Should You Hire a Lawyer and an Expert to Buy a House?
  1. Real Estate

Should You Hire a Lawyer and an Expert to Buy a House?

Last Updated on October 1, 2020

Should You Hire a Lawyer and an Expert to Buy a House

Avoid Lawyers When Possible with an Exception

In real estate deals, unless you are a lawyer or have much experience & expertise, it is always best to have a competent lawyer or equivalent represent you. 

I’ve been buying many real estate properties. By my 10th deal (out of some 350 deals) I felt competent to represent myself without any outside lawyer. Of course, I was a licensed lawyer admitted to the bar of several states after taking the bar exam. But if truth be told, a newly admitted lawyer knows far less than a wheeler-dealer who has been burned a few times in real estate deals. 

Make no mistake, the odds are that you will be burned:

  1. The first few times you buy.
  2. The first few times you do a subdivision.
  3. The first few time you build or remodel. 

“Experience is the best teacher” 

However, you can learn a lot about mistakes to avoid, from the classic book about real estate, Think Like A Tycoon.

In What Situation Do You Need a Lawyer When Buying a House?

In the USA there is Title Insurance. This covers the “invisible” risks that the seller is not really the rightful owner or that there is an easement for somebody (or the general public) to drive their cows or cars through your front yard.

Thus in the USA, and places with private Title Insurance, you don’t generally need a lawyer in real estate deals.

However, in a country foreign to you, where you may be unaware of local rules and customs, it is always best to have a competent lawyer or equivalent represent you.

In France, this person is known as a Notaire who specializes in real estate.

In Italy it is a “Commercialista.”  

Definitely, do not use the same lawyer who represents the seller! Exception? Maybe if the lawyer and/or seller is a trustworthy friend who will make honest full disclosure.

Certainly never trust the real estate agent whose only goal (usually) is to close the deal and collect his commission. 

What Are the Commissions and Closing Costs of Buying a House

Don’t believe that in places where the seller pays all the commission it is not a cost to you. 

Obviously, every seller factors in the fact that he must pay say 6% of his selling price to the broker. His price to you will always be 6% more than his minimum expectation. Thus, a direct deal is always preferable.

Then to be aware that in most places there are significant “closing costs.” Lawyers get around 1 to 2% of the designated price. 

The “State” may get a huge percentage. In England and the USA any transfer tax is usually quite low, maybe 1 or 2%. But in Belgium a while back it was 17%. 

In Italy, it is 3% for a 1st residence and about 7-8% for a second home.

What Expertise Do I Need When Buying a House

Generally, you should do a lot of “due diligence”. On many properties, especially hillsides, you need an expert to give you a report of the possibility of such things as earthquakes, ground subsidence. 

I once had a property built over limestone with an underground river. 

First, there were cracks in the walls, then part of the property just dropped away. No fun for me. If the place you are buying has a lot of wood, you will need a termite report. 

And if there is the possibility of termite or other wood-boring insects, you must either walk away from the deal or have the seller do termite proofing at his expense or lower the price sufficient to cover you doing it. 

Roofs have a life of maybe 25 years max, and thus you need to inspect the roof yourself if you are capable of assessing the remaining life, and certainly, you must inspect the interior for any signs of roof leaks. 

Often there are people in any given area who do real estate inspections and reports like the “Chartered Surveyor” who does a full inspection of yachts, propulsion systems, and hull integrity.

My personal choice where possible and practical is to rent a place with a lease option and live in it for at least a full four seasons. Once you do that you should & will become aware of all problems including stuff like neighbors with barking dogs or destructive kids.

If you do that and get to know the neighbors and the landlord’s reputation, you should be pretty safe without a lawyer. Also, once you know of the defects, they can be used as bargaining chips to lower the price if the landlord won’t fix the problems.

Tips on Assessing the Build and the Quality of the Materials

Usually, a new property is more valuable than old, because old roofs, plumbing & electrical systems become worn out or outmoded. 

There are usually fewer problems with new builds than with older ones. But in condo apartments, for instance, new properties often become slums because the Home Owners Association is run by incompetents who do not understand that maintenance & upgrading is the key to preserving values. 

It may cost more in annual dues, but unless there is skimming, you get what you pay for. Thus an older, well-managed condo property can be a much safer investment.

In South America for example the quality of construction by local craftsmen and builders is usually much inferior to what wealthy Europeans and Americans expect in upper-middle-class housing or commercial establishments. 

Local may use young wood that warps instead of kiln-dried wood. The quality of workmanship and joinery, with some exceptions, is inferior to what we expect. 

If a place has been built to Swiss, German, or American standards by an expat, you will see the difference immediately. The doors and windows open property, the stonework fits together with quality inset tuck-pointing, the roof does not leak.

The avant-garde design work by Mexican architects, for instance, can be aesthetically, far more interesting than most European standard construction, but when you get to the guts, like plumbing, heating, solar installations and excellent fiber optic internet connections, a foreign engineer from Switzerland is the person to go for for the latest and most efficient technology.

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