Attorney vs. Agent? Selling Condo to Relative

[Sazoo]

We are going to sell our condo to my MIL. She is ready to buy, and has been in touch with a mortgage broker and I believe is in the process of getting pre-approved for a loan. We have not officially started house-hunting yet, but we are getting ready to do so (talked to a mortgage broker today & we're in the process of getting pre-approved for a loan).

Anyway, our dilema is who to hire to handle the sale of the condo to MIL. We do not want to try to do it completely on our own because we just don't understand enough about the process, and honestly I don't have the time or interest to figure it out and don't want the full responsibility of it to rest on my/our shoulders. We feel that we do not need a real estate agent & we don't really want to pay them a commission when all we really need is for someone to walk us through the paperwork, make sure we do everything right, answer our questions, etc. Several people have advised us that hiring a real estate attorney would be a more affordable option. Is that really true?

I've done a little bit of research into local real estate attorneys and have contacted one who had a very informative website. He suggested several options to us:

1. He could handle our entire transaction with MIL (which would be cost-effective & simple), yet in this situation he would be unable to offer any real legal advise or "protect" the interests of either MIL or us because it would be a conflict of interest. Basically he would just guide us through the paperwork process & ensure we do everything right (legally-speaking).

2. He could represent just me & DH, & MIL could not hire an agent or an attorney of her own...basically we'd ask the attorney to draft "neutral" provisions in our P&S agreement & MIL would have to use her best judgement to review & sign the proposed contracts & other paperwork. This option would also be inexpensive & simple, plus it offers DH & I more legal support/protection...but it leaves MIL without similar support.

3. He could represent me and DH, and MIL could go hire her own attorney to represent her. Slightly more expensive (but possibly still cheaper than paying a commission to a real estate agent?) but then both sides of the transaction have adequate legal representation.

DH and I are leaning toward options 1 or 2, although option 3 would be preferrable over us hiring an agent to handle our sales transaction (instead of an attorney). MIL, however, seems to feel that she should have a real estate agent help her out with her part of the transaction. Does that make sense? Would it work for us to hire the attorney to represent us, & for her to enlist the services of an agent to represent her? Something our mortgage broker said to me today raises a question about this for me though - he said the seller always pays the real estate agent commissions. So if MIL hires an agent, does that mean DH and I have to pay the commission? :confused:

Another option, which our mortgage broker suggested today, is that we could hire a real estate agent to help us buy our new house and also ask him/her to handle the sale of our condo to MIL - perhaps they'd give us a "deal" on that since it's pretty much a slam-dunk, with us selling to a relative, and all. Good idea? Bad idea? I still don't like the idea of paying a commission on the sale of the condo when we already have our buyer lined up, etc.

I realize I'm asking several questions here, and that I'm probably not making much sense. This whole thing is so jumbled up in my head right now, and DH is really not much help, as he understands even less about this process than I do and he doesn't seem to be interested in trying to help figure it out. :rolleyes: I don't know who to ask for advise - especially impartial advise. The attorney I spoke with seems to think an agent is not necessary for our transaction, and our mortgage broker suggests we use some real estate agent he has worked with before for both our condo sale and new home purchase.

If anyone is able to make any sense of my situation, I would surely welcome your input. Thanks! :)

[Rose]

I don't think you need to agent, since you already have a buyer. I would check in to a RE attorney and also check into having a title/escrow company do for you. RE attorneys aren't used in my area but I don't see why should 6% when you aren't actually listing your house.

Another option, which our mortgage broker suggested today, is that we could hire a real estate agent to help us buy our new house and also ask him/her to handle the sale of our condo to MIL - perhaps they'd give us a "deal" on that since it's pretty much a slam-dunk, with us selling to a relative, and all. Good idea? Bad idea? I still don't like the idea of paying a commission on the sale of the condo when we already have our buyer lined up, etc.

You could, but you're still probably going to end up giving them 3%.

Practice vary state by state, so I would check into a title/escrow company first since you'll have to use one anyone and see how much they can do for you.

[curlygurl]

I would suggest Option #3. I think both parties need legal representation. I would also inform any agent that your MIL would contact that this is a FSBO with no commission to a broker, so that if she needs an agent - it would come out of her pocket. I would prefer the knowledge of a RE attorney over a broker at this point in the process. Also, I believe in my state - any agent that you pay is responsible and accountable to you and not your MIL. This may be different in different states.

[Rose]

Something our mortgage broker said to me today raises a question about this for me though - he said the seller always pays the real estate agent commissions. So if MIL hires an agent, does that mean DH and I have to pay the commission?

