Flat fee Real Estate Fee FAQs
WHAT DOES A LAWYER DO THAT IS DIFFERENT THAN A REAL ESTATE AGENT?
A lawyer can help a buyer or seller make/negotiate an offer on a home, draft the contract, fill out the purchase agreement, complete addenda, and provide the necessary legal disclosures. However, a lawyer will not drive a buyer around the neighborhood to look at homes or perform market research. A lawyer will not help a seller stage a home for sale, price their home, or schedule viewings.
Lawyers save money when the buyer and seller know who each other are, and they primarily want the formalities completed to close on the home. Hiring a lawyer can save you big money in agent commissions.* A lawyer can also provide their client legal advice regarding issues with the home or contract, where an agent cannot.
WHEN IS IT A GOOD IDEA TO HIRE A REAL ESTATE AGENT?
For buyers, hiring a real estate agent (Realtor® is a registered trademark not ours) is a good idea if you are unfamiliar with a new city. If you don’t know the neighborhoods or schools, and don’t want to do the research yourself, hiring a real estate agent is a way to figure out what areas of town you would like to live in. Sometimes real estate agents who have worked in a neighborhood for a long time will know of a property that might be available but that has not hit the market yet. An agent can also help schedule a series of viewings in a day with homes for sale.
If you already know the area and saw a home online that you would like to purchase, you can skip the agent and possibly save money. You can simply hire an attorney to help you make an offer and complete all the paperwork.
Rather than pay the commission to your own agent, you can ask the seller to refund the money to you that they were expecting to pay a buyer’s agent. It is perfectly appropriate to ask the seller to reduce your purchase price rather than pay a commission. You simply make the offer with a statement indicating a reduction in the purchase price in lieu of the agent’s commission (or ask that it be applied to closing costs and fees).
For sellers, hiring a real estate agent can make sense if you need help staging your home for sale or if you want someone to help advertise your home for sale. An agent can also schedule viewings of your home for you when you are not home. If you expect multiple offers, it can be time-saving to have a real estate agent manage the sales process for you.
If you list the home yourself on a flat fee service (MLS® is a registered trademark not ours) and have a buyer already in mind, then you can save yourself the agent’s commission. Simply hire an attorney to help with the purchase contract and necessary disclosures. There is no need to pay 6 to 9% commission when you can hire an attorney to prepare the documents for a fraction of the cost.
CAN YOU BYPASS REAL ESTATE AGENT?
Yes. Whether you are buying or selling a home, you do NOT have to hire a real estate agent. Ohio law allows you to buy or sell a property without involving a real estate agent. If you already have a buyer or home in mind, you can skip the agent and hire an attorney directly. An attorney can draft the necessary documents and disclosures and assist with the closing. Hiring an attorney instead can save big money in unnecessary commissions.*
WHAT IS THE PROCESS OF BUYING OR SELLING A HOME?
Normally, here is how the process works:
The seller advertises their property for sale. When a buyer is located, they negotiate terms. Generally, an appraisal and property inspection will follow. If there are contingencies for these items, then any problems here will need to be worked out between the buyer and seller. If the buyer is getting a loan, the buyer will be working with their lender to finalize financing. When that is complete, the lender will draft the paperwork. A final walk-through of the property may occur before closing. Once everything is in order, the closing occurs at a title company. A title company will prepare the deed, have done a title search, and may also provide insurance for the buyer and their lender. The parties then meet to sign all the paperwork (although they can sign separately). Once the deed and funds are transferred, the property is then owned by the buyers, who can move in.
WILL REAL ESTATE AGENTS TAKE LESS THAN 6%?
You can negotiate with any agent over their commission. Not all will agree to change their commission rates, which might prompt you to locate another agent who will be willing to work with you. Sellers who refuse to negotiate on commission rates might find themselves without a willing buyer.
Why bother negotiating with an agent if you already know what property you want to buy, or know who wants to buy your property? Skip the commission and hire an attorney to help with your paperwork instead. Then you do not need to worry about a reduction in the 6% commission and might save thousands of dollars.
HOW DO I MAKE AN OFFER ON A HOUSE WITHOUT AN AGENT?
You can make an offer without an agent, but you will need a written contract in Ohio. In Ohio, the “statute of frauds” requires a written agreement to buy real estate in order for that agreement to be enforceable. However, that contract can be drafted by an attorney rather than a real estate agent.
