Selling: attorney for less than $100 - legit or not?

Question

After we put our property on sale, we started receiving in the mail offers from local attorneys, all below $100. At the same time, 2 minutes' research shows that the regular cost is above $500, and that's the ballpark I heard from several attorneys I contacted. So I'm wondering what's the catch. I actually called one of those lawyers who sent a postcard, and asked, how come he is charging five times less. His answer was, Illinois law allows him to be compensated by the title company. "But isn't everybody else?" - I asked. "They probably are as well, they just don't tell you". I asked our seller's agent and couple of others, but did not hear much beyond the general "if it's too good to be true, ..." Can anybody shed a light on this? It's very unusual than numerous licensed legal professionals are able to offer the same service for 5-10 times less than their colleagues.

Tom Shallcross · Answer

@Gary Jones - Not sure if this is just IL-specific as I really only invest here, but in Illinois, attorneys are typically licensed agents of the different title companies. A typical contract usually states the seller's agent picks the title company. As the licensed agent of that title company he is getting a huge amount of that title fee plus some of the auxiliary fees. It's not legally called a kickback or referral, but for layman's terms, that's a good way to think of it - an incentive to pick that specific tile company over any other title company.

Regardless of the IL shenanigans, best practice is to build a relationship with someone you can trust as opposed to feeding off the bottom price.

Regardless of the IL shenanigans, best practice is to build a relationship with someone you can trust as opposed to feeding off the bottom price.

Jonathan Klemm · Answer

Hey @Gary Jones - It is definitely true that the seller's attorneys can make a large portion from the title company in Chicago, so it's likely possible.  That attorney is likely just extra hungry for work.

I know for me, I try to focus less on the money so that I can focus more on the relationship & expertise of any real estate professionals I am working with.

Bob Floss II · Answer

@Gary Jones IDFPR went after a handful of attorneys several years ago for advertising $100 closings. I'm surprised to hear this still goes on, but I guess people have short term memory loss. Title policies pay out a premium to the party who underwrites the policy. In northern Illinois, it's typically the seller's attorney, however it can be any person licensed to produce title, including a Realtor, buyer's attorney, or the title company itself. The title check tends to be large and has resulted in fighting over who should receive it. It's important to note, someone will receive that check. If the sellers attorney doesn't get it, someone else does and they hope you don't notice.

As for the $100 attorney, they are doing it to get new business. IDFPR went after attorneys because it is a violation of the Title Insurance Act to induce someone to use you for title insurance by offering a reduction of other fees or services. As far as I know, the cases were never completed. It created too many questions of the government telling us to price fix by forcing us to charge more for our services. I personally avoid offering discounts as an advertising ploy. If a client repeatedly uses me or a closing was particularly easy, I'll drop my fees. If your transaction ends up being difficult and problems arise, you don't want an attorney locked in at $100 and hoping you just get frustrated and go away.

Jason B. · Answer

@Gary Jones As an Illinois attorney who had my own real-estate focused practice, I can tell you in my experience those firms typically work on volume and are compensated for the legal work and the title work. There has been a lot of discussion over title fees and attorney fees, as well as what is allowable over the last few years, but what remains true is all fees and payments should be disclosed to you. I wouldn't necessarily say an attorney who charges $500 is better than 1 who charges $100. That said, like everyone else who has commented,  I'd say go with someone you feel comfortable with since you're entrusting them with guiding you through a purchase for what is likely a substantial amount of money.

Gary Jones · Answer

I fully understand all about the "you get what you pay for", but from what I've seen when buying 3 homes in the past, the attorney (hired for the "regular" $$$, not $95, with excellent reviews, recommendations and references) was hardly anything but email-forwarding clerk. I don't recall a single word of actual advise or change he effected. The several issues I had with the title and mortgage companies during these transactions were resolved by noone else but yours truly, while all his answers were inevitably starting with "you may".

Manny Vasquez · Answer

Remember the golden rule: "You get what you pay for."  I would be very skeptical if all the other lawyer's charge $500/hr and this guy is charging less than $100/hr.  I would assume that his "services" may be very, very limited.  Hey may be charging less than $100 for very specific items to perform, and then charging you more money to perform other things.   I would ask what his tasks involve for what he is charging.

Tom Gimer · Answer

If somebody other than the lawyer's client is paying 80% of the lawyer's fee... that is a problem unless properly disclosed and the client gives informed consent. Rule 1.8(f). Who's interests do you think the lawyer is truly representing in that scenario?

Ana Nuckols · Answer

Any debits and credits should be disclosed to both buyers and sellers in your closing disclosure if you're using a title company, which I would obviously highlight recommend as they run title searches, etc. If the lawyers were being paid out by title company it would most likely show as a closing cost paid by seller. Unless, that lawyer has a relationship with the title company where they bring the title company clients and they then get compensated for those referrals internally (which also needs to be disclosed to seller/buyer). I would also agree that if it's too good to be true you need to really read the fine print and go with your gut.

Selling: attorney for less than $100 - legit or not?

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