Posted: under Buyers, Lawyer selection, Sellers.
Tags: Client counseling
Here are 5 steps I’m taking with every single real estate contract that comes into our Firm…
1. Initial contract and inspection review. I view this stage in my representation of people buying property as the most important stage in the process both legally and as a business/marketing matter. Because this is first impression time, when that contract comes in from that real estate agent referral source, that’s a potential new client sitting in your inbox. And, in my expereince many clients think that you’re just sort of “there for the closing.” I think the way to handle a new contract is to contact your potential new client within a day or so of getting that contract and ask if she’s having a home inspection done and assuming she is (assuming this is a purchase), set a time a day or two after the inspection is done to review both the contract and the inspection fully with the new client. Then REALLY review the contract and to a lesser extent the inspection report (I rely a bit more on the inspector and client regarding inspection issues). That 10-11 page contract that some real estate hurridly filled-out sitting in her car IS THE TRANSACTION…so it better be right, it better be consistent with the terms your clients are expecting or changed to meet your clients expectations if there are errors. Some low hanging fruit to always remember: make sure the personal property provisions are handled properly (the check marks are correct), pull the property’s tax bill to be sure any tax credits are adequate, get some $$ from that inspection report, and talk through closing logistics and convenience matters. Get a client’s lender contact and talk loosely about loan terms and the mortgage contingency. I like to get a copy of the Good Faith Estimate provided to borrowers by lenders.
2. Attorney Review and Inspection letters. This flows right from #1. If you’re thorough in reviewing the contract and inspection report you’re almost always going to find an error and want to verify something that’s confusing or often actually make substantive modification and/or repair requests. If you find yourself saying too many times to a new real estate client, “the contract looks fine” you might want to ask yourself if you’re providing the best and most thorough representation that you can.
3. 1-10 days prior to closing counseling…be fastidious and manage client emotions. Once #1 & #2 above have been handled there’s a lull in the action as the buyer’s lender somewhat dictates the speed at which the transaction proceeds. Check-in with a lender every 3-5 days as you get near a closing and make clear to your client that lender delays always happen and to expect them and not to get too worked up if your closing is delayed a few days. Once a buyer’s lender gives the ‘clear to close’ schedule a closing that’s convenient for your client, remind her what she must bring to the closing, and remind her to do a property walk-thru a day or so prior to closing. 12-24 hours pre-closing give your client a bottomline $$ figure (official funds please) to bring to closing so she’s not rushing around the morning of closing.
4. The closing. The key here is managing client expectations because the closing is pretty simple and the culmination of earlier good work on the lawyer front. I know that, but surely the client will remember the dreaded 8 hour closing. Client must know that closings are filled with “fluff” delays that aren’t a big deal if you’re prepared for them, but they can be devastating if client thinks she’s moving in in 2 hours and she’s paying for all her life’s belongings to sit on a moving truck. As for legal work, be sure the HUD matches what was agreed to in the contract, the deed’s legal description matches the title commitment, and put on a happy face and bring some small talk to the table.
5. Post-closing counseling. Frankly, this is a great marketing opportunity because “the stress of the process” is over for your clients and they’re likely happy homeowners now. And you need to provide them with both the title insurance policy and a recorded copy of their deed anyways. We include a letter touching on things like property tax exemptions, tax matters related to the transaction, title insurance, and suggest that client open a HELOC if possible. But we also use this as that last marketing shot too…putting everything in a personalized folder, including a few give-away things with our information attached, and explainging the full scope of our Firm’s practice.
Tweet This Post
Aug 07 2009
Posted: under Buyers, Lawyer selection.
Tags: Closings
Or if I’m being optimistic lets call it a FUTURE CLOSING…I hope!
So here’s how things went down…
4/30/09 – Closing scheduled directly with Seller’s attorney’s office (I have the Buyer) with carbon copy (acknowledged) by lender setting closing for today, 5/6/09 @ 11am. It feels like a ho-hum transaction with client having no difficulty with lender issues and really only concern being Seller vacating property by closing…elderly, non-English speaking Seller.
