Selling a home is a major financial event for many people. If you’re like most sellers, you’d like to ensure that you’re getting the most money for your investment and protect yourself from loss. One way some sellers seek to mitigate risk is to hire an experienced real estate attorney to review the sale documents and look for errors and omissions that could potentially affect your sale proceeds. Real estate attorney fees are a small investment to make for a home purchase that could yield hundreds of thousands of dollars at the time of sale.
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According to New York real estate attorney and founder of The Donaldson Law Firm, Stephen Donaldson, “The cost of retaining an attorney compared to the purchase price of an average home is usually nominal, at best.”
“For example, in downstate New York, even when a home is purchased for $350,000, a legal fee of $1,750 represents an additional cost of only 0.5%,” says Donaldson. “The majority of home buyers would not dream of purchasing a home without investing a few hundred dollars in a home inspection to make sure [they know the repair status of a home],” he says. “The same perspective should apply to retaining a real estate attorney to make sure no one attempts to pull the wool over their eyes.”
In this guide, you’ll learn how much real estate attorneys cost, the services they perform, and whether or not you need one.
What do real estate attorneys do?
Real estate attorneys possess the education, expertise, and licensure to prepare, review, negotiate, and dispute important legal documents and issues related to the acquisition or sale of a property. Upon reviewing documentation, an experienced real estate attorney advises parties of matters that might need addressing and amending for the best interest of their client.
Some of the documents attorneys handle include:
- Purchase agreements
- Title reports
- Inspection reports
- Closing and transfer documents
- Mortgage documents
- Property taxes
- Property liens
- Estate planning paperwork
“Sellers rely on real estate attorneys for the same reason airline passengers rely on pilots to get them where they want to go,” says Donaldson. “While the passengers know that they want to get from point A to point B, they lack the training, skills, and experience to fly the plane, communicate with the air control tower, anticipate weather conditions, etc.”
What services are included in real estate attorney fees?
Real estate attorneys provide sellers with a menu of services, depending on their needs and the state where they reside. These may include:
- Drafting and revising contracts
- Placing earnest money deposits into escrow
- Reviewing title reports
- Helping to clear title issues
- Drafting deeds
- Reviewing loan documents
- Drafting and reviewing inspection contingency clauses and appraisal contingencies
- Negotiating inspection requests
- Obtaining a Certificate of Occupancy (CO)
- Handling payoff and discharge paperwork for lien issues
- Reviewing settlement statements
- Reporting the sale to tax authorities
- Drafting amendments for attorney review
How much does a real estate attorney cost?
The cost for real estate attorney fees is based on geographic location, the attorney’s level of experience, type of services rendered, and the complexity of your real estate transaction.
Real estate attorney fees: State-by-state comparison
| State | Average cost per hour |
| Alabama | $332 |
| Alaska | $342 |
| Arizona | $480 |
| Arkansas | $260 |
| California | $465 |
| Colorado | $386 |
| Connecticut | $391 |
| Delaware | $333 |
| Florida | $337 |
| Georgia | $412 |
| Hawaii | $396 |
| Idaho | $360 |
| Illinois | $400 |
| Indiana | $360 |
| Iowa | $289 |
| Kansas | $317 |
| Kentucky | $256 |
| Louisiana | $294 |
| Maine | $276 |
| Maryland | $380 |
| Massachusetts | $355 |
| Michigan | $302 |
| Minnesota | $331 |
| Mississippi | $268 |
| Missouri | $301 |
| Montana | $322 |
| Nebraska | $291 |
| Nevada | $402 |
| New Hampshire | $348 |
| New Jersey | $369 |
| New Mexico | $314 |
| New York | $414 |
| North Carolina | $374 |
| North Dakota | $355 |
| Ohio | $301 |
| Oklahoma | $307 |
| Oregon | $363 |
| Pennsylvania | $344 |
| Rhode Island | $448 |
| South Carolina | $346 |
| South Dakota | $307 |
| Tennessee | $332 |
| Texas | $367 |
| Utah | $323 |
| Vermont | $348 |
| Virginia | $380 |
| Washington | $395 |
| West Virginia | $260 |
| Wisconsin | $322 |
| Wyoming | $299 |
Source: Clio
How are real estate attorney fees calculated?
Real estate attorneys charge $150 to $400 per hour, although some can bill up to $500 or more. They might also charge a fixed fee for preparing closing documents. Although some attorneys bill by the hour, Donaldson says it’s more common for attorneys to charge a flat rate.
“The vast majority of residential real estate transactions are performed on a flat or fixed rate basis, typically between $1,200 on the low end to $3,000 on the high end, depending on the type of property and any other special circumstances, for example, when the sale involves an estate.”
When sellers might need a real estate attorney
“Sellers get a bang for their legal buck because a good attorney helps to mitigate unwanted circumstances that could end up costing sellers unnecessary costs,” explains Donaldson. If you’re a seller, the following common and uncommon scenarios might warrant having a real estate attorney in your corner.
You agree to finance the sale of a property
“One out of the ordinary issue that arises, albeit infrequently, is when a seller offers to finance the sale of property, meaning the seller is also acting as the lender,” says Donaldson.
“In that scenario, the buyer signs a promissory note and mortgage over to the seller rather than to a bank; if a seller is going to go down that road (and you see it more commonly with distressed properties that have been on the market for a while) the seller absolutely needs the help of an attorney to make sure the note, mortgage, and any other closing documents are as airtight as they can be from a legal perspective.”
When you offer a concession to the buyer
“Another extraordinary issue is when the seller offers a concession to a buyer,” Donaldson explains. “This means that [the buyer] will agree to a specific purchase price but the seller will also allow a concession of several thousand dollars to help the buyer finance their closing costs,” he says. “For example, the seller will agree to accept $50,000 down on a $500,000 sale and also allow a $10,000 concession. Because the amount of the concession is in the contract, this allows the buyer to apply for a loan of $460,000 rather than $450,000, and the additional $10,000 is applied toward closing costs.”
“On its face, it seems straightforward,” says Donaldson, “however, a seller should rely on the guidance of an experienced real estate attorney to make sure the concession provision is worded [in a way] so the buyer’s lender does not reject it, that the seller does not end up paying a transfer tax on the $10,000 concession.”
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