thoughts on “(Are We) Oil and Water?

  1. I haven’t had any negative experiences with attorney’s killing “the deal”. (ARDELL, I put “the deal” in my remarks just to see if you are paying attention.) I’m not afraid to have my client or any party to the transaction seek legal advice if they think it is necessary or if either of the real estate brokers thinks it is a difficult transaction. I use plenty of “team members” during a transaction – escrow officers, home inspectors, roofers, electricians, septic designers. Attorneys are just another member of the team. (I enjoy having them as clients too because they want to read and understand everything they sign.)

  2. Geordie,

    I emailed the last person I urged to use an attorney in a real estate transaction, Craig in fact, and he chose not to do so. Hoping he will post here first, and then I will follow up on my first hand experiences regarding real estate and attorneys.

  3. Russ, (and Reba) As a former mortgage broker I’ve seen problems with deals that my loan officers had to close on Loan from the East Coast loans. In a state where lawyers were used instead of escrow, were who were accustomed to escrow officers, were very confused to see lawyers stepping in and trying to modify essentially already done deals. It was hard to understand what they were trying to accomplish other than tying up the deal and causing extra headaches for us. Ultimately the deals went through with little or no adjustments.

    The problem therefore was that the communication was not going on to help us to understand what the heck was going on.

    I can say also that I’ve heard the line you are talking about, where lawyers get involved and everything goes down the tubes. I do know as you’ve stated there are a cases where a lawyer is essential, and I would never discourage a client from seeking counsel. I cannot inform them on certain things and I make it clear who can.

  4. Interesting enough, I had a transaction with a RE attorney who wrote the contract and represented his son in the transaction. This attorney actually wrote a real estate book used by the industry for licensing. Although he knew the fundamentals on the contract, he was completely out of his element within the transaction, constantly asking me what the next steps were. Nice guy. Everything closed smoothly, but again, in the practical application of the process he was a fish out of water.

    My biggest compaint with RE attorneys is ego on stage in front of a Realtor audience. We’ve had some “battle of the barrister” sessions, where the attorneys were more interested in showing their debating skills then teaching the Realtors. At times we come out of these sessions feeling like we’re “screwed”. It’s the old damned if you do, damned if you don’t feeling as attorneys can take either side quicker then you can say boo!

    I’ve had a few screwy things come back from the attorneys that service Microsoft. All in all, I’m not afraid of the process of using an attorney for review, not at all. There are situations where it makes sense. They are not need for a normal transaction with an experienced agent.

  5. “Moving to the real estate side, the perception is that most residential agents would rather listen to fingernails on a chalkboard than send their client to an attorney for help with the transaction.”

    I’ve had the opposite problem. When I really do want an attorney involved, the consumer says NO!!

    1) For Sale By Owner calls. Says attorney is writing offer for buyer what should he do. I say call Craig. He says well I can probably figure it out, can’t you just look at it? I say sure. Turned out to be NWMLS forms. Odd.

    2) When I sold the house for the homeless lady I suggested an attorney and my services would be free. She freaked out! NO ATTORNEY! I tried to at least have John Wagner Escrow, and attorney based escrow company in Seattle. NO! She freaked out! In the end I HAD to introduce an attorney and she is the only person in 16 years who hates me for it. There was just no other way. I had to do it to her. Sad to say “bringing in attorney” was “doing ‘it TO her’, but that’s how she saw it.

    3) Some of my clients at Microsoft have a free or almost free attorney service. I encouraged them to use it. Only one did and said it was a waste of time.

    What exactly is an attorney supposed to do for a normal tranaction. How does it not appear superflous and additional cost.

    Sellers are sick of cost. Oh let’s have an agent and a stager and a lawyer and a professional photographer and a Title Company and and Escrow Company and…and…and. No wonder everyone wants to be a FSBO and sell their house to their friend’s daughter.

    Where does it end. Cost after cost. Consumers want less cost, not more cost.

    I am never afraid of lawyers (can you tell?) Some of my best friends are lawyers, in fact my very best friend of over 30 years is a Managing Partner of a major firm in Philly. Coming from the Trust and Estate Business, I worked with every lawyer in town.

    I worked with lawyers in PA sometimes in real estate transactions, but they always viewed me as a peer. Same in the trust business.

    I have to agree with Greg when he talks about the Ego thing. For some reason it’s all “Oh agents fill in blanks and lawyers are mensa level and agents are not”. What’s up with that? Clearly if an attorney is in the “mix” he is a peer of me and the Closing Agent and the Inspector…all professionals and good at what we do.

