Closing costs in Michigan

Finding your dream home in Michigan is an exciting journey, but it’s crucial to be well-informed about the associated costs. Closing costs, a significant aspect of any real estate transaction, can add up to thousands of dollars. In Michigan, these costs average around 2.7% of the home’s sale price, making it important for both buyers and sellers to understand what to expect at the closing table.

Closing Costs Breakdown

1. Average Closing Costs in Michigan

   According to data from CoreLogic’s ClosingCorp, closing costs in Michigan typically amount to an average of 2.7% of the home’s sale price. For a median-priced home of $259,500, this would translate to just over $7,000 in closing costs.

2. Location Matters

   Closing costs vary based on location. For instance, in Ann Arbor, where the median home price is $465,000, closing costs could total $12,555. On the other hand, in Kalamazoo, with a median price of $191,000, the figure would be significantly lower at $5,157.

Who Bears the Costs?

1. Buyers’ Closing Costs

   As a buyer, most of your closing costs will be related to your home loan. These may include:

   • Loan application and origination fees
   • Credit report fee
   • Mortgage points (if purchased)
   • Home appraisal fee
   • Home inspection fee (optional but crucial)
   • Title insurance and search fees
   • Property taxes and insurance premiums

   If you’re buying with cash, your closing costs will be considerably lower.

2. Sellers’ Closing Costs

   Sellers typically cover more extensive closing costs, particularly real estate agent commissions, which typically range from 5 to 6 percent of the sale price. For instance, on a median-priced $259,500 home, a 5.5 percent commission would amount to $14,272. Other costs for sellers may include:

   • Title-related fees
   • Transfer taxes
   • Outstanding property taxes and HOA fees (if applicable)
   • Seller concessions (if agreed upon)
   • Wire transfer fees

Reducing Closing Costs

While government fees and taxes are non-negotiable, many other closing costs can be discussed:

1. Negotiating Realtor Commission

   Sellers can negotiate their Realtor commission, which is typically the largest expenditure.

2. Buyer Assistance Programs

   First-time homebuyers, in particular, should explore financial programs that help cover closing costs and down payments. Michigan offers various programs, and local counties and cities may have their own as well.

Conclusion

Navigating closing costs in Michigan is a crucial aspect of any real estate transaction. Understanding what to expect and exploring options for negotiation and assistance programs can help both buyers and sellers make informed decisions. Working with an experienced local real estate agent is also invaluable in ensuring a smooth and successful transaction. Whether you’re in downtown Detroit or the Upper Peninsula, Ann Arbor or East Lansing, a knowledgeable agent can be your guide in the Great Lakes State.