Once a seller has accepted your offer, you will need to hire a real estate attorney to prepare and negotiate the details of the contract.
But don’t wait until then to figure out which attorney you plan to work with. There will be a lot of fast moving pieces and heightened emotions--and you don’t want to rush this.
Here are a few pointers for picking a good closing lawyer:
- Just about the worst thing you can do is hire an attorney who does not specialize in NYC residential real estate. Do not—repeat, do not—try to save money by dragging Uncle Morty away from his trusts & estates practice. The intricacies of closing a NYC real estate deal—from due diligence on a co-op to reading a condo board minutes—are not taught in law school or dealt with in many other real estate markets.
- On the other extreme, don’t pick a chop-shop closing lawyer who takes a cookie cutter approach to your transaction and/or is too overloaded to be responsive.
- If you don’t already know a good closing attorney, ask for referrals from people you know, but be skeptical about referrals from brokers involved in your transaction. These attorneys may be quite competent, but they may also feel the need to help a transaction go through in order to keep getting referrals. This is especially true with referrals by a broker representing a new development, where the potential for future business can be huge.
- Fees typically range from $1,500 to $2,500 for the average transaction. Expect to pay up to a few thousand more if, for instance, you want to preserve your privacy by buying an apartment under an LLC created for this purpose.
- Make sure the fee includes due diligence, and that your attorney (not a paralegal) will be going to the managing agent’s office to read the financials and minutes (and read the offering plan if the building is less than 5 years old). It’s also best practice for your attorney to administer the managing agent questionnaire (about bed bugs, leaks, noise complaints, reserve funds, major capital projects, etc.) in person or over the phone. (As one closing attorney told us, “They have a duty to the building but generally they don’t want to lie. You can tell if they’re trying to avoid something.”)
- Find out how much of the attorney’s fees are refundable if the deal doesn’t go through.