Thursday, July 23, 2009

The Real Estate Deal - Lawyers - whose side are they on anyway?

I find myself in the situation of really wanting to rant but I will try and make this educational instead...

We all know that the Real Estate transaction or "deal" is a process that involves a lot of characters - as in any aspect of life, you have the good, the bad and the ugly.

There are many things that can make a deal go sour. Maybe the buyer changes their mind...(hey no crime there, it IS a big investment not just a pair of shoes!)

But what I want to talk about are the reasons behind that phenomena.

There are valid concerns like, "hey I didn't think this through and I really don't want to be an owner, not yet" or "hey I might be losing my job in the next few months not a good time to get into this kind of thing" or "you know what I love that house but I loved the one we saw before it even more". These are good and perfect reasons to back out.

One reason a deal can fall through that has nothing to do with the buyer's frame of mind is the many I have seen cry in the last stages of the process just before closing where it turns out that preapproval letter was really JUST a piece of paper and not worth more than what it was written on! The underwriters at the last stage decide to simply deny the mortgage approval due to this, that or the other. For that I recommend to everyone don't just go to ANY lender! Trust your Realtor as they KNOW what they are talking about when they tell you go with so and so...and more importantly, when in doubt, go to a DIRECT LENDER!

Another thing that has been a big pain in the rear for everyone has been this totally inane and nonsensical and...(ok ok I know you get the point) fact that banks are using appraisers based on a roll call method, is the best way I can explain it.

Hey I understand appraisers need to work and it's not fair for some that don't have enough work and others have more...but just call in an appraiser from the outskirts of LI to appraise a house in the BRONX when they have no clue as to the market is downright ridiculous! They have been known to come out with numbers that are way above or below even in the 100's of thousands, market value for the given area! Needless to say that creates a real issue as it messes up the mortgage approval the latter stages when the hopeful buyer is already thinking he has it all planned out...where the bed will go..where the TV will have center stage etc!

The FINAL and most deadly thing in my book is the real estate lawyer. Before I go on I want to offer my SINCERE apologies to the absolutely awesome ones out there and believe me if I do this it's because I would love nothing more than to start a movement that will slowly weed out the ones that give them a bad name!

Why would I make such a preposterous claim? Deadly? YES! Deadly to a deal...

Aren't lawyers supposed to be working for their client?
Maybe if they kill the deal it's BETTER for the client, after all the real estate people are vultures that try and sell people whatever they can just to make a buck right?

If it were not for the "advocate" that works on behalf of the buyer they would be in over their head! Sound familiar? an ideal world the lawyer is truly the "advocate" of their client and is there to protect their interests. By the way, a buyer's agent on the realtor side has that exact same fiduciary responsibility and owes that same alliegence to their buyer to work in THEIR best interest. But I digress...

When that trust is broken and the client is not even aware of it, boy that gets my goat to no end!

These are some examples JUST in my last few deals...we're not talking mass studies here...but I'll bet many agents can come on here and add their experiences into the mix and this could turn out to be ONE loooong blog!

I am on the selling side and buyer came to me direct, so no agent on their side. That means I am the only go-between in this transaction.
~ Buyer calls me up constantly that seller is not fast enough and getting back to their lawyer with info...meanwhile buyer's lawyer has not contacted seller's lawyer even ONCE. Rather the seller's lawyer has left 3 messages when I was in THEIR office so I saw it with my own eyes and emailed them but never heard back from them. The buyer's lawyer has the audacity to claim that he has tried to call the seller's lawyer and is not hearing back! Needless to say...this buyer adored the house! But after 2-3 weeks of this back and forth their new baby comes into the world and now mother and father really does not feel able to go through the whole buying a house process especially with constant complications because they believe their own laywer and in the end are now still paying rent and waiting till the baby is at least sleeping nights before they start the process. In the meantime that house is now under contract to someone else.

I am on the buyer's side in this one.
~ Buyer is extremely savvy, matter of fact has done SO much homework and is SO in the know about the market that I am convincing her to get her license so that I can add her to my team! She has decided on a gorgeous 2 bedroom condo that is actually a great deal and she knows it. She decides to go with a lawyer referred by a family member. So far so good right? Here it gets really good! Instead of giving her advice on the terms of the contract (which we don't even have yet) and helping her make sure that all the terms are in her favor...he starts a really off tangent conversation about how this place is NOT for her. That its above market value for the area (but he does not prove he has any knowledge of the area nor does he have any comps to prove his point, better yet does not even KNOW what place she is buying just a general idea ). That she should wait even another year to find a place (never mind that she will miss out on the 8k the govt is offering her if she buys this year) and that she is better off just renting the rest of the year (say WHAT?) and here's where it gets REALLY good...casually..."You know...I have a really good agent and he has a condo up in another area of the Bronx that is a way better deal!" here is the crux of the matter then...was all of that just to steer her in the direction of the other agent? of many feel that Mr.Esquire etc has shown a wonderful set of ethics and is really trustworthy...that he is really going to work in the best interest of the client that will after all be paying his bill? superstar client is a smart cookie and KNOWS this fella is not working with a full deck or at least not showing half of it.

Do you know how many more I can add to this? I can...but I won't...why?...because it will start to get redundant.

I will close with this...buyers PLEASE for the love of money...and house and everything in between...make SURE you use a lawyer that has references galore! Ask your lawyer for a few references too...real clients that have bought real houses...and FINALLY...make sure it is a lawyer that does at least 90% REAL ESTATE! Most of the time people don't realize their laywer probably does one or 10 deals a year and the rest of their work practice involves other forms of law. This is why you don't hear back from your lawyer in days and why they cover their tracks with itsy bitsy lies like blaming the other side for not being on the ball...

Bottom line is...with any kind of transaction in real your homework! Choose your professionals because it will mean the world to you in the purchase of your new home!
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