Key Insights into Closing Costs for Home Sellers in Metro Detroit

Selling a home can bring a sense of excitement, but it also comes with expenses that might catch you off guard. Picture this: you’re at the closing table, expecting solid proceeds, only to discover significant deductions due to closing costs. If you aren't prepared, these costs can eat into your profit substantially.

In this guide, we’ll break down what sellers in Metro Detroit typically pay, why these costs exist, and strategies to maximize your profits when selling your home.

What Are Closing Costs?

Closing costs are the final expenses you pay to wrap up the sale of your home. They cover everything from title transfers and legal fees to other services necessary to close the deal. Typically, sellers in Metro Detroit pay 6% to 10% of the home’s sale price in closing costs.

Understanding these costs beforehand can help you budget efficiently and avoid any surprises at the closing table.

Common Closing Costs for Home Sellers in Metro Detroit

1. Transfer Taxes and Recording Fees

Transfer taxes are state and local fees paid for legally transferring the ownership of your home.

• How much do transfer taxes cost? In Michigan, transfer taxes can range from 0.86% to 1.22% of the sale price.
• Who pays these taxes? Typically, the seller covers the cost in Metro Detroit, but sometimes buyers may agree to pay part or all of it.

2. Title Insurance (Owner’s Policy)

Title insurance protects buyers from potential claims or disputes on the property. While buyers usually purchase their policy, many sellers also pay for an owner’s title policy.

• Is title insurance mandatory? No, but it's common practice in Metro Detroit home sales.
• Cost: Typically, it amounts to 0.5% to 1% of the home’s sale price.

3. Escrow and Closing Fees

Escrow services manage funds and documents to ensure a secure transaction. These fees also cover the paperwork for transferring ownership.

• What do escrow companies do?
• Hold funds in a secure account.
• Ensure all contract terms are met before funds are released.
• How much do these fees cost? Between $500 and $2,000, depending on location and provider.

4. Prorated Property Taxes

Because property taxes are paid annually, you need to pay your share up until the closing date.

• How is it calculated? The total property tax bill is divided based on the number of days you owned the home that year.
• Example: If property taxes are $6,000 per year and you sell halfway through the year, you owe $3,000 in prorated taxes.

5. Homeowners Association (HOA) Fees

If your home is part of an HOA, expect additional fees at closing.

• Unpaid dues: Any outstanding HOA fees must be settled before closing.
• Transfer fees: Some HOAs in Metro Detroit charge $200 to $1,000 to process the ownership change.

6. Attorney Fees (If Required)

In Michigan, it’s advisable to hire a real estate attorney to review and finalize sales documents, even though it's not mandatory by law.

• Cost: Generally ranges from $500 to $1,500.
• What do they do?
• Review contracts and other closing documents.
• Ensure the sale complies with local laws.

How to Reduce Your Closing Costs

Closing costs can take a sizable chunk out of your home sale profits, but the good news is that there are ways to cut back on these expenses. Whether through negotiation, strategic choices, or finding cost-effective service providers, you have options to keep more money in your pocket. Here are some practical ways to lower your closing costs as a seller.

Sell Without an Agent (FSBO) — this means no listing agent commission. However, you’ll still need to:

• Pay the buyer’s agent commission (usually 2.5% to 3%).
• Handle marketing, negotiations, and paperwork yourself.

FSBO works best if you have experience in real estate or a buyer already lined up.

Ask the Buyer to Cover Some Costs

• In some deals, buyers agree to cover certain closing costs instead of negotiating a lower sale price.
• This works best in a seller’s market, where buyers compete for homes.

Shop Around for Service Providers

• Get multiple quotes for title insurance, escrow services, and attorneys.
• Some companies offer discounts for bundled services.

Preparing for Closing

As you approach the finish line of your home sale, there are still a few final steps to take before closing day. Proper preparation can help avoid last-minute surprises and ensure everything goes smoothly. Here’s what you need to do before handing over the keys.

1. Review the Closing Disclosure Early

• You’ll get a Closing Disclosure a few days before closing that lists all costs.
• Review it carefully to catch any unexpected charges.

2. Finalize Repairs and Paperwork

• Complete any agreed-upon repairs before closing.

Make sure liens, HOA fees, and taxes are paid to avoid delays.

Final Thoughts

Selling a home involves more than just finding a buyer—it’s important to be aware of closing costs that can add up. By knowing what to expect and planning ahead, you can keep more of your hard-earned money when selling your home in Metro Detroit.