Last week I wrote an article in which I broke down 15 different aspects of the HUD 1 Settlement Statement that I thought were the most important to double-check for accuracy. I believe it’s of utmost importance for investors to know and understand the components and costs of a real estate closing. There are so many opportunities to lose money if you’re not paying attention.
Just this week I was in the process of buying a distressed property. The seller was opposed to using my attorney and stipulated that we use his attorney instead. Of course, as soon as I received a first draft of the Settlement Statement, I saw that this attorney was much more expensive than what I was used to.
What? You mean attorney’s fees can differ that much from one attorney to the next? Absolutely. I remember when I first got started in real estate …. I simply wasn’t paying close enough attention to who I was closing with or what I was being charged. And truthfully, even when I did recognize the fact that one attorney was more expensive than another, I didn’t speak up.
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Don’t Be Afraid to Say Something
So what did I do this week with the closing at a different law office? – I spoke up! I told the seller (who had insisted on using this attorney) and the attorney that their fees were too high. It’s simply not right that a seller dictates who you are going to close with when their selection could end up costing you as the buyer an additional $200-$400 dollars. In this particular case, the seller ended up covering $250 dollars towards the attorney’s fees so as not to lose the deal or end up moving it to a different attorney.
That said, I can tell you that I’ve brought this up to other attorneys in the past and have had them reduce their fees for us. It may not seem like a big deal, but if you are overspending by $250 on 20 deals over the course of a year, it begins to add up. I’d much rather move closings to different attorneys and ask for discounts than lose $5,000 bucks!
For new investors, it’s imperative that you feel empowered to speak up when the costs of a closing don’t look right. It’s not a bad idea to ask around and find out what kind of competitive pricing other attorneys (or escrow companies) are charging in your area. Most closing attorneys want your business bad enough that they are willing to get their prices fairly close to a more competitive attorney … but I can promise you they won’t drop their price unless you ask!