5/4/09 -Primary client contact with CitiMortgage says client/Buyer is ‘clear to close’ and 5/6 closing date seems solid.
5/5/09 – Strangely my office gets an e-mail correspondence from Citi’s loan processor midday asking whether or not the closing has been scheduled (don’t these guys communicate with one another?? See 4/30). Nonetheless once she’s set straight she claims we’re still fine to close 5/6 @ 11 a.m. Yet, as of close of business title company has no lenders figures nor a lender’s mortgage package. So I’m getting concerned.
5/6/09 -
9am – Still no lender figures/package at title company and calls to lender go unanswered…I’m thinking we’re not closing at 11am.
10am – Client calls to say walk-thru went well…sort of suprising and the only good news for today. I’m on hold not wanting to head out to Seller’s attorney office since I know nothing will happen without lenders stuff. So I work the phones and continue to hear nothing from Citi’s loan processor.
11am – Finally hear from loan processor who says the closing is canceled because of a problem with the title company’s closing protection letter. The problem? I kid you not, the title company’s logo hadn’t come though on the letter and this had Citi canceling the closing like that.
1130am – We go over loan processors head and issue is resolved and closing’s back on set for 2pm.
**Good news, but a bit of communication upfront sure would have avoided unnecessary frustration.
2pm – We show-up at Seller’s attorney for closing. Seller has pre-signed and attorney isn’t around. Seller’s figures are wrong and attorney can’t be reached via telephone. I make necessary HUD corrections and we proceed to sign Buyer’s mortgage package. Slight delays on Buyer’s two wires hitting but within the realm of normalcy.
330pm – Couple major problems…corrected HUD now shows Seller owing some $500. No big deal, unless your attorney had suggested to you several hours before that you’d be receiving proceeds of $10,000! Yikes and Seller doesn’t just rush in with the $450…she’s pissed. Meanwhile, listing real estate agent doesn’t appear at closing and no one knows where the property’s keys are.
415pm – Seller can’t be tracked down and Seller’s attorney still nowhere to be found. We dry close with Seller’s attorney to meet with client first thing tomorrow morning to explain how +$10,000 became -$450. And there’s nothing unethical going on with attorney just overlooked some Seller costs and unfortunately has created unrealistic expectations with Seller.
Ugh!! A consistent lender problem: bad communication. On the attorney side, it ain’t rocket science, but thoroughness and an attention to detail are critical.
Tomorrow: The Conclusion…I think.
Tweet This Post
May 06 2009
Posted: under Lawyer selection.
Take a read here about a hearing from the Attorneys Registration and Disciplinary Commission regarding an Illinois real estate attorney who provided transaction legal representation, acted as a title agent, and also had an interest in a land surveying company that provided land surveys often required during the sale of real estate. The hearing transcript includes a useful discussion of the pitfalls that real estate attorneys face in acting as title agents but even more than that in this guy’s case. Also, some issues are raised regarding attorney advertising too.
Standing on my little blog/soapbox for a second, what bothers me the most about these scenarios is that the lawyer MUST be the objective voice in a real estate transaction. In my view that’s priority #1 in residential real estate. Fight the momentum that lenders and agents want to create and help open your client’s eyes to his best interests. If you’re going to NOT be objective why not just be a broker or something…your commission is likely going to be larger than typical attorney fees on a transaction.
Tweet This Post
Mar 13 2009
Posted: under Lawyer selection.
Let me help ya with this one because I experienced this first hand again this week…
Don’t use the lawyer/firm that does too high a volume of transactions.
Because you don’t get the lawyer attention that you should and the lawyers in these circsumtances get sloppy. And likely most of these lawyers are good lawyers it’s just if you’re juggling 30 files at once and you have those Fridays with 5 closings you have to be pretty quick with things and things get missed.
My view is the ideal lawyer for your residential real estate transaction is the lawyer/firm that’s involved in some 30 to 60 transactions a year (and I’ll admit it, I’ve been in the high volume firms myself) and maybe ya pay a touch more. But then you’re getting someone who has the experience but also has the time and thought to give to your individual transaction.
Tweet This Post
Mar 07 2009
