Tag Archives: risk

Should you hire a lawyer when buying or selling a home? Depends – do you want to reduce your risk?

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[Updated 3/2016]

Buying or selling a home is a legal transaction. Real estate brokers are able to engage in the limited practice of law needed to put together contracts for real property. But brokers certainly aren’t lawyers. And buying or selling a house is usually one of the biggest financial transactions in someone’s life.

So “forward thinking” consumers – both buyers and sellers – might consider using a lawyer instead of a broker. This allows them to save money while getting superior legal services. Other consumers will go the traditional route, but end up wondering whether they should also hire a lawyer to assist them in the transaction. If that describes you…

You should hire a lawyer in a real estate transaction when the legal risk outweighs the cost of a lawyer.

What is “legal risk”? For a seller, it means possible liability for someone else’s financial losses. So there are two parts to “legal risk.” First, what is the possibility of being held liable? And second, what is the probable amount of that liability? A 98% chance of owing $100 is a very different legal risk than a 2% chance of facing a cool $1m liability.

What sorts of issues might create liability? On the seller side, there are two general obligations: disclosure obligations, and title obligations. An attorney will help you to understand these obligations, what you need to do to comply with them, and the possible amount of liability if you fail to do so and are held accountable. In other words, by hiring a lawyer, you’ll be able to identify – and then reduce – legal risks.

On the buyer side, “legal risk” means the possible hassle and costs associated with some condition of the property. In other words, a buyer engages in due diligence specifically to identify the legal risk of completing the purchase and owing the house, usually under the title contingency and the inspection contingency. If there are land use concerns or landlord/tenant issues, an attorney will really help. And regarding title, only an attorney is qualified to analyze a title report. For example, if a neighbor has a driveway easement across the property, you’ll want to know that. Based on what you find, you might have the ability to renegotiate the contract to account for the defect. An attorney can help there too.

And of course you need to know the cost of an attorney. As a general rule, expect to spend $1-2k on an attorney if you need to rope one in for some legal analysis and counsel.

At the end of the day, it simply makes sense to hire both a lawyer and a broker if you are a prudent consumer. Why? Because…

Every transaction has risk. A lawyer reduces it.

Those two statements are simply not debatable.  And as a long-time practicing attorney, I have lots of examples of the risks associated with buying or selling a home, and how a lawyer will reduce those risks. Here is one such example.

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Safety can't be stressed enough for agents and sellers of property….

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Safety is always a concern of mine for both me, my team, and my clients. Oddly enough, agents work in a profession where we and our clients are frequently targeted for a variety of opportunistic crimes such as burglary, assault, rape, and murder. Recently, notices went out from our local MLS letting agents know that a strange man was attempting to lure female agents to vacant properties. I’m pasting in the full content of that original notice. There has been an update on the MLS site since then that actually has a photo available of this potentially dangerous person.

“February 6, 2008. NWMLS has recently received reports of potential dangerous situations regarding a man attempting to lure women agents to homes.

A man named Christopher Heath (from Vermont) is trying to get female agents out to vacant properties. Most of the properties he is interested in are vacant and secluded. He has been arranging to meet with several agents in the area (Duvall, Monroe, Kent).

Heath claims to be relocating here to work at the Fire Academy in North Bend. He claims to be a widower, retired firefighter, cash buyer searching for rural setting with room and privacy for the 2 search-and-rescue dogs he has for his job here with the Seattle Fire Department.

He originally was looking for a house priced between $400,000 and $600,000. He later changed the price to a million, saying it was going to be a cash deal and that the money would be wired from Merrill Lynch.

One agent was feeling uncomfortable with the situation and began a background check. The Fire Academy has never heard of him. He had called from a New York phone number so she did a reverse search — it was a doctor’s cell phone # — when she called the number the next day it had been cancelled.

A 2nd agent called the number she had been given in Vermont and spoke to his wife (he claimed to be a widower). She said there are about 10 different female real estate agents leaving him messages and she found many Seattle area agents on his home computer. According to his wife, he was in the middle of taking out a home equity loan on his wife’s (of 4 months) home. His wife just happened to be home and saw the appraiser measuring her home – a 30-acre horse ranch in Vermont.

Another agent arranged to meet with him today (February 6). She told him by voice mail and email that they would be meeting at her office to introduce themselves in person and to go over their tour and initial real estate paper work. She told him it was their company policy to meet new clients at their office, introduce them to their office manager and to make a copy of their driver’s license. She has not heard from him since.

His wife believes he is now in New York heading to Washington.

The situation has been reported to the police.

Please be careful! If this man contacts you, contact your local authority.”

