There are many advantages to using an attorney rather than a traditional agent to assist you in buying or selling a home.
Duties to Clients
First, by law, the duties owed by real estate agents to their clients are limited. These limited duties allow them significant leeway in regards to their obligations to any particular client. For example, an agent can represent both the buyer and the seller in the same transaction, even though the interests of the buyer differ from those of the seller (the buyer wants the lowest price possible, while the seller wants the highest). Moreover, an agent is not prohibited from “self-dealing.” In other words, an agent can both represent the seller and be the buyer of the property. Both dual agency and self-dealing can put a client in a very compromised position.
In contrast, lawyers have clear and unequivocal duties to their clients. These duties cannot be compromised by the attorney’s obligation to another client or even by the attorney’s own self interest. In a typical arms-length transaction, an attorney cannot represent both the buyer and the seller. Similarly, if an attorney has been hired by a seller to assist with the sale, the attorney cannot buy the property. The clients’ interests must be paramount, without any question or doubt. So if you want “representation” in a transaction, you should know that your representative is truly and completely looking out for your interests only. Anything less and you are not getting the best representation possible. Attorneys are required by law to provide it, while agents are not.
Legal Counsel
Second, real estate agents are only authorized to engage in the limited practice of law. This means that agents are limited by law to filling in pre-printed forms that were drafted and approved by a lawyer. Agents are not supposed to provide legal counsel to a client. In other words, they are neither authorized nor trained to explain the terms of the contract.
In contrast, lawyers are specifically trained and authorized to practice law without limitation. If you have a unique issue in your deal and want it addressed in the contract, your agent may not be legally authorized or trained to draft an appropriate contract term to protect your interests. Got a question about the terms of your contract? A lawyer can answer it. Concerned about an issue or aspect of the transaction? A lawyer can deal with it. Worried about whether there is a defect in title? A lawyer can find out and, if so, address it.
Compensation
Third, agents are typically paid by commission. This commission is paid only if the transaction closes. If it does not close, the agents do not get paid for their services. This obviously gives an agent a strong personal incentive to convince the parties to close, even though closing may not be in the clients’ best interests (they could have changed their mind, or there could be an issue with the property). In addition, commissions can vary based on the terms of the offer or other factors, and an agent may not have a duty to inform the client about these variations. For example, some sellers offer an extra commission to any buyer’s agent who presents a full price offer. The buyer’s agent may not have an obligation to inform his clients about this extra personal incentive.
In contrast, as lawyers we are paid directly by our clients. We do not take any portion of a commission otherwise available to us as agents. We charge a flat fee for our standard brokerage services (and another flat fee for our legal services via our law firm), plus additional fees for additional brokerage services. However, if it turns out that closing is not in your interests (because you changed your mind, or because there is some late-discovered issue with the property), we have no incentive to convince you to close. Want to cancel the deal? No problem – you won’t get any protest from us. Is there an extra commission to the buyer’s agent for a full price offer? Great! It will go to you and will have absolutely no impact on our representation.
History and Culture
Finally, real estate agents today are considered to be representatives of their clients and therefore should act in their clients’ interests. However, this is a relatively recent development. Historically speaking, agents were salespersons. They sold property just like a car salesperson sells cars. If you have any doubt about that, watch Alec Baldwin’s great scene in Glengarry Glen Ross. Even today, the buyer’s agent is officially known as the “selling agent.” Similarly, an agent who only represents buyers will still talk about the number of houses they have “sold”, even though the agents did not “sell” anything. Rather, the agents represented buyers who bought properties. Continued use of the terms “selling” and “sold” is telling.
In contrast, lawyers have always provided representation, period. There was never a time when lawyers were paid to convince their clients to buy anything. Lawyers are, and have always been, their clients’ representative who is only concerned with protecting and advancing their clients’ interests.
