BEST ANSWER
Yvette,
I am actually a real estate attorney, so my answer may be a little biased :). Buying a property "as is" does not negate your need for an attorney in the Chicagoland area. It is not required for you to have an attorney, but almost every transaction in the area uses an attorney, and more than likely your seller will be using one. The typical attorney fee for the chicagoland area is $450 - $600, and in my humble opinion it is well worth it. Since I do not know the specifics of the property you are purchasing lets talk about a few issues I have had to deal with on "as is" transactions:
1. On a foreclosure/REO property (where the bank is the seller) and the property is a condo, there is an Illinois statute that allows the bank to pass up to 6 months of over due association assessments - in this case we successfully negotiated with the bank to pay these fees saving the client well over $1500.00
2. In Chicago there is a transfer tax that is imposed on the buyer and the seller. Sometimes the Seller will attempts (particularly if it is a foreclosure/REO property) to pass this $3.00 charge per every $1000 of purchase price charge onto the buyer so on a $150,000 proeprty it is $450.00, etc. We have sucessfully negotiated with the Seller to make sure these transfer taxes are paid for.
3. Even though the property is "as is" you should still have an inspetion period where you can have a certified insepctor take a look at the property to make sure there is not something significantly wrong with the property. In the event that you find something wrong we work with the Seller's attorney's office on the release of the earnest money. Ideally it should not be a problem without an attorney, but when you are unrepresented things often go less than ideally.
4. Even though the property is "as is" you should still have a mortgage contingencey clause on the property. This would be the last date that you can declare the contract null and void and receive the return of your earnest money. Your attorney's office should be communicating with your lender to insure that you have a mortgage commitment by this date, and if not, request an extension. It is important to preserve your rights under this clause.
5. This one is complicated for this posting, but here we go! Your taxes in Illinois are a year deferred (you pay 2008 taxes in 2009, 2009 in 2010). Check out my previous posts for a good discussion on tax prorations. Since you will be owning the property in 2010, you will be paying the full 2009 taxes -- but wait you didnt own the property for all of 2009 did you? So at your closing your Seller should be giving you a tax proration based off of the previous year's taxes. Usually in Cook County it is 110% of the previous years taxes. here is the problem - Cook has a reassessment of the property's value every 3 years - and even in today's market the property values are going up. Part of Chicago get reassessed for 2009 taxes. This means more than likely 110% is inadequate. Guess who normally negotiates that?
6. If this is a condo, you should get what is called the 22.1 disclosure statements - named after the section of the Illinois code that states what information the Seller should be providing the Buyer prior to closing. I have found that without an attorney you often do not get this information, or you get it at the closing and don't understand it's significance. This tells you about the financial health of your association, and helps us determine if a special assessment might be around the corner that you will have to pay. We have saved clients thousands of dollars investigating this.
7. If is a single family home, the seller should provide a survey (if it is a foreclosure/REO bank owned proeprty they will not). Without a survey your title insurance policy lacks important coverage for you as a home owner. (Now these are real examples btw) What happens when you get to closing and the property ends 20 feet short of where you thought the property line was, or your driveway is actually on your neighbors property, or the neighbor built a new garage on your property, etc. There are a bunch of other examples, but I think you get the point.
These are just a few examples, I didnt get into a lot of other issues (Trulia also limits the number of characters I can post!), but suffice to say, in my opinion, for the fee, and this being probably the largest investment of your life, I think it is imperative in this area to have a real estate attorney.
Quick plug - even though my office is in Hinsdale, my partner lives downtown and we do a ton of Chicago closings (as well as all over Chicago for anyone else reading!). Feel free to call me on my cell with any questions 630-551-6833.
Hope this helps,
Paul Garver
Sun Mar 15 2009, 10:36
Fair Housing and Equal Opportunity