Looking for some input here. This is my 3rd REO purchase in 7 years. The two prior were my personal residence fixed up, leveraged, rented out got bigger and better.
Each time I would buy one the lawyers would look at these contracts with no financing contingency and no inspection contingency and say I am crazy they would never do a deal like this.
I have to explain to them... I understand the risks then they go ahead with the deal. I can understand the need for one selling for drafting the contract, or if buying a rental that tenant issues... etc
Those are not issues with this deal so what can an attorney do for me? I already got prices from title company. Do they do anything else other than communicate with sellers and order title? Honestly I feel I would better communicate and expedite my transaction handling them myself.
This is a very small purchase 60k. Lender doesn't care if I don't use a lawyer. Every person I talk to tells me I am crazy... maybe I am... but I just don't see the need. Please sell me on the need before I move foward.
Secondly, on the auction site it provides me with the option to use the sellers title company. Is there any down side to this? The company that is underwriting the policy is a 3rd party. People on the internet forums act as if the 3rd party is going to work with the seller and conspire to sell me a property with defective title. I just don't see why it should be paid for 2x.
My earnest deposit is going to be 3k. Hiring an attorney and title co will add 3k to the deal. If my financing doesn't pull through I will lose the 3k (but its so small they would probably find it easier to just give it back then go to court which I have had happen on a deal that I gave up to pursue a better deal).
You may want to repost this with some state-specific thing in the title. That will help get the attention of anyone who has a keyword alert set up for New York. Closing practices vary a lot from state to state. I'm from Colorado where it would be unusual to have a lawyer involved- but we also have state approved contracts, etc so there aren't as many variables.
Jean Bolger, 33 Zen Lane | http://www.solidrealestateadvice.com
Hi Jean, That would have been good. I didn't see an edit button so I will just throw in some key words:
Why should I use an attorney? Putnam County, NEW YORK ( NY )
@Dan Liptak All you need is a title company. They have their own lawyers that do the title searches and will assemble all the necessary documentation to close the sale. I've never used an attorney outside of my title company. I can't imagine any scenario that would require a separate real estate attorney. Title companies will even provide sales contracts with all the correct verbiage.
Using the seller's title company will have no negative effect on you at all. They will almost always throw in free title insurance if you use their title company because they know and trust the company they want to use. Title insurance companies are bound by the same strict laws as any other professional business so the idea that they would conspire to sell you a bad deed is unwarranted. I use them all the time.
My thoughts exactly! Thanks @Michael Woodward
@Dan Liptak I know that New Jersey requires an attorney to be involved in real estate closings so it might be law. If it's not required, you probably don't need one. Where did you get your purchase contract? If it's one that is used around the area then it's probably good. If it's a form from an office supply store or the internet you might want to find a better one.
Over the years, I have purchased quite a few foreclosures. I have always used the seller's attorney, never had one of my own involved. Why have two attorneys involved when one is sufficient. My sate of SC won't record a deed that has not been prepared by an attorney. Even if your state requires settlements to be done by an attorney, the seller's attorney is all that is needed to close the deal.
With REOs I would definitely use a title co and buy title insurance at the least. The type of deed banks and foreclusure's use to transfer title (bargain and sale, quitclaim, etc) are weak and provide no warranties. Good title insurance is extra crucial.
Thanks for the feedback! Glad to be in such good company. I will be moving forward without the attorney. Seller is paying for title insurance and will issue me an owners policy at their expense.
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