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Considerations Before Selling a House in Michigan

By Marcia Stewart, Co-Author of Nolo's Essential Guide to Buying Your First Home and Every Landlord's Legal Guide
Find out key issues involved with selling a house in Michigan.

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Whether you're moving up from a cramped starter home or leaving an empty (and too-large) empty nest, selling a house is often complicated, with many legal ramifications. Although the steps involved in selling a home are similar regardless of where you live, Michigan's real estate laws and practices are unique in some respects.

Becoming familiar with the process early will help you avoid problems later. Here’s an overview of the basics—from working with a real estate agent to making legally-required disclosures to closing the deal.

Working With a Real Estate Agent

Most people selling their home in Michigan work with a licensed real estate broker or agent. A good real estate agent will help price your house, based on a comparative market analysis (or comps), accurately assessing the current values of similar homes in your area; effectively market your house to prospective buyers; and handle other tasks, such as reviewing house purchase documents and negotiating with buyers.

Before signing a listing agreement (discussed below) with any agent, get references from other home sellers and check customer reviews on sites such as Zillow and Trulia. You can find licensed Michigan real estate agents at the Michigan Department of Licensing and Regulatory Affairs and at the Michigan Realtors website.

Signing a Listing Agreement in Michigan

Once you find a real estate agent you want to work with, you’ll sign a “listing agreement” giving the agent the right to market and handle the sale of your house. Most real estate agents use standard forms created by their state or local Realtor association, such as Michigan Realtors.

Listing agreements typically cover the following terms.

  • The real estate agent commission that you (the seller) will pay. This typically ranges from 5-6% of the house sales price, and is split between your real estate agent and the buyer’s agent.
  • The type of listing. Most listing agents will want you to sign an exclusive right to sell listing, which obligates you to pay a commission to the agent regardless of who brings in the buyer (see the sample Midland Board of Realtors Exclusive Right to Sell Agreement). Other arrangements are possible, however, such as an open listing, in which you agree to pay a commission to whichever agent brings in a buyer, or an exclusive agency listing, in which you agree that your agent is the only agent authorized to sell your house, but that you will pay a commission only if the agent brings in the buyer (not, for example, if you do).
  • Duration of listing. In all cases, the listing agreement will cover a set amount of time, such as 90 days.
  • Listing price. Your agent will recommend the appropriate selling price by comparing prices of similar homes (“comps”) that have been listed in your immediate area, based on his or her experience and data found in a Multiple Listing Service (MLS). To educate yourself as to whether the agent is recommending an appropriate price, the National Association of Realtors’ website is a good source of information on prices of houses currently on the market, and websites such as Zillow and Trulia provide data on actual sales prices. See the Nolo article, Listing Your House: What List Price Should You Set? For more details.
  • Items included or not included in the sale. For example, you may plan to leave behind a built-in dishwasher (which is therefore part of the property that the agent is contracted to sell), but exclude a washing machine that you plan to move to your new home.
  • Duties and obligations of seller and real estate agent. Your agreement will spell out how the real estate agent will list or market your house, what type of insurance you must maintain on the property, and what disclosures you must make.

Making Real Estate Disclosures in Michigan

State law in Michigan (Michigan Comp. Laws. Ann. Sections 565.952 and 565.957) requires that sellers provide buyers a disclosure form, which includes details on the property, including:

  • items such as specific appliances or a fireplace, and whether or not they are in working order
  • defects in the electrical system, roof, and other key components or systems
  • problems such as flooding or fire damage, and
  • any pending litigation that could affect the property.

To aid sellers in making all required disclosures, the Michigan Association of Realtors offers a disclosure form.

In addition, if your house was built before 1978, you must comply with federal Title X disclosures regarding lead-based paint and hazards. See the lead disclosure section of the EPA’s website, for details.

What Goes Into Michigan Offers, Counteroffers, and Purchase Agreements

A buyer who wants to purchase a particular Michigan home will make the seller a written offer, specifying the price, proposed down payment, and any contingencies, such as a satisfactory inspection report. (See the Nolo article Contingencies to Include in Your House Purchase Contract for details). Other common contingencies include the buyers’ arranging financing or selling their current house.

You may reject an offer outright, accept it as, or (more typically) respond to a buyer’s offer, with a counteroffer. A counteroffer accepts some or most of the offer terms, but suggests changes to others, such as a higher price or a closing date that’s sooner than the buyer proposed.

A legally binding contract, typically called a purchase agreement, is formed when you accept a final offer (agreeing to any changes from the original offer), and notify the buyer of its acceptance. Your agreement will contain key terms of the sale, such as the agreed-upon price, contingencies, financing terms, dispute resolution, and closing date.

Once a purchase agreement is signed by both buyer and seller, the transaction will go into what’s called “escrow.”

What Is Escrow?

Escrow is the time period between signing the purchase agreement and closing on the house. You will choose an escrow or title agent, a neutral third party, to serve as intermediary and supervise the process (preparing title reports, processing loans, removing buyer contingencies, and so on).

The buyer typically has a lot more to do during this time period than the seller. By the close of escrow, the buyer will need to finalize financing, remove all contingencies, have the house appraised (typically required by mortgage lenders), and get title insurance—usually under set deadlines. Issues often come up that require negotiating, such as who will pay for repair problems identified in an inspection report. The buyer may insist that you pay to remedy a defect or lower the purchase price. If you cannot reach an acceptable agreement, the buyer may have the right to back out of the deal.

What Happens at the Closing of Your Michigan Home

By the close of escrow (known as the closing or settlement), you and the buyer should have fulfilled all the terms of your purchase agreement. At the closing itself (sometimes a meeting of the parties, other times conducted in separate locations), all final documents and funds will be exchanged between buyer and seller. The buyer pays you the purchase price, and you give the buyer a deed and other transfer documents and clear title to the house or condo. You pay off any outstanding loans on your property and pay commissions to the real estate agents (per your listing agreement).

The closing normally takes place on one day, though it’s possible to go over several days.

Sellers do not usually need to be present at a Michigan closing so long as all costs are paid and documents are signed. Typically, the buyers will sign the final documents at the office of their title company or escrow agent and pick up the keys. Then the buyers will record the new deed their name at a local government office, and the home is officially theirs.

For more details, see Escrow and Closing in Buying or Selling a Home. You’ll also find useful information on Sandy Gadow’s website, Buying, Selling, and Closing Simplified, which includes a state-by-state guide to closing practices.

Working With a Lawyer

Unlike some states, Michigan does not require that sellers involve a lawyer in the house-selling transaction. Even if it’s not required, you may decide to engage a lawyer at some point in the process—for example, to review the final contract or to assist with closing details. Or, you may want a lawyer’s help drafting a lease agreement if you plan to rent the home back for an extended period of time after the house closing, or if problems show up on the title report such as a lien on your property. And if you are selling your home without a real estate agent (a “for sale by owner” or FSBO), it may be useful to hire an attorney to help with the legal paperwork.

Check out Nolo’s Lawyer Directory, to find an experienced real estate attorney in Michigan.

More Information on Selling a House

The Selling a House section on Nolo.com includes a variety of useful articles on all aspects of the house selling process, including marketing strategies and tax issues.

For detailed information on every phase of selling a home, from marketing to closing, see Selling Your House: Nolo’s Essential Guide, by Ilona Bray.

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