As you prepare to buy or sell a residential property, you may wonder about the roles of the various team members involved in the transaction. It’s not uncommon to feel confused about how agents, attorneys and brokers function in the process, so here’s a guide to help clarify the matter.
The real estate agent
When it comes time to buy or sell a home, most people immediately think of contacting a realty company and a real estate agent. An agent can be an invaluable resource for sellers and buyers — particularly those purchasing a home in a different state or country.
Real estate agents are in a sales position, working for commission under the direct supervision of a real estate broker. Agents can help match buyers with a home within their price range and in their favored area.
For sellers, real estate agents can be an integral component to finding the right buyer for a particular property. Sellers’ agents are often in constant communication with buyers’ agents to find the right match.
The real estate broker
Real estate brokers are much like real estate agents, except brokers have pursued additional education and credentials, which allows them to work independently and supervise other agents.
Depending on the locale and business model, the real estate broker may not always work directly with clients. However, commissions are often payable to a brokerage, then distributed to the agent responsible for the sale of the home.
West Chester, PA attorney Robert Carey recommends “find[ing] a real estate attorney who is also an active licensed real estate broker — that way you can have the best of both worlds without running into the additional attorney fees.”
The real estate attorney
A real estate attorney is an important component of the process after the property is under contract between a buyer and seller. When it comes to land sales, many issues can emerge with regard to the title to the property, boundary lines, easements, oil and water rights, agricultural leases, zoning and more.
As explained by Sean Green, a real estate attorney working in Lubbock, TX, a real estate attorney can review your purchase agreement early in the process, helping you determine if “the seller had a contract drafted that gives them all sorts of recourse while limiting yours.”
Your real estate attorney will investigate the property’s ownership background, legal description and survey. They’ll work with the buyers to ensure that, at the time of settlement, a proper title insurance policy is in place, the buyer fully understands the terms of the mortgage and promissory note, and the title to the property is clear of any encumbrances like mortgages, liens and judgments.
If, along the way, the attorney discovers a major issue affecting ownership, they will advise the buyers not to close on the property until the problem is solved.
“In many transactions, the real estate attorney is the only party who is truly unbiased,” says Tampa, FL real estate attorney Andrew Hoek. “A broker only gets paid if the deal closes. An attorney gets paid regardless and can therefore truly represent your best interests.”
Certain circumstances may also call for a residential or commercial real estate purchase in the name of an entity such as a corporation or limited liability company. Houston, TX lawyer Bruce Ward Bain explains that a real estate attorney can not only assist if the transaction goes south, but “can also help you set up the right entity to acquire [your] properties.”
Real estate attorney fees are relatively low compared with potential hazards that can ensue if a property is sold unchecked and unverified. Fraudulent transfers, boundary line disputes and legal claims from adverse possessors are just some of the real estate conundrums facing buyers who chose to forgo the assistance of an experienced real estate lawyer.
In addition, a real estate attorney will protect the buyer from most of the foreseeable risk associated with a real estate purchase, a service which can be truly priceless compared to the costs of defending against later claims.
“It will be an added expense, but in light of the enormity of the transaction, engaging a real estate attorney to review the contract and attend closing on your behalf is worth it,” says Malvern, PA real estate attorney Nellie Shulz.