Congratulations! You are in the final stretch! However, the joy of finalizing the real estate deal brings with it the stress of financial planning. Closing costs in Michigan are a sum of expenses you should plan for when buying or selling a house.
- Closing costs or “settlement costs” are a set of final expenses paid for completing a real estate transaction.
- The seller and the buyer both pay closing costs in Michigan.
- The 3 major Seller Closing Costs in Michigan are:
- 1. REALTOR Commission
- 2. Recording Fee
- 3. Escrow Fee
- The 3 major Buyer Closing Costs in Michigan are:
- 1. Loan Origination Fee
- 2. Escrow or Impound Account
- 3. Inspection and Appraisal Fees
- In Michigan, real estate transactions are usually closed by title companies and attorneys.
What are Closing Costs in Michigan?
Closing costs in Michigan are a sum of fees that have to be paid to different stakeholders. Closing costs are essential for finalizing the real estate deal and transferring the ownership of the house. These settlement costs are paid in addition to the net property amount.
Who Pays Closing Costs in Michigan?
Both the buyer and seller pay certain closing costs at the end of the real estate transaction in Michigan.
The seller shells out a higher monetary amount as closing costs as they pay the REALTOR commission. Other fees, like documentation charges, transfer fees, etc., are paid by the buyer.
Some closing costs are negotiable, while others are non-negotiable, like taxes charged by your state or local jurisdiction.
Depending upon the conditions of the Michigan real estate market, the buyer or the seller can negotiate their share of the closing costs. For example, in a buyer’s market, the seller may have to bear a portion of the buyer’s closing costs.
Who Pays Closing Costs on FSBO in Michigan?
While Michigan For Sale By Owner (FSBO) property sellers do not have to pay heavy real estate agent commissions, they cannot completely escape closing costs. Some of these are:
1. Transfer Taxes
Transfer tax is charged by the state and/or municipality before the ownership is transferred from the seller to the buyer. Michigan imposes a state real estate transfer tax (SRETT) at the rate of $3.75 per $500 of the property value. In addition to this, counties may levy a transfer tax of $0.50-$0.75 per $500 of the property value.
2. Seller’s Attorney Fees
The law in Michigan does not mandate the presence of an attorney for FSBO real estate transactions. However, it is highly advised to hire a real estate attorney for FSBO deals to avoid any type of legal risk.
A real estate attorney guides the owner in preparing the necessary documents like the Michigan seller’s disclosure notice and drafts of other legal paperwork. On average, real estate attorneys in Michigan charge $250 per hour.
3. Pre-listing Appraisal
FSBO sellers may have to invest in the pre-listing appraisal, as it would help them find an appropriate buyer in less time. This will, in turn, lower the number of days on the market and make the sale faster.
The cost of home appraisal in Michigan ranges from $250-$400.
» How to Sell a House in Michigan by Owner: A comprehensive guide for FSBO sellers in Michigan.
How Much are Closing Costs in Michigan?
The closing cost in Michigan for sellers is approximately 8%–10% of the home’s agreement value, while the buyers are expected to pay around 2%–5% of the home’s purchase price.
Let’s put this in perspective! The median home value in Michigan is $237,236. So, if you are selling a home in Michigan, you may have to pay $19,000 to $24,000 as closing costs. On the other hand, if you are buying a house in Michigan, your closing costs may range between $4,500 to $13,000.
How Much are Closing Costs for Sellers in Michigan?
As mentioned above, when selling a house in Michigan, you will have to pay some closing costs to transfer the house ownership to the buyer legally. These costs include several fees that need to be paid over and above the net price of the property.
Some seller closing costs are negotiable. Real estate agents in Michigan usually have information about who pays what at closing and can help you save on closing costs.
Here are some of the typical seller closing costs in Michigan.
1. REALTOR Commission Michigan
The seller pays real estate commissions to both the listing agent and the buyer’s agent. The real estate commissions in Michigan usually amount to 5%-6% of the agreement value. According to the typical home value, realtor fees in Michigan may amount to $13,000-$15,000.
