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Should I Use An Attorney To Close My Deals?
Joe: Hey, it’s Joe. Another question here. This one is from Gary. Gary’s from Kansas City, Missouri. “When putting these deals together, would it be a good idea to use a title company or a real estate closing attorney to completely close the deals, trade the contracts and distribute the money to all the parties, myself, to ensure trust and credibility to both my cash buyer and seller, or do we just handle these deals at the kitchen table with both the buyer and seller there at the same time, provided that everyone is local and there’s no boots on the ground assistant and the system isn’t automated? I’m concerned because I don’t want a conflict of interest issue with putting a deal together since the seller could question the amount I’m getting in using the For Rent Method lease option deal, and the cash buyer could be skeptical of bringing funds to complete strangers. I know it’s about gaining all the parties’ trusts first, but anything is possible.”
Joe: Well, yeah, if you’ve got a problem building trust it might make sense to have an attorney do it for you. And an attorney is probably going to cost you anywhere from $250 to $500 to close a deal. You probably won’t be able to get a title company to close it if you’re using the For Rent Method. But you could pay an attorney to do it. Just a regular real estate attorney, give him a call, say here’s what I’ve got. I’d like you to close the deal. I’d like you to be able to accept the funds and distribute them at closing, make sure all the paperwork is signed. Would you do that for me and make sure that, you know, we’re crossing all of our T’s and dotting all of our I’s. And you know, I’m sure you’ll be able to find somebody. You may have to call a few of them until they understand what you’re doing, but once you find somebody they can do that for you. And that’ll save you from any question from your buyers and sellers about whether what you’re doing is improper or not. They won’t have as much problem wiring you funds or wiring your funds to the attorney and they’ll be a lot more comfortable with the process without you having to you know, build that credibility in another way.
Joe: Honestly, most of our deals are closed at the kitchen table. Eventually you’re going to learn how to build trust and they’re just going to give you – we have people give us cash and don’t ask for a receipt. You know, this is, I mean, this is crazy. Don’t ever do that, by the way. And when you get the cash, I don’t like getting cash. If I get cash I want to take it directly to the bank and deposit it, or I’d like to meet them at the bank and deposit it while they’re giving it to me so that they see that we deposit it and then I give them a receipt. I don’t want there to ever be any question that I screwed them or took advantage of their naivete. So make sure that you’re careful with that.
Joe: But having an attorney do that solves that problem. Again, somebody has to pay for that attorney. I would try to get the seller to pay it, but it’s probably going to come out of your profits ultimately because you’re going to try to negotiate the best deal that you can with that buyer. You’re going to try to get as much money as they have available for the down payment so they’re not going to have a tone of extra money anyway. So somebody’s going to have to pay for that attorney if you do it that way.
Joe: There’s one state that I would suggest always using an attorney and that’s North Carolina. I would always have an attorney close in North Carolina just because of some legislation that’s there. If you’re in my mentor program, and you have questions about North Carolina, let me know and I’ll send you the legislation. If you’re not in my mentor program, you can look it up online, just look up lease option legislation in North Carolina and you’ll probably find the documentation on that.
Joe: But because of that you’ll probably want to have it closed by an attorney. It just makes it cleaner and easier. Doesn’t mean you can’t do it there, it just means that you should have somebody looking over your shoulder while you’re doing it.
Joe: I also have students that do a lot of deals and they have them all closed by attorneys simply because they don’t want to do the work. They don’t want to do the closing and it makes more sense to have somebody do it for them that you know, that covers all their bases. So that may be another option for it.
Joe: All right – hope that answers the question. Good luck.