What are your closing costs? Part 1

As I mentioned in my early posts, the reason I started this blog was to let people know about the CEMA possibility and other ways to save some money in the closing process. Now that I got the CEMA discussion out of the way, its probably a good idea to discuss the various costs associated with a closing.

Closing costs are broken down into several categories, bank closing costs, title charges, recording, escrows, to name a few. First however, I will discuss what I consider to be the most important fee that buyers and sellers pay, the legal fee to their own attorney. While it may sound self serving, I really believe that this is true. As a buyer or seller, you deal with many different "professionals" in the course of the transaction - real estate brokers, mortgage broker, appraisers, insurance agents, engineers - to name a few, and they all stand to get paid somehow from your transaction. While they may all be competent and nice people and do the right thing, your lawyer is the only person who you are paying to look out for your interest.

For this reason, it is very important to hire a lawyer who you can speak to directly and feel comfortable that he (or she) is personally on top of your file. A real estate transaction is a very personal matter and you are entitled to competent representation by an attorney, not a paralegal. Certain very competent law firms have their clients deal only with a paralegal during the entire closing process. While getting standard information or updates from a paralegal is ok, I am of the opinion that private homeowners or buyers should have access to the attorney at all times. In addition, the client should review the contract with the attorney personally and the attorney should be present at the closing. I always recommend that the real estate broker not be present when you meet with your lawyer. Much more on brokers in later posts.

As far as legal fees go, I charge a flat fee. If the specific transaction requires extraordinary work (estates, post closing issues, etc.), than additional fees would apply. Some attorneys charge hourly fees but I think a flat fee is more practical. I have found that attorneys in Manhattan charge more than attorneys in the outer boroughs or Long Island. This does not mean that they do a better job (contrary to what a broker may tell you).

What you should always keep in mind is that your lawyer's job is to look out for your best interest and explain to you different options available to you and the possible consequences of the decisions you make regarding those options. A good and thorough lawyer will be able to save you money (by suggesting a CEMA as discussed in earlier posts or in other ways I will discuss in future posts) and make the closing process less stressful by keeping you informed.