» What is the Average Real Estate Commission in Michigan: Check out the average Realtor commission in Michigan.
2. Recording Fee
The recording fee is paid by the seller to make the real estate transaction a matter of public record. The recording fee in Michigan is $30.
3. Home Inspection Fee
Sellers can opt for a home inspection in Michigan to identify any major defects and issues, like plumbing issues, water damage, mold, appliance malfunction, etc., in the house that they must resolve before selling. Home inspection cost in Michigan is usually around $430.
You can choose to resolve the issues found by the Michigan real estate inspector before selling the house to avoid having to offer seller points in lieu of the cost of reparations.
The buyer can also undertake a home inspection. However, if they find undisclosed defects, it might give them the upper hand during negotiations, or they may back out of the deal.
» Selling Home As Is in Michigan: Avoid paying the cost of home improvement by selling your house as is in Michigan.
4. Escrow Fee
An escrow agent is an unbiased third party who helps you and the buyer complete the transaction. They clear the house for sale, transfer the ownership to the buyer, and the respective funds to the seller.
The escrow fee is the remuneration charged by the escrow agent for their services. Escrow firms in Michigan typically charge 1% of the purchase price as escrow fee.
» Michigan Home Seller Closing Costs: Here is a detailed breakdown of seller closing costs in Michigan.
How Much are Closing Costs for Buyers in Michigan?
These are the closing costs paid by the buyer while acquiring the property ownership from the seller. Like seller closing costs, these too are negotiable. Hence, hiring a real estate agent in Michigan can help you save on closing costs.
We have listed some of the typical closing costs for buyer.
1. Loan Origination Fees
Some mortgage lenders charge buyers a loan origination fee to execute the loan with other respective documentation and legal formalities. The loan origination fee in Michigan usually amounts to 0.5%-1% of the mortgage loan amount.
2. Mortgage Escrow Account/ Impound Account
The mortgage lender reserves a part of the buyer’s monthly mortgage payments in an escrow or impound account. This reserve is maintained to pay the property tax and homeowners insurance premiums.
A mortgage servicer manages the mortgage escrow account and makes the payments on behalf of the buyer. As mentioned above, escrow forms usually charghe 1% of the purchase price as fees.
3. Appraisal Fee
Appraisal fees are paid to the professional appraiser who assesses the home value and ensures you get the best competitive price.
The cost for home appraisal in Michigan varies between $250 and $400, depending on the property characteristics like its actual saleable area and its geographical location.
» How Much Does an Appraisal Cost in Michigan: The cost of a home appraisal in Michigan also depends on the home type and loan type. Read more here.
4. Title Insurance
» How Much are Buyers Closing Costs in Michigan: Here is a detailed breakdown of buyer closing costs Michigan.
How to Calculate Closing Costs in Michigan?
It is important to calculate closing costs while selling a house or buying one.
The estimated closing costs give sellers an idea about the home equity they will have after the sale and helps buyers find out the amount they will have to pay over and above the agreement value of the house.
» Closing Cost Calculator: Check out the closing costs calculator for calculating the closing costs for your real estate transaction.
How to Calculate Closing Costs for Seller?
Houzeo’s Home Sale Calculator helps calculate closing costs for sellers in Michigan with a swish and a click! All the sellers have to do is enter their property location, home sale price, mortgage payoff, seller agent commission, and buyer agent commission, and voila!
The Seller Closing Cost Calculator even gives sellers an estimate of their home inspection fee and home warranty fee. With the help of this home sale proceeds calculator, sellers can find out their home equity and be prepared for closing.
» Seller Closing Cost Calculator Michigan: Check out the Michigan seller closing costs calculator to calculate the estimated closing costs for seller in Michigan.
How to Calculate Closing Costs for Buyer?
