Key takeaways
- Buyer closing costs in Michigan typically run about 2 to 5 percent of the purchase price, driven mostly by lender fees, the lender's title policy, and prepaid taxes and insurance.
- Seller costs usually land around 6 to 10 percent of the sale price once you include the real estate commission, which is now negotiated and disclosed up front.
- Michigan's transfer taxes are paid by the seller: $3.75 per $500 in state tax plus $0.55 per $500 county tax, about 0.86 percent of the price combined.
- Sellers customarily buy the owner's title policy; buyers pay for the lender's policy required by their mortgage.
- Nearly everything except statutory taxes and recording fees is negotiable, so the contract decides who actually pays.
Closing costs are the fees, taxes, and prepaid items that change hands when a home officially transfers from seller to buyer. In Michigan, both sides pay, but they pay for different things. After helping clients across Oakland, Wayne, and Macomb counties close since 2013, I can tell you the surprises almost always come from the items people never see coming. Here is a plain breakdown of who pays what, with real Michigan numbers, so nothing catches you off guard. Treat the tax details here as general education and confirm your specifics with a tax professional.
What buyers pay
Buyer closing costs in Michigan generally run about 2 to 5 percent of the purchase price, separate from your down payment. Most of it ties back to the mortgage. The main line items are:
- Lender and origination fees: the charge for processing and underwriting your loan, sometimes shown as an origination fee plus assorted lender fees. This is where shopping multiple lenders pays off.
- Appraisal: a licensed appraiser's opinion of value, ordered by the lender, commonly in the range of a few hundred dollars.
- Credit report: a modest fee for pulling your credit during underwriting.
- Lender's title insurance: a policy that protects the lender's interest against title defects. Buyers customarily pay this in Michigan because the mortgage requires it.
- Prepaids and escrow: money collected up front for property taxes and homeowners insurance. Your lender sets up an escrow account and may collect several months of taxes and a full year of insurance so funds are ready when bills come due.
- Home inspection: not technically a closing cost since you pay the inspector directly, but budget for it. In our older housing stock it is money well spent.
- Recording fees: the county register of deeds charges to record the deed and mortgage.
If you are early in the process, my first-time buyer roadmap for Metro Detroit walks through pre-approval and budgeting so these numbers do not arrive as a shock at the closing table.
What sellers pay
Sellers usually carry the larger share, roughly 6 to 10 percent of the sale price once the real estate commission is included. The big pieces are transfer taxes, the owner's title policy, prorated taxes, and commission.
State and county transfer tax
This is the one most sellers underestimate. Michigan charges a State Real Estate Transfer Tax (SRETT) of $3.75 for every $500 of value, which works out to $7.50 per $1,000. On top of that, the county transfer tax is $0.55 per $500, or $1.10 per $1,000. Combined, that is $4.30 per $500, about 0.86 percent of the sale price. The seller is legally responsible for both, and the register of deeds will not record the deed until the tax is paid.
An example: on a $350,000 sale, the state tax is about $2,625 and the county tax adds about $385, for roughly $3,010 in transfer tax. Counties with a population over two million may charge up to $0.75 per $500, but most Michigan counties use the standard $0.55 rate.
One exemption to know: if you sell your principal residence and the property's State Equalized Value at sale is equal to or lower than it was when you bought, you may qualify for a refund of the state portion. Sellers who paid it can file Treasury Form 2796 within four years and 15 days of the sale. Confirm eligibility with a tax professional.
Owner's title insurance, prorated taxes, and commission
In Michigan it is customary for the seller to buy the owner's title insurance policy, which protects the buyer against prior claims, liens, or defects in the chain of title. The buyer's lender policy is separate.
You will also see prorated property taxes. Michigan bills taxes in summer and winter cycles, so the closing agent divides the year's bills between buyer and seller based on the closing date. Because a home's taxable value can reset after a sale, the figures can shift; my explainer on Michigan property tax uncapping covers why the new owner's bill may not match the old one.
The largest seller cost is usually the real estate commission. Following industry changes that took effect in August 2024, compensation is no longer posted on the MLS and is not set by law. Buyer and seller agent compensation is now negotiated and disclosed in writing up front, and buyers sign a written agreement with their agent before touring. Practically, this means you should expect a clear, itemized conversation about commission before you list, rather than a fixed number everyone assumes.
Who pays what, and what is negotiable
Custom assigns most of these costs the way I have described, but the purchase agreement is what actually controls. Sellers can agree to a concession toward the buyer's closing costs, buyers can offer to absorb a fee to strengthen an offer, and either side can ask the other to cover an item. The only costs that are not really up for debate are the statutory ones: the transfer taxes the seller owes and the recording fees tied to the deed and mortgage.
The takeaway is simple. Buyers should budget 2 to 5 percent on top of the down payment, and sellers should plan for 6 to 10 percent off the top, then negotiate from there. When you are ready, I will build a net-sheet estimate around your actual price and county so you can see the real bottom line before you sign anything.
Realtor® with Golden Key Group, serving buyers, sellers, and investors across Metro Detroit since 2013. Call or text (586) 255-2480.
Frequently asked
How much are closing costs in Michigan for buyers and sellers?
As a rough guide, buyer closing costs run about 2 to 5 percent of the purchase price, separate from the down payment, and are driven mostly by lender fees, the lender's title policy, and prepaid taxes and insurance. Sellers typically pay around 6 to 10 percent of the sale price once the real estate commission, transfer taxes, and owner's title policy are included. The exact figure depends on your price, county, and what the contract says.
Who pays the transfer tax in Michigan, and how much is it?
The seller is legally responsible for Michigan's transfer taxes. The state tax (SRETT) is $3.75 per $500 of value, or $7.50 per $1,000, and the county tax is $0.55 per $500, or $1.10 per $1,000. Combined, that is about 0.86 percent of the sale price. The deed cannot be recorded until the tax is paid, though who ultimately pays can be negotiated in the purchase agreement.
Does the buyer or seller pay for title insurance in Michigan?
Both, but for different policies. It is customary in Michigan for the seller to pay for the owner's title insurance policy, which protects the buyer against prior claims and defects in the title. The buyer pays for the lender's title policy, which their mortgage requires to protect the lender's interest. These customs can be adjusted by contract.
How did the 2024 commission changes affect closing costs?
Industry changes effective August 2024 mean agent compensation is no longer advertised on the MLS and is not set by law. Buyer and seller agent compensation is now negotiated and disclosed in writing up front, and buyers sign a written agreement with their agent before touring homes. The result is a clearer, itemized conversation about commission rather than a fixed rate everyone assumes.
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