    But all too often, the attorney wants to be…hmmm how do I put this…. ON TOP! 🙂

  6. One of my first mentors many years ago was attorney and educator Hugh Hawkins. So anytime I interact with attorneys, I carry this image in my mind of an attorney as someone who is alive with energy and a passion for learning.

    Now that I’m farther along in my career, I have attorneys as students, as educators for my firm, and as clients.

    What I appreciate about attorneys is how high of a standard they are held to.

    When attorneys take on the role of instructor, sometimes an attorney can become so enamoured with the language and words, and the tinest detail in the meaning behind the words, that he or she loses sight of what concepts a student needs to learn THAT DAY. Put this into the practice of real estate, consumers, when visiting an attorney for advice on a real estate transaction, might leave the office more confused.

    However, what I sense when real estate agents complain loudly about attorneys is plain old Nietzschean ressentiment.

  7. Greg and Ardell,

    First, let’s not get into anecdotal issues about people who don’t want to go to attorneys or attorneys who are “fish out of water” in your deals and don’t add value. You can’t use these as examples to prove a point because if you go down that slippery slope, why don’t we open the discussion to anecdotes about agents who took listings, did nothing and collected 3% as evidence that all real estate agents are worthless.

    I think you hit the nail on the head, Ardell. It IS an ego thing. “Clearly if an attorney is in the “mix

  8. Like I said: A passion for language and words!

    Maybe Ardell meant “peer” as in people respecting each other as “colleagues who discharge their duties in a professional manner with competency and knowlege in their own specialized areas of expertise”

    I have not considered attorneys and real estate agents (or any of the other professions parallel to r.e. like mortgage, escrow, title, etc) to be like oil and water, simply because when we REALLY NEED an attorney, their value becomes unquestionable. Like when my super ego REALLY NEEDS a highly competent escrow closer.

    Let’s face it guys: eventually, we come to realize that we all need each other.

  9. Russ, ” Exactly what qualifies you to be my peer when your client walks in my office and asks for help in drafting or reviewing a contract?”

    The only time I ever used an attorney in a real estate transaction, is when I walked into the attorneys office and said, “hey, I need some help with this one”. You used an example of my client walking into a lawyer’s office. Why would my client ever do that? That’s insulting. Why wouldn’t me and my client be together, if a contract is being written? You floor me. You may not see the insinuation in your comment that my client does this without my recommendation, and without me with him. But really, that is just lame.

    OK, now we turn the tables and not the same wording. It doesn’t say Russ’ client walked into my office for something. No Russ’ client goes to him and he comes to me. My client walks into your office, your client walks into your office, everyone is going to Russ.

    You don’t even see your bias and that you are looking down your nose, do you?

    “Clearly if an attorney is in the “mix

  10. Hi you all,
    I am the FSBO who sold to his friends daughter and I did call Ardell for her opinion of a good RE attorney to review our purchase and sale agreement at which point she wholeheartedley recomended Craig Blackmon to me. I have in the past had an attorney look at all of my Real estate transactions but I dont have an attorney that I reglarly use now. After reading her posts and participating in some discussions about how to best sell my house FSBO and then talking to her back around thanksgiving I was impressed with her honesty and forthrightness. So after she recomended Craig, and upon further reflection on my part, and after talking to my wife I decided to ask Ardell if she would review the agreement since it was on standard NWMLS forms.
    She agreed to do this at her INCONVENIENCE and on very short notice with little forewarning which has allowed our deal to progress with no delay. And all this at no charge for which I am very gratefull.
    I dont know about the oil and water exactly, but what I think is that the advice needed relates to the complexity of the deal and the persons experience or knowlege of similar type situations. Its the ability to look over a document and pick out what dosent fit at a glance. I would rather have a qualified RE agent look at my forms than a more qualified attorney who is not familiar with real estate.
    I think the advice will be more to the point which is how to get the house sold safely with all the interrelated details.
    Thanks Ardell

  11. Ardell

    First, I have had many agents over the years refer me their clients and I believe I have treated the vast majority with professional respect for what they do. I have not treated them as equals or peers to me in the context of providing legal advice to their/our client.

    It does not surprise me that in all your years of real estate, you have used an attorney ONCE. Why? Because you are the type of agent who believes that they know all. Why would your client need an attorney review of something you drafted when you are (as you say) an EQUAL and PEER of a good real estate attorney? Why in the world would they need to incur the added cost? They wouldn’t because there is no added value to that. From your comments, Ardell = Lawyer.

