Flipper/Rehabber · Chicago, IL · Member since 2016 · 123 posts · 38 votes
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?
Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
9y
@Chris K. Thanks for the input. I'm learning the closing process is 100% different in PA than IL. Here in PA buyers hire and pay for title, and attorneys are rarely involved at all. In IL, attorneys represent both sides, and its the seller who needs the title insurance.
Are there any listing agents, or sellers in IL that are familiar with the closing process? Please connect. I'd love to learn how it works out there since its so different from my market. Thanks.
How much do you pay a lawyer on the buy side of a transaction?
Also, do experienced flippers still use a lawyer for each transaction? Is it more or less to represent on an off-market acquisition?
What we pay depends on the size of the transaction. In Illinois for single to small families, we pay between $500 & $750 for a simple transaction, whether listed or off-market. If there's anything unusual about the transaction that may require some creativity we'll pay a little more. For larger commercial transactions our costs are much more.
Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
9y
I'm a picky client and need a lot of attention. I have a 300/hr lawyer in retainer with a 5k deposit. But when I call, he needs to pickup the phone or return my call in 2 hours. Picky client pays.
I'm a picky client and need a lot of attention. I have a 300/hr lawyer in retainer with a 5k deposit. But when I call, he needs to pickup the phone or return my call in 2 hours. Picky client pays.
Have you worked with your lawyer a lot? I'm up north in the bay area and in need of a lawyer to review some documents.
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
9y
On commercial deals in the millions to tens of millions costs can be 10,000 to over 50,000 I have seen before. It depends on billable hours in relation to navigating complex problems to closing dealing with title, environmental issues etc.
There are things a capital mortgage broker can do for diligence review for the loan and also the commercial real estate broker helps with checklist due diligence items. Any kind of legal issue the attorney has to handle.
Rates per hour depend on the experience of the attorney. I have seen on the higher end 350 to 400 per hour. Less experienced attorneys at 200 to 250. There are of course lower and higher priced attorney than that. I stay away from litigation attorneys doing transactional work as they can't usually get out of (court mode) and over blow every little minutia into something bigger than it has to be.
Seasoned transactional attorneys know the goal is to get to closing but also protect their clients.
In a lawyer firm the main attorney might be 300 to 400 an hour, junior attorney they give some items to handle 200 to 250, paralegal 100 to 150.
The good attorneys are fair with fees and understand repeat business and recommendations will get them much further than overcharging clients and getting a bad rep in the community.
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
9y
Other than a lawsuit the one time I took a partner (never again) I bet I have less than $10k in total attorney fees after $50m in transactions.
People over use attorneys IMO. and over complicate things in general.
The only time I ever really use my attorney is when some knucklehead sends a slip and fall letter or if the city is being uppity.
To answer your question: $250/hr
Attorney · NJ · Member since 2016 · 1k+ posts · 794 votes
9y
Wow @Cody L. you must be talking about residential then, because closing a commercial property without a lawyer is just not smart at all, especially a larger scale one. In all of the hundreds of millions of dollars of loans and purchases and sales, I have ONCE seen someone choose not to use an attorney. Literally...once.
Anywhere in the NY Metro area, you are looking at, for residential $900-2000 depending on the complexity of the transaction (short sale or REO are a little more expensive, some attorneys charge travel fees if the closing office is far away, etc.) For commercial, hourlies run from probably $75-110 for paralegals, and attorneys from $225-700 an hr depending on their level of experience and length of time with the firm, and how big the firm is. My firm caps out at $500 or just under, but the bigger Manhattan firms, especially, you'll see a much higher hourly rate.
As a very general guideline, most of my commercial refinances run from $6,500-12,000, a little more if its a CMBS or some other variable that makes it more time consuming or requires additional expertise, or if it's a shotgun closing because the client didn't realize a loan matured in 10 days (it happens more than you'd think!) then there may be extra 'work around the clock' costs associated with the deal, but generally, that's where we fall.
