Some buyers and sellers may not realize that brokers aren’t alone.
State law allows lawyers to collect commissions — without having a real estate license — though they cannot employ other salespersons to work under them unless they do obtain a license.
However, lawyers may not automatically charge a commission. They must have a signed agreement with whomever they are representing or an agreement with the listing broker.
At the same time, lawyers may not double dip. It is a conflict of interest for a lawyer to act as both attorney and real estate broker in the same transaction.
Interestingly, lawyers do not have to meet the educational or experience requirements that the law specifies for those of us who till the soils of real estate.
You will doubtless assume that we brokers don’t welcome competition from lawyers. You would be correct in that assumption.
Whether a lawyer can represent a buyer or seller to that individual’s best advantage is another question entirely. If you think I believe the answer is no, you would be right again.
Bypassing a broker admittedly can seem to save the seller money, especially if that seller is a FSBO (For Sale By Owner) and doesn’t equate time with money.
But I don’t see how either the seller or the attorney can judge the fair market value of the property, a process that means visiting many properties and obtaining the very latest sold date, which is not likely to be publicly available.
Not having that experience or knowledge conceivably could cost the seller big bucks by having failed to expose the property to the largest number of potential buyers or by lacking an up-to-the-minute understanding of what the market will bear.
Some buyers believe — mistakenly I strongly contend — that they can save themselves cash, too, by undertaking the purchase process without a broker’s help.
The same issues bedeviling sellers who rely on lawyers alone in a real estate transaction can arise in reverse for buyers. That’s because we brokers don’t only open doors: We educate, we handhold, we seek to uncover defects in a property that buyers may not otherwise consider and that go beyond the budgets and offering plans typically scrutinized by lawyers.
I have only scratched the surface of the differences between the two occupations, and I may not have persuaded you of their relative merits.
But I do know this: I don’t practice law and I firmly believe that lawyers shouldn’t practice brokerage. When lawyers compete with brokers, they alone tend to be the winners.
Tomorrow: Spell check
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Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022