How much do you pay a lawyer on the buy side of a transaction? I saw another thread that said they work with lawyers that have $250/hr rates. I've been told $550 and $700 by individual lawyers to close on a property.
Also, do experienced flippers still use a lawyer for each transaction? Is it more or less to represent on an off-market acquisition?
Hi @Francis Rusnak Of course the obvious answer is ,"it varies". I'm currently under contract on a property in NJ and worked with a lawyer that charged per hour at $200/hr and I could choose to use him during the whole process (attorney review, negotiations after inspection, at closing etc.) or a la carte.
On the other hand, my brother worked with a lawyer who had a flat fee between $1500-$2000 for everything during the 30 day close window regardless how many hours he worked.
In the Chicago land area I know of a lawyers who take $500 - $1000 no matter how many hours they work. The rate is low because they are building their name.
$500 plus or minus a few hundred
Always use a lawyer in all RE closings!!
$975 for my guy on mostly commercial deals (6+ units)
Its less for SFH and OO's...about $600 I think.
I was quoted $650 for basic buy side representation but ended up paying $750. Additional $100 was for 'existent tenant's lease transfer.' There was additional 20-30 minutes of work and with attorney's $300+ per hour rate, I have no complains. This is for Chicago.
Just to clarify as every state is different in the way closings are handled. Exactly what are y'all using your attorney for in regards to the closing? Do they perform the closing or just review documents?
In Texas we use title companies primarily. Fee attorneys can do closings as well. Typically, the title company does the title work, clears up any title issues and issues title insurance. Additionally, they close the transaction and charge both parties an escrow fee to do so
I started with a lawyer that's about $500 an hour. After a while, I start to know what they are looking for, then I gradually moved to a lawyer that's about $200 an hour. At this stage, I am very well versed, so I can start either getting an even cheaper, jr. lawyer or do some myself.
The key is to have that $500 lawyer in the good books so you can call upon him when you have litigation, which I find the jr. lawyers aren't good at.
I can recommend my attorney to you. He is excellent, very knowledgeable, has helped me through some very complex real estate transactions, easy to contact and only charges me $500 flat. PM if you would like his contact info
I agree with @Greg H. In Texas, most deals don't need an attorney as the title company handles the paperwork, insurance policies, and closing. I am usually only engaged on the one-off deals that fall outside the normal closing.
Another vote for the "about $500 flat rate" club in Chicago...
A note about the $500 per close - I've been using the same attorney for all my transactions in Chicago since 2012 (over 20 transactions so far - all SFH, 2-flats or 3-flats) so I suspect there's some preference there. I'm always happy to refer people to him as well, which reinforces the relationship and perhaps gives slightly preferential rates. A good attorney can be a huge help in connecting with others as well - it's definitely worth building that relationship!
Thank you for the answer as it is hard to differentiate whether people are using attorneys to handle the closing or just to review documents. Like I said, in Texas both can handle closings but a title company has to have an attorney and an attorney has to be affiliated with a title company in order to issue title insurance
@Francis Rusnak , I agree, always retain an attorney for a closing in Illinois. I'm not just saying that because I'm an attorney, but in many instances, the value an attorney will bring to the table will pay dividends. Furthermore, since Illinois is an attorney state, your broker, if you have one, is not necessarily training in dealing with many of the issues that come up routinely in a closing, as a broker in for instance, Florida may be. Therefore, you would need someone on your side who knows how to review title, closing documents, etc.
Finally, in response to the rates, generally, on residential deals, I would say $500 per transaction is fair. On a commercial contract, you can find a good attorney for $250/hr and perhaps even on a flat rate fee. For instance, on hotel closings, many attorneys in my field now offer a flat rate of $3,500 - $5,000 per transaction. Of course, this varies from attorney to attorney.
PM me if you have any questions.
TOO DAMN MUCH!