Normally, the offer “letter” is an actual contract with all the terms of the transaction outlined. The standard form used in greater Columbus is multiple pages and includes many items. These include whether there will be contingencies for financing, value, inspections, and more. The contract will outline deposits, what property is being transferred (including possibly personal property) and other items. Sellers will also be required to provide property disclosures to comply with the law.
Having an attorney draft that contract for you can save you big bucks on real estate commissions. As a seller, you can skip paying 6% or more in commissions. As a buyer, you can ask the seller’s expected 3-4% commission to the buyer’s agent be paid to you instead. You can ask for a reduction in the sales price, or for those funds to be applied to closing costs. Most lenders will not allow you to get a check at closing for the savings, and will require that you use the money to reduce the sales price instead.
DOES A SELLER HAVE TO ACCEPT AN OFFER DRAFTED BY AN ATTORNEY?
A seller does not have to accept any offer for just about any reason. But if the seller wants to sell their home, and your offer is a solid one, then why wouldn’t it be accepted? Money talks.
DO I HAVE TO USE THE REAL ESTATE AGENT THAT SHOWED ME THE HOUSE?
If an agent was hosting an open house and you happened upon it, then you will probably NOT be required to use that agent or pay them a commission. Similarly, if you found a home that you liked and called the listing agent who arranged for you to see it, then you also will probably NOT be required to hire that agent or pay them a commission. However, if you entered into an agreement with an agent to find and show you homes, and that agent found a home for you that you bought, then you will likely have to pay that agent something for their help. If your situation is different, contact an attorney for additional help.
CAN I BE MY OWN REAL ESTATE AGENT?
You can sell your own home without hiring a real estate agent. Ohio law allows you to buy and sell your own real estate without hiring an agent. You can market it yourself, put it on a listing service through a flat fee brokerage, create flyers and distribute those as you desire. You can also present a contract for a buyer to sign, and hire an attorney to help with the necessary disclosures if you like.
However, you cannot do these things for someone else’s property in Ohio. That would require a license.
ARE THERE CLOSING COSTS WHEN BUYING A HOME FOR SALE BY OWNER (FSBO)?
You will generally have all the normal closing costs when buying/selling a FSBO loan as you would with a loan not listed through a real estate agent. The primary difference in cost of a FSBO is not having to pay a real estate agent a commission. If you choose to hire an attorney, you will have to pay that cost too.
It is wise to obtain inspections, an appraisal, plus title work when buying any home, which are costs paid in most transactions (some at closing and some prior to closing). The big savings in buying a FSBO home is not having to pay $% in real estate agent commissions.
HOW LONG DOES IT TAKE TO CLOSE ON A FOR SALE BY OWNER HOUSE?
There is no extra time for closing on a FSBO home versus one sold through an agent. The major time constraint in buying a property is usually the financing for the buyer. That can take several weeks, depending on the situation of the buyer. Time is also needed for inspections, an appraisal, and a title search.
ARE CLOSING COSTS CHEAPER WITHOUT A REAL ESTATE AGENT?
Yes. Most real estate agents charge 6 to 7% or more to sell a home. Half that usually goes to the agent selling the home, and half to the agent buying the home. If you are buying a home, that means you are paying 3-3.5% of the price of the home for the agent who helped you. That is baked into the cost of the home and is usually negotiable. You can negotiate the buyer’s agent’s commission as a reduction in the purchase price if you skip the agent. Hiring an attorney to do the paperwork and negotiation can save you big commission dollars.
CAN I SAVE MONEY BY NOT USING A BUYER'S AGENT?
Yes, see the answer above.
IS A LAWYER ALLOWED TO HELP SELL A HOME WITHOUT AN AGENT’S LICENSE?
Yes. Lawyers are specifically exempt from Ohio’s statute governing real estate brokerage licensing. That means they are able to fully assist with real estate transactions in Ohio without additional licensure, including helping a buyer or seller in a real estate sale. In fact, they can also provide legal advice, which is something that a real estate agent is generally prohibited from doing.
Lawyers spend significant time during law school learning contract law. They are tested through the bar on their knowledge of multiple areas of law, including contracts and are required to pass a “character and fitness” review. Lawyers are also obligated to keep current through the law by taking 24 hours of coursework every two years. Lawyers are fully able to assist with real estate transactions in Ohio.
* Savings assumes the commission paid is less than the cost of hiring counsel. The seller must accept any reduction in sales price in lieu of paying a buyer’s agent commission.