Economics of real estate practice by chenmeixiu


									Economics of real estate practice

Members of the Illinois Real Estate Lawyers Association (IRELA) have noted with interest the
exchange of correspondence between Joseph Daudish of Westchester (February and June 2001
Journal) and John Morreale of Glen Ellyn (August 2001 Journal) regarding the representation of
buyers and sellers of residential real estate. Mr. Daudish wondered whether any attorney could
make a living concentrating his or her practice in this area. Mr. Morreale responded that the only
way to make a living doing this type of work was to act as a title agent for one of more title
companies to supplement the income of the attorney with a remittance from the title company.
Mr. Morreale, in a statement intended to be cruelly frank, suggested that the recent action
undertaken by IRELA against Koenig & Strey Realty was not at all motivated by an attempt by
an association of attorneys to combat the unauthorized practice of law, but rather an attempt by
such attorneys to protect its pecuniary "turf" as the controller of the selection of the title
insurance provider.
Mr. Morreale ignores the fact that many attorneys who claim membership in IRELA are not
affiliated with any particular title company. Many attorneys do not direct title insurance business
at all. While I would not be so glib as to deny that many attorneys augment their income with
title insurance premiums, it is indisputable that the presence of attorneys in residential real estate
transactions, as professionals with a keen understanding of the law and procedure in such
matters, lessens the risks attendant to such transactions for real estate agents, title insurers and
lenders, as well as for consumers. IRELA has compiled anecdotal evidence of significantly
higher costs for title insurance, closing services and related expenses in "escrow" states such as
California, Arizona and Texas where attorneys do not participate in such transactions. In short,
even with the relatively modest fees charged by attorneys, consumers in Illinois are truly best
served by the presence of attorneys in such transactions.
In response to our brethren on the issue of fees, attorneys have chosen to compete in the market
place for relatively modest fees, often due to the fact that real estate agents quote "customary"
fees for them. You can make a living doing residential real estate work, if you charge a fee
commensurate with the amount and complexity of work you are doing. Many clients shy away
from those attorneys who charge "bargain basement" fees, assuming, often with good reason, that
such low fees reflect the lack of personal service or a lack of expertise in the field.
Many attorneys use residential real estate as a "loss leader" to build the client base for the
attorney's firm. Many do a sufficient volume of transactional work to justify modest fees. But the
message here is a simple one  if you charge a fee commensurate with the services rendered and
you do a good job, the client will, more often than not, be satisfied and seek out your services in
the future.

                                                                             Joseph R. Fortunato, Jr.
                                                                              Vice President, IRELA

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