Would always use an attorney in IL for all transactions. Typically for not commercial units it is a flat fee at closing in my experience
I was shocked at what some people pay for an attorney. I do business in Illinois and Indiana. Believe it or not, almost no one uses an attorney when we close in Indiana. On the other side of the coin, almost everyone uses one in Illinois. What a difference! I think it all depends on your comfort level and level of expertise and experience. My attorney works for the title company we usually close with, so she looks over the documents for me. I just trust her to do her job. Sometimes she'll email me and tell me she's charging me $250 or so, because she had some "extra" work to do. So I think it depends on what I mentioned. However, since I'm not typically "buying" and just wholesaling, I don't always need one. If I get a contract that I'm not familiar with, I retain my attorney. But I pay $400 for a full blown "job" by my attorney for sfr's and small multi units. I hope this helps.
@Scott Steffek isn't the difference because the 2 states require a different process for closing? For example Illinois is an attorney state where as Indiana is not. PA happens to not be an attorney state, we have title companies handle everything. Maybe an attorney can chime in and help clarify what the difference is between and attorney state and non? Why would one state require it, and the other not?
Rarely do people use attorneys in Indiana. However, I have investors who have closed in Illinois and not used an attorney as well. It's rare, because the title companies don't like it. I always recommend to my investors that they use an attorney, but in the end, it's their choice. If they don't use one in Illinois and there's a problem with the paperwork, it can create unwanted issues. I can close a deal in Indiana for less than $1000. In Illinois, it costs anywhere between $2500 and $3200. Pretty big difference for basically the same services!
I have seen quotes of nearly $3,000 for a commercial deal I recently did (9 units) in the Chicago burbs. We ended up paying a little under $700 for that deal. Most small multi or sfr deals in Illinois shouldn't be more than $500 or $600 in my opinion.
300 dollars an hour is what mine charges. He offers to charge a flat fee but that's typically higher. It's expensive but already he's provided advice that I wouldn't have come up with on my own.
If you're spending 10s of thousands on RE don't skimp in other areas
My attorney in Central NJ charges 1k. I am not the most complicated client, though; most of our communication is via email, and I've been with him for 2 closings, each was spent in his office for max 10 minutes each time.
As a lawyer and as an investor that hires other lawyers to do work for me, I’ve been on both sides. In PA, I would say anywhere between $500 and $750 is a reasonable price for most standard residential properties. This assumes that there are no major title issues and the market hourly rate is around $200 to $300 an hour.
Interestingly enough, I've seen unexpectedly low fees in large metropolitan areas. My theory is that there is so much competition there that lawyers are trying to undercut each other's fees. That could be both good (e.g. cheaper costs for investors) and bad (e.g. lawyers paying less attention to you since they make money by doing volume work).
If you do repeat business with your lawyer, you many find that your fees will drop since both sides are familiar with each other. For example, I can tell you that I always end up spending a lot more time with a first-time client. This is because I don't really know how much this person knows about real estate. Beyond doing competent legal work, I genuinely do want to see them succeed as investors. To do so, I need to have a general understanding of what this new client knows or doesn't know about investing. The more experienced the client is, the less I have to worry about holding their hands step-by-step.
@William C. --- one cynical view is that some states have lawyers with a better lobby group.
Hey @Francis Rusnak my lawyer charges 450 per transaction (not hourly). He's great! PM me for his info!
PA doesn't require attorneys so it's a little different here. We pay title companies to handle Closings. A buddy of mine purchased a condo in Chicago over a year ago and felt he was being ripped off by the attorney charging $500/hr. He went out and got a license to open a title company. Is there an opportunity to offer reasonable rates? It looks like some are paying $450/hr, and some $450 a transaction.
Being from PA I'm not exactly sure how the process differs but I do know the similarities. Having to pay title insurance when you buy a home, and then 6 months later after we flip it always seemed so ridiculous to me.
Is there a market for my buddy to charge reasonable rates in Cook County?