Closing Costs in Michigan: A Guide for Sellers
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Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
Disclaimer: This article provides estimates of a seller’s closing costs that are meant for educational and research purposes only; our calculations are not a guarantee.
When selling your home, the dollar amount it sells for and what you’ll actually walk away with will likely differ substantially. Before planning your next steps, you’ll want to factor in your closing costs to determine how much money you’ll actually pocket when the sale is completed.
If you’re selling your home in the Wolverine State, you might have asked yourself, “What are my closing costs in Michigan?”
Michigan sellers usually pay closing costs ranging from 6% to 10% of the home’s sale price. These costs include title searches, title insurance, and transfer taxes.
Our guide will break down seller closing costs in Michigan, giving you an idea of what to expect regarding your bottom line.
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What are closing costs?
Closing costs are any fees paid when finalizing the purchase or sale of your property. They can include a wide range of fees, like property taxes or insurance; most are standard for homeowners and sellers. Others, like transfer taxes, will vary depending on where your home is located when it sells.
Mortgage/Loan payoff amount
Before transferring your title to a new owner, you’ll need to pay off any remaining balance on your mortgage. This will include the principal (the amount actually owed), along with any remaining interest. To get an idea of what you’ll owe, you can use a closing costs or mortgage payoff calculator to assist you.
Depending on how deep you are into your mortgage, you may also be on the hook for a pre-payment penalty. Lenders typically charge this to deter homeowners from paying their mortgages off early, as it costs the lender money.
Property taxes
According to WalletHub, Michigan ranks 38th in the country in terms of property taxes, just outside of the top 10 highest in the nation.
Real estate in Michigan is taxed at a rate of 1.35%, with a median home value in the state of $201,100. To get a better idea of what you might owe, consult a property tax calculator.
Reconveyance fee
Once you’ve finalized the sale of your home and your mortgage is paid off, you’ll usually be responsible for a reconveyance fee. You’ll receive a reconveyance deed, which releases you from your debt. Your mortgage company will have to record the deed, and the fee will depend on the city, state, or county where you are located.
Realty transfer tax
You also might be responsible for what’s known as a realty transfer tax. These are fees assessed by local governments whenever a property changes ownership.
These taxes are sometimes called a “Deed Excise tax” or a “Documentary Stamp tax.” Who ultimately pays these taxes depends on the state, city, or county where the sale occurs.
In Michigan, for example, the seller is typically responsible for covering transfer taxes as part of the closing costs, but this can fall to the buyer, depending on the terms of the sales agreement.
A statewide transfer tax is levied on real estate transactions exceeding $100 in total value. This tax is levied at $3.75 for every $500 (or a portion of $500) of the property’s value.
Additionally, there is a county transfer tax rate in Michigan of $0.55 per $500.
Real estate agent commission
Unless you’re selling your home for sale-by-owner, you’ll likely have used a local agent. Research indicates that an agent’s expertise can significantly impact your sale: In 2023, homes sold with an agent’s assistance had a median price of $405,000, compared to $310,000 for FSBO sellers.
Working with a real estate agent means paying a commission. This fee covers various services, such as accurately pricing your home, marketing it effectively, and negotiating with buyers to ensure you receive the best possible price and terms.
It should be noted, however, that on March 15, 2024, the National Association of Realtors (NAR) announced a landmark lawsuit settlement that will change the way real estate agent commissions are handled in the future. These changes will “decouple” seller and buyer agent compensation. Industry experts predict that this decoupling will likely lower agent fees and give buyers the ability to negotiate commission amounts directly. Learn more.
HomeLight’s transaction data reveals that the national average real estate agent commission is 5.8% of the property sales price. This commission typically includes fees for both the listing and buyer’s agents, with sellers customarily covering the cost.
Use HomeLight’s commission calculator by entering your city for commission data tailored to your specific area.
Attorney Fees
Some states require an attorney to be present when closing the sale of a property. Michigan is not one of these states. However, it can still be a good idea to consult a real estate attorney anyway, particularly if you are selling your home FSBO or if you’re selling because of a complex divorce or inheritance situation.
Homeowners Association/Condo Fees
One of the biggest sticking points for sellers is the fees levied by their homeowners’ association (HOA) or condominium association fees.
Like other fees we’ve discussed, these will vary, not just because of the different rules and regulations of your local HOA but also because HOA regulations vary greatly depending on the state. These fees (or dues) are usually prorated at the time of the sale.
HOAs in Michigan have broad powers. They can levy fines or enforce property upkeep and appearance restrictions (such as yard maintenance). HOA fees in Michigan average around $200 monthly, depending on the area. As such, it’s important to be caught up on fees you may owe to an HOA before selling your home; you will have to pay them eventually.
Seller’s concessions
Sellers might owe money at closing due to financing concessions agreed upon during negotiations. These concessions often include cash for closing costs, repairs, and home warranties.
A common seller concession is repair credits. This is sometimes used when a buyer has a contingency in their offer, usually related to home inspection.
In that case, they can back out of the deal with earnest money intact if the seller refuses to address necessary repairs identified by the home inspector. Instead of making the repairs themselves, sellers can offer repair credits—cash to cover the cost of needed repairs—to the buyer at closing. It’s important to note that these are less common in seller’s markets, usually because contingencies can be off-putting to potential buyers.
Miscellaneous closing costs/fees
These are some of the most common closing costs you’ll encounter as a seller in Michigan. However, it’s important to remember that many closing costs are negotiable. Your buyer may be willing to negotiate on some of these closing costs, or a real estate attorney or agent may be able to help you get a better deal.
HomeLight can connect you with a top local agent to ensure you pay for the least closing costs possible without jeopardizing your sale.
Or, if you prefer to avoid the hassle of dealing with an agent or managing closing costs, consider HomeLight’s Simple Sale program. We make selling your home easy in just three steps. Just enter some basic information about your home, speak with one of our Home Consultants, and you can sell your home in as little as 10 days.
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