Houzeo’s Buyer Closing Cost Calculator helps calculate closing costs for buyers in Michigan. To find the estimated buyer closing costs, the buyers have to add the property location, home purchase price, and the down payment in the buyer closing cost estimator.
The closing cost calculator for buyer gives a detailed list of estimated closing costs for buyer in Michigan.
Home buyers can find out everything right from origination fee, appraisal fee and survey fee to title search, attorney fee, recording fee, prepaid interest charges, escrow property taxes, and owner’s title insurance.
The Buyers Closing Cost Calculator even shows which fees have to be paid before closing and which ones have to be paid at closing while buying a house in Michigan.
» Buyer Closing Cost Calculator Michigan: Check out the Michigan buyer closing costs calculator to calculate estimated closing costs for buyer in Michigan.
Closing Costs in Michigan for Refinance
Before we dive into closing costs for refinance, let’s look at the term refinance:
What is Refinancing?
Refinance, also called “Refi,” is nothing but replacing your current loan with one that offers a lower rate of interest. This helps lower monthly mortgage payments.
How Much are Closing Costs in Michigan for Refinance?
Refinancing closing costs are the sum of several expenses paid against any services that were used in the process of underwriting and closing on your mortgage loan, which makes up 3%-5% of the mortgage amount.
The closing cost for refinancing would vary with respect to the property’s location.
Junk Closing Costs to Watch Out For
Junk costs are the additional costs that are imposed by the mortgage lender. These are usually excessive but can be challenged and negotiated for a fairer price. Some of these are:
- Application Fee: The buyer pays this fee to the lender when applying for the mortgage. Not all lenders charge an application fee.
- Loan Processing Fee: This fee is charged by the lender to execute the loan once it has been approved. Borrowers can negotiate for these charges to be waived.
- Mortgage Rate Lock Fee: This fee is a guarantee that the lender will honor the pre-agreed interest rate for a said amount for a set period.
- Underwriting Fee: Mortgage underwriters charge underwriting fee to evaluate and verify loan applications. It is a non-recurring fee. Some lenders charge it in place of the originating fee, while others charge it in addition to the same.
- Courier Fee: A fee of $20-$50 is typically charged in order to cover the courier transactions.
Note: The costs vary by region.
The closing cost in Michigan is the mandatory fee that needs to be paid by the seller & the buyer. This is paid over and above the mortgage loan amount. Where the buyer pays 2%-5% and the seller pays 6%-10% against their share of the closing cost.
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Houzeo’s customer-centric approach, advanced technology, and flat fee packages make it an ideal choice for those looking to avoid paying high commissions and closing costs.
» Houzeo Reviews: Check out Houzeo.com’s reviews before listing your house!
Frequently Asked Questions
1. How much are closing costs in Michigan?
The closing cost in Michigan for buyers are approximately 2%–5% of the home’s agreement value. While the sellers are expected to pay around 6–10% of the home’s purchase price. For sellers, that includes the agency commission too.
2. How much are closing costs in Michigan for buyer?
The buyer closing costs are the charges paid by the buyer while acquiring the property ownership from the seller. These charges included several fees that need to be paid over and above the agreement amount and are negotiable too. Hence, you would need the best listing agent that would benefit you in this deal.
3. How much are closing costs in Michigan for seller?
The seller closing costs are the charges paid by the seller while transferring the property ownership to the buyer. These charges included several fees that need to be paid over and above the agreed amount and are negotiable too. Hence, you would need the best listing agent that would benefit you in this deal.
4. Who pays for title insurance in Michigan?
In Michigan, the seller typically pays for the owner's title insurance policy. If the buyer has taken a mortgage to purchase the house, they pay for the lender's title insurance.
5. Who pays realtor fees in Michigan?
The seller pays REALTOR commission in Michigan to the seller's agent as well as the buyer's agent.
- Who Pays Closing Costs in Michigan Buyer or Seller: Read the blog to know who pays the closing costs in Michigan.
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- For Sale by Owner Websites Reviews: Take a look at our reviews of the best FSBO websites.
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