FSBO – WIN FOR CONSUMERS AND ATTORNEYS

FSBO: Win-Win for Consumers and Attorneys
There is value in a diverse new client funnel. Fundamental changes in technology have created new opportunities for lawyers. There may be no better example than real estate. It starts with FSBO 鈥 For Sale by Owner.

In Seattle today,it鈥檚 a great time to sell a home. A home 鈥 any home, in any condition 鈥 can elicitan 鈥渋nsane鈥 bidding war. In some neighborhoods, it seems writing 鈥淔or Sale鈥 in chalk on the front door could attract a few fair-market offers.

So why do sellers still routinely pay 6% to sell a home? In this historic seller鈥檚 market, surely sellers can save a point or two 鈥搊r way moreon real estate broker commissions. Thosecommissions average about $40,000in Seattle. That鈥檚 an opportunity for massive savings. A year of college, anyone?

Homeowners can market the home themselves
Real estate brokers provide two types of professional services to home sellers: marketing services to attract buyers andlegal servicesto negotiate a contract. Since buyers far outnumber sellers these days, any reasonably sophisticated home-owning adult can handle the marketing. Because of the transaction鈥檚 nature and magnitude, though, the legal services are a different matter.

Legal counsel is prudent
Selling real property is a uniquely legal transaction. The obligations and potential liability of the seller are rooted in hundreds of years of common law. They also flow from statute. The vastmajority of sellersmust disclose the knowncondition of the homein detail.

Furthermore, the stakes are high. The typical home in Seattle sells for $735,000. For most, it is the largest financial transaction of their lives so far. It鈥檚 a big deal that requires incurring legal fees 鈥 whether paid to an attorney or a real estate broker.

A lawyer provides huge value
SinceCultum v. Heritage House Realtors, 103 Wn.2d 623 (1985), brokers have been able to engage in the limited practice of law (by filling in blanks on preprinted forms drafted by lawyers). Back in the 鈥80s, the court noted, brokers could much more efficiently provide the needed legal services.

Today, the internet allows sellers to effectively market the home themselves. Meanwhile, increased competition in the legal field, combined withhousing values that have far outstripped inflation, mean lawyers are no longer the expensive option. They are, in fact, much less expensive than real estate agents.

Needless to say, they also provide superior legal services. By hiring a lawyer, a seller will have a full and complete understanding of the risks and potential liabilities associated with selling real estate. Those risks can be addressed and reduced by inserting unique terms into the contract (which is beyond an agent鈥檚 authority to practice law).

Buyers make great clients
All of the same logic applies, of course, to home buyers. These days,more buyers use the internet than an agentto find their home; so buyers don鈥檛 need assistance on the 鈥渟hopping鈥 end of the real estate broker service spectrum either.

Buyers do, however, need legal services. And they, too, will benefit from having legal counsel to provide the legal services (e.g., only an attorney is qualified to interpret a title report).

Tools are available
Expanding a law practice to include residential real estate transactions is easy. Every broker is a member of the Northwest Multiple Listing Service (NWMLS). So the service鈥檚 forms are the de facto and near-universal standard. When representing sellers, an attorney is more than qualified to counsel a client about an offer on NWMLS forms. And those may be the only forms you ever see.

Theforms are for sale to attorneys. A lawyer can easily draft an offer on behalf of a buyer that will be received like any other. Important in this market. The best part? Knocking 3% (the unpaid commission to the buyer鈥檚 agent) off the price.

Everyone wins
When an attorney provides legal services to home sellers and buyers, they give consumers an alternative鈥 a chance to save an enormous amount of money and superior service in the process. And the attorney gets a new stream of business.