    Just look at your post that I linked to in my post above. You were flat out WRONG about a very standard and common contingency form. Had any agent provided that type of “advice” to a real client, they would be committing legal malpractice.

    Ardell, you are apparently a good real estate agent. That does not make you a real estate legal expert and until you qualify as one, you cannot be equal to the real estate legal expert. At the same time, I have said over and over that most attorneys (including me) are not experts in the other aspects of real estate brokerage and they should leave those issues to good agents.


  12. I guess I am a little lost in this subject, Michigan requires real estate agents to inform all of their clients to seek the advice of an attorney and is mentioned on our sales contracts if not always then many times as a means to ensure that this requirement has been made.

    I agree with ideology of network and team and as being perceived as a professional who directs clients to resources that are able to handle a particular need that I may not hold an expertise on.

    As a small business one of the rules I operate under is outsource areas that I am not an expert in or do not have the resources to maintain with in house methods. These may be because of tools, equipment, labor or other. As an appraiser I am required to divert when out of my expertise or enlist a professional that is qualified for the item at hand. As part of business operations in the promotion of company image it is a corner stone to be a resource. This is because as a consumer I would appreciate being put on notice that should I have a need and it can be better served some where else then as a consumer I will continue to do future business with that company because they did not waste my time or mislead me and demonstrated that they had my best interest in mind.

    If my client has a need then I will make my best effort to help them address it and learn as I do it.

    All professions have ego issues and that is ok because in the end ego and customer service mixes like your oil and water. Those with an ego in the end help my business.

    If any of you know good real estate attorneys please let me know because I would love to add them to my network of professionals that may serve my clients in above average ways and in the end promote my company.

  13. Martin,

    I’m not sure exactly what Ardell did for you but sounds like you were very satisfied. Nice job! For other agents out there, just keep in mind that providing legal review of contracts when done outside of your normal real estate brokerage services is the unauthorized practice of law for which many E/O insurance companies exclude coverage.


  14. Russ,
    I whole heartedly agree with you that when an addendeum moves away from boilerplate language, it should be reviewed. I also think waterfront, certain acreage pieces, many new consturction issues would benefit by a review. When a contact is within the context of the “fill in the blanks”, I don’t think a review is necessary at all.

    Russ, here’s a real life example of why agents may shy from the practice of routine atty. review. Several years ago, I had Buyer with a well written contract. The house they wanted had another Buyer bidding on it. Our offer was best and we prevailed. The Buyer had no/charge atty review benefits with MS and we made the offer subject to atty. review. At the time, we had 2 kinds of inspections contingency forms. Form A more friendly to the Buyer, Form B, more friendly to the Seller. We used form B, the Seller friendly version because of the competition. During the review the atty., without any consult with me, whacked the Form B, substitued Form A and changed dates. That forced me to go back to re-negotiate the deal, and of course, because the other offer was out there, the Seller and LA suggested we stuff it. Now, we did hold the deal together for the Buyer, but only after agreeing to the orignial terms. I was ticked at the time, my biggest issue being the hack job without consult. When he made the arbitrary changes, he wasn’t working within the context of the negotiation.

    The real issue is, and I think you addressed it, is the RE atty”good”. Maybe this atty. wasn’t so good. It didn’t change my experience at that time with an attorney review. And without a referral from an agent, how do we know a Buyer’s atty is “good”, or even a RE atty?

    I had an issue last month and referred a client to a “good” RE attorney and the experience saved a deal for him. That was a good experience.

    Russ, I do think you guys come off sometimes with an air that tries to put RE agents down. I know your reputation and I do think you’re top drawer in your field. But when you guys have a stage (and you’ve been there with the group), you end up giving the audience a sense of confusion and bewilderment. Or, maybe your plan ahead of time is to confuse and scare the stuffings out of the agents that are attending. When 3 or 4 attorneys all have a different point of view on one issue (like a financing addendum) and and at times contentiously dabate them (and at times talk down to the agents in attendance) it may give agents the feeling that “what’s the use? The attorneys can’t agree, so I’m forced to used my best judgement to get the job done.” I think the agents would learn more and as a profession, you would instill more confidence in your profession , if the audience felt you were there to educate and serve.