A purchase or sale without a 1031 and no loan assumption, just a new loan, $15-25,000. More complex commercial transactions can run from $25,000 into the hundred thousand range. Like @Joel Owens said, it depends completely on how much time it takes the lawyer. I also agree that there are ways to minimize legal fees, like having a good commercial broker to review leases to find any slippage, and to make sure NOI reps are accurate, and lease terms are generally standard. Good brokers often help with estoppel and SNDA requests, which backs out a lot of paralegal time, stuff like that. There are also companies that you can hire just for diligence, that's all they do. They'll review your leases and contracts and management agreements, and get you summaries or abstracts on everything. There's a cost associated, of course, but depending on how big of a project we're talking, hiring a due diligence company could save a lot on legal fees.
And frankly, using a good lender is HUGE. Some lenders use crap loan documents that take forever to review and revise, I have bank lawyers that you have to ask the same thing 20 times, charging the client every time. Some won't release their documents in word format, which takes forever for us to handwrite comments, then check their revised version to see if they incorporated all of the comments. It's ridiculous. A broker with the ear of someone at the bank, or if you have a good contact there, that could make a big difference for you.
And last thought...and hopefully this won't offend anyone... the CLIENT is a huge factor. If we ask you for things like corporate documents, or questions about a term sheet, getting us info quickly so we can do our jobs efficiently is key. Every time we have to bug you for the same thing, and every time you call with one question (12 times a day) instead of 1 email (with all 12 questions), the clock is ticking! :)
Wow @Cody L. you must be talking about residential then, because closing a commercial property without a lawyer is just not smart at all, especially a larger scale one. In all of the hundreds of millions of dollars of loans and purchases and sales, I have ONCE seen someone choose not to use an attorney. Literally...once.
Well I guess I'm outside the norm. A claim I've for sure heard before.
I closed on a $2m property yesterday. Closed on a $4m property 2 weeks ago. One was between me and the seller. One was between me and the sellers agent. No attorneys involved. Those are "commercial" (5+ unit) multifmamily.
It could be that I'm too dumb to understand the complexity but to me, it's a pretty simple transaction. It boils down to I'm buying something from someone. I cut them a check, they give me the property, title makes sure the deal is clean and acts as escrow. Easy peasy. Again, to me. But I'm a simple man.
The last time I had an attorney review a lease was when I rented out one of my commercial buildings to a nightclub. It's a $$ NNN lease and the only reason I had him review the lease is the lease was drafted by their attorneys and quite long. Had we used the propagated commercial lease available to me as an agent in Texas, I'd likely have just filled-in-the-blank and rock and rolled with it.
Wow @Cody L. you must be talking about residential then, because closing a commercial property without a lawyer is just not smart at all, especially a larger scale one. In all of the hundreds of millions of dollars of loans and purchases and sales, I have ONCE seen someone choose not to use an attorney. Literally...once.
Oh, and to be fair I should note that on all these deals attorneys are involved, and that cost gets passed to me. The bank has their attorneys draft the loan docs. I pay for that. The title company has legal fees for drafting closing docs. I pay for that. I should have been more specific in that I don't go out of my way to hire (personally) an attorney to help/represent me.
I'm a picky client and need a lot of attention. I have a 300/hr lawyer in retainer with a 5k deposit. But when I call, he needs to pickup the phone or return my call in 2 hours. Picky client pays.
Have you worked with your lawyer a lot? I'm up north in the bay area and in need of a lawyer to review some documents.
He is a construction lawyer. Might not be a good fit.
Attorney · Durham, NC · Member since 2016 · 224 posts · 126 votes
9y
The fees quoted by @Jessica Zolotorofe are similar in my market (Raleigh-Durham, NC) and I agree 100% that a good lender and, more importantly, good lender counsel, have a tremendous impact on how efficiently the transaction progresses and, ultimately, the size of the borrower's final bill.
Real Estate Developer, Investor, and Broker · Raleigh, NC · Member since 2017 · 99 posts · 82 votes
9y
I'm in NC - an attorney must close state. A typical buyer with a loan often pays around $800-$1,100 in attorney fees to close a residential transaction.
I negotiated with my closing attorney and paid $475 for my first 5 purchases with them. Now I pay a little less than that.
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