Making this seem even more important to bring to public attention was news that RE/MAX agents received yesterday of a murdered colleague in Canada. The same type of tactic used by this guy noted above was used to lure a 24-year old agent to a vacant home where she was then stabbed to death. Purportedly, she had expressed concerns about going out to this viewing for a variety of reasons based on the calls she received asking for the showing. I wish she’d listened to her gut and not gone but we can’t change what happened now, but I can certainly put out a warning to others in hopes that they’ll escape a similar fate in the future.

When it comes to sellers, I also speak strongly about safety measures. Just because a sign is in your front yard doesn’t mean you need to open the door to just anyone because they ask. Follow all the same security procedures you would if the house wasn’t on the market. If someone comes to the door, ask them to set up an appointment with their agent, or your own agent so that there is a layer of qualifying put in place. If you happen to be home and an agent comes to your door, to make sure they really are an agent make sure they first check in with the keybox. Only agents have the products available to them to open these boxes. The key boxes are geared specifically to capture electronic data so that the people going in and out of your home can be monitored, plus it allows for follow up and feedback, also necessary for the agent selling your home to do their job most effectively. This came up recently when a client had stayed home with a sick child. A bunch of agents came over and went through the house without logging in to the keybox. I told her that in the future she should have every single agent log in before allowing them into her home.

Having an open house potentially puts your belongings at risk so if you have anything of value – whether it’s monetary or personal in nature – put it away. Medicines in your cabinet? Put them where they can’t be picked up by snooping people or those there to see if they can pick up their “fix”. Sometimes it can seem entirely benign to have an open house but what you’re doing is inviting complete strangers in, who haven’t been qualified by anyone specific much less a lender and/or agent, who will come traipsing through your home. Even if people are asked to sign in they will oftentimes put down false information because they want to remain anonymous. I’m not saying “don’t do it” at all, but rather think about safety measures that can keep you, your family, and your belongings safe throughout the sale.

Let me get this straight, you will pay me if it rains???

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If you live in Seattle you will understand what I am talking about here. We had a client flying in to relocate to Seattle and with the weather we have been having, they have already had to cancel a home buying trip already. So watching the forecast the past week we decided this would be a good weekend to come buy a home in our beautiful city.

They flew in Friday night and we double checked with our local weather hero Walter Kelly (Q13) to make sure it would be ok for Saturday. About noon on Saturday we came to find out the 1000s of web sites out there that were predicting for mostly sunny skies all weekend were WRONG. Not only did we not have mostly sunny skies (like we did on Sunday) we had snow. That combined with the cold snap, our roads were not incredibly safe for driving all over the city. We did make it around and were able to make a joke out of it and were laughing about the fact that the weather ‘pros’ may very well be for pure entertainment. No matter what anyone says, it seems like there is never a 100% guarantee (actually, not even 75%).

Not only was it difficult for us to get around, but some the houses we were showing had tenants who had to leave while we showed. I started to think about my obligation to the client if we would have been snowed in and could not drive around. Of course I could not be held liable for what WE all felt was a good weekend, but you want to keep your customers as happy as you can.

[photopress:weatherbilllogo_sml.jpg,full,alignright]Then came as an answer to any agents prayers (or person with a wedding, outdoor BBQ, garage sale, etc), Weatherbill; a Web 2.0 launched today. They essentially are creating a market for that which cannot be controlled… weather. Their site puts it best and says, “WeatherBill sells Weather Contracts to eligible buyers. Weather Contracts can be used to protect your business from adverse weather conditions, by paying you when those adverse conditions occur.

Cocktail Party Primer

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I’d like to open this thread up to a conversation on the health of the Seattle market…

but there is a catch. I will not allow it to dissolve into a conversation about racism, liberals, RCG, or faith. If you’d like to have a reasonable intellectual conversation, you are more than welcome to participate. If you attack me, RCG, or any contributor, then I’ll happily delete your comment.

By the way, please consider this post the “anti-linkbating” post. Not only will I quickly delete any off topic comments, but more importantly, I will mark those comments as “spam”. That will allow me to ban your email, name, IP, etc. from the site after only a few off-topic comments.

Two days ago, Michael Lindekugel of Team Reba made a very interesting comment. No one ever challenged him on the merits of his argument, so I think it makes an appropriate starting point into a discussion on the health of the Seattle market:

It’s the hot topic at most cocktail parties. Is Seattle going to experience a bubble and burst? The short answer is no…..the long answer follows:

We experienced a busy market with a shortage of supply and increasing demand resulting in four or five offers and short “Days On Market