  15. “She agreed to do this at her INCONVENIENCE and on very short notice with little forewarning which has allowed our deal to progress with no delay. And all this at no charge for which I am very grateful.
    Thanks Ardell
    Martin ”

    You are very welcome, Martin. Next time I think you will need to pay me a 6% commission, because apparently what I do day in and day out for 16 years is perfectly legal, until I do it for free 🙂

    If this is what this Country wants to be about…don’t do anyone a favor, I think that is really, really, REALLY sad.

  16. Russ,

    Clearly I am not the only agent in the Country who writes up contracts, and reviews them, with both buyers and sellers every day for many, many years, without an attorney involved.

    That doesn’t make me a lawyer. It makes me a real estate agent.

    When the seller wants to keep their dining room chandelier…I am perfectly capable of writing that on a Form 34 blank addendum.

    Lawyers drafted the existing forms, and they have no protections for buyers from interest rates increasing. It is the only State I have worked in that does not have an interest rate cap in the Financing Addendum. Without that protection, a buyer who planned to have conventional standard financing, can be forced into exotic financing, or lose their earnest money.

    If lawyers really want to be more active in the real estate arena, I suggest you complain about the buyer protections missing in the standard NWMLS agreement, and stop picking on lil ol me. If you put as much passion into protecting the buyers of Washington as you do in worrying about agents not needing you, we would have contracts that offer adequate protections for homebuyers.

    Russ P.S. I’ve written 1,000 or so posts since I started blogging in various places. You found one you don’t like…oh well. I have never yet had a buyer client lose their Earnest Money. I think I’m batting 1,000 there.

    Sorry I missed most of this…had a very busy day. My sincere apologies to Tim. I’m sure he had his popcorn out 🙂

  17. I’m sorry I missed the debate — down with the flu last week. One wrap-up comment: The attorney plan offered by Microsoft pays very, very poorly. I signed up, realized what they paid, and dropped out. Attorneys who remain on the panel are licensed attorneys, I’m sure, but they also offer their services for a very low rate, and we all know the old adage: “You get what you pay for.”

  18. Pingback: Where’s the line between “agent” and “lawyer”? | Rain City Guide | A Seattle Real Estate Blog...

  19. Slightly of subject, but I would love this forums feedback. I am a corporate attorney, I draft/review/negotiate huge money contracts everyday including the commercial real estate matters that I feel are simple enough for me to handle. I have a great track record and my company is very happy with my skills. Due to my propensity to travel I have never bothered to lay anchor and buy a personal home, preferring non-committal rentals. My best friend/CPA is very disgruntled by my lack of equity building skills on my personal portfolio are zero while I encourage my employers to do the exact opposite. The truth is that my initial discussions with real estate agents never go well, so out of lawyer paranoia I shun the entire process, not much better when buying a car. I believe my problem is that I have yet to to meet a real estate agent who can tell me something I don’t already know. Typically before I call the agent I have already done my due diligence on the particular home I want to see. I have researched title, liens, comped the area and know exactly what I am willing to spend, and have no desire to see what they think I might like, I know what I like. When it comes time to write a contract, I would prefer to review and/or write myself as this is my forte’, also when dealing with banks I am happy to do that myself, as I talk to those types everyday and know the crap they pull, I have financing and don’t want to switch brokers my guy is my guy and he knows that I know he can’t pull no shit and doesn’t even try, we have worked professionally together, nonetheless I will still try to get other lenders to beat him and he knows it. With all this said basically the only reason I call a real estate agent is because I want him or her to open the door to my prospective property so my Contractor and I can have a look. Paying 3 to 6 percent for this is crazy unless someone can point out the value an Agent would bestow on me. Apparently the listing agents where I live will not give lock box numbers to anyone but real estate agents. I am at the point where I am just going to get a real estate license, I checked my state statutes/laws/regs and rules and apparently to get a license I have to take a test which looks easy enough, the down side to this is my state requires that I do quite a bit of Cont. Ed to maintain a Real estate license, which with coupled with my CLE’s seems a daunting task. I know the law does not require a buyer to higher an Agent, but how else do you get to see the houses? As you can not ask the seller directly, because he is represented by and agent? I am not in anyway minimizing the value of a Real Estate Agent for majority of people, frankly they work very hard. I also do contend that I am in anyway better than Agents generally speaking, I just haven’t been fortunate to find one, that gets me. I am not opposed to paying a commission, but please tell me what value this adds for me personally outside of them getting the lock box code? I could have missed something.

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