Agents are paid from the seller. If you're not offering a commission nobody would get paid, and MIL might have trouble getting an agent to do half the work.

You, DH & MIL should sit down and figure out if she wants an agent to represent her.

Somebody needs to do the work and so you will have to pay somebody. Maybe you can figure out a price, and pay for attorney for both sides.

If she was a buyer for any other house, the seller would pay her agent so I think that needs to be figured out into the price or her representation.

[lawyerlee]

I would use a real estate attorney and preferably go with option 3. I would not recommend option 1. I don't think you need an agent at all, but you do need advice to make sure everything is done properly, so that sounds like the perfect role for an attorney. :)

[BeachBum]

If I was in your situation I would go with #1. But if you feel like something could go wrong and you and MIL wouldn't be able to amicably settle things then go with #3. Regardless, MIL would be responsible for paying for her own RE attorney.

I absolutely would NOT hire an agent. If MIL did I would up the sales price to cover the commission.

In my experience with hiring a RE attorney it is just a couple of hundred bucks. Not 10's of thousands like you would be talking with an agent.

[Asha]

according to what i know, agents cannnot offer you legal advise. agents help smooth the transaction and market your home. you don't need marketing bc your home already has a potential buyer.

we are saving butt loads of money by not using an agent. we would have paid nearly $15,000 to an agent. we are only paying $1,100 to an attorney, and anyways in my state you have to hire an attorney for contract and closing even if you use an agent.

you should get an attorney, and your mil should get her own attorney. buyers pay for their own attorneys.

[mamax2]

I agree w/the consensus here - you need attorneys, not RE agents. The benefit of an agent is really market expertise and marketing. You don't need either since you already have your buyer! You and your DH should hire an attorney and recommend your MIL hire her own - for her protection. It should be a reasonable cost and well worth the piece of mind.

[villanelle75]

I agree that attorneys are the way to go. Each of you shoudl hire and pay for your own attorney.

However, if MIL insists on having an agent, I think you need to make it clear to her that she will be responsible for paying his commission since you don't feel it is necessary. While the sellers (you) may officially be the ones who pay the agent, make it clear to MIL that it will be with her money. The easiest way to do this would probably be to increase the selling price by the amount her agent will cost.

Also, if she goes that route, make sure she negotiates with the agent she choses. When we were selling our place, we discussed with our agent the possibility of us finding the buyer and then having him handle the paperwork, negotiations, etc. He said he would chrage 1% to do thi, rather than the 2.5% he charged for a full service sale and marketing. If MIL insists on getting an agent, there is no way she should be paying him the full amount he would charge to help someone find a place, do showings, negotiate price, etc.

[Sazoo]

Thanks ladies, for confirming my feeling that we do not need the assistance of a real estate agent for this transaction. I talked to MIL a little bit more about this over the weekend and told her I really didn't think getting an agent involved would be the way to go with this. My boss said on Friday "No way should you pay a commission on this transaction when you already have a buyer!" so I told MIL that too. :)

I know the ideal situation would be for us to hire our own attorney & for MIL to hire her own attorney. For some reason she seemed resistant to that idea when I first suggested it to her last week - that's when she said "Well there's a woman in my office who is a real estate agent, maybe I should just ask her if she can help me." Admittedly MIL doesn't know much about how all this works (not that I'm any big expert, but still - the idea of hiring an attorney/s never occurred to her until I first mentioned it last week. I think she thought her mortgage broker could handle everything for her.)

Anyway, I found a couple of other real estate attorney references last week, so maybe I'll contact them on her behalf to find out what they charge for their services, & then perhaps I can recommend one of them to her. Then if MIL still decides not to hire her own attorney, perhaps her real estate agent friend at work would be willing to look over the contract just as a favor, to make sure there's nothing in there that is not in her best interests (obviously there wouldn't be, because we have no reason to put anything controversial like that into the contract).

If her agent friend wants to charge something for her to be involved in the transaction, then we'll have to work out a way so that MIL ends up paying for it (this should not be a problem - when I told her this weekend that the sellers always have to pay the agent commissions, she indicated that we could work that out if a commission needs to be paid). Or, our mortgage broker said the agent he recommended to us would be willing to handle the transaction for a 1% commission, so if MIL really insists on hiring an agent and the woman at her office wants to charge more, maybe we could at least convince her to work with this guy instead. *shrug*

Thanks again for the advice, everyone. I know what we SHOULD do and what DH and I WANT to do, but it's a matter of convincing MIL, I guess. :)