Lawyers should know limits of expertise
I have often said that real estate agents should not give legal advice. In the past year or so, I have seen more and more instances where the opposite has arisen that is, lawyers acting as real estate agents.
Some attorneys, well meaning as they may be, have advised clients that they, as lawyers, can do the paperwork for the real estate transaction and the client can avoid using a real estate agent.
Most real estate attorneys will agree that there are two separate areas of expertise: law and real estate agency and sales.
Real estate attorneys, no matter how knowledgeable they are, often do not know a lot of key information relative to selling and marketing real property.
They have not had the opportunity to:
- View all the properties in the area;
- Become familiar with sales data for the area as to what comparable properties have sold for and the length of time properties had been on the market;
- Ascertain what actions are necessary to market the property properly, such as putting the property on the Multiple Listing Service;
- Know the value of the property in the area.
Many times, the circumstances of an attorney acting as a real estate agent arises in estate sales where the seller desires to sell the property he or she has inherited through the probate court and the attorney knows the potential buyer.
The attorneys think they know fair market value and can sell the property so the seller can “save the commission.”
However, most attorneys are not familiar with market conditions and what the market will really bring if the property is properly exposed to the market, put on the Multiple Listing Service and marketed aggressively.
Often these attorneys wind up costing their clients money because they could have received more and had the property been actively marketed, usually much more than the real estate commission “saved.”
Frequently, the seller or relatives of the seller know a prospective buyer and are trying to save the commission themselves, and the attorney merely goes along with it. Whatever the scenario, who is really saving money? It’s an interesting question.
In my opinion, an attorney should not be advising buyers or sellers on value of real property in residential transactions. A knowledgeable real estate agent who knows the area and is aware of trends should be consulted on valuations.
Qualified attorneys can complete the contractual and other legal documents, but as for selling the property, it does take active marketing, listing the property on the multiple listing service and using other marketing tools to get the best possible price for the seller or the lowest possible price for the buyer.