Buying & Selling Frequently Asked Questions

Frequently asked questions and answers about buying or selling a house in Southeast Michigan.

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• What is a Seller's Disclosure Statement?
• What about Property Inspections?
• What is Earnest Money?
• How do Property Taxes work?
• What does "Escrow" mean?
• Should I get Legal Advice?
• What are Transfer Taxes?
• What is Title Insurance?
• What about Powers of Attorney?
• What are Dower Rights?
• What about the money?
• What's the difference between Condominiums vs. Site Condominiums?
• Is buying a newly constructed home any different?

What is a Seller's Disclosure Statement?

Michigan law requires that sellers of all properties (other than new construction or property being sold by a non-occupant fiduciary) provide the purchaser with a statutory Seller's Disclosure Statement. This document provides the purchaser with information about the condition of the property to the best of the seller's knowledge. It is not a warranty or guarantee as to the condition of the property. TOP

What about Property Inspections?

Seller's Disclosure Statements are an indication, but not a guarantee, of the condition of the property. Most, but not all, municipalities in Michigan do not require any municipal property inspections prior to the sale of residential property. We strongly recommend that all purchasers engage a competent private building inspector and pest inspector to inspect the property and advise the purchaser as to its condition and as to the presence of any wood boring insects.

All Coldwell Banker Weir Manuel purchase agreements contain an inspection contingency provision which allows the purchaser a reasonable length of time to secure these inspections. Purchasers should act diligently, however, because sellers typically agree to such contingency periods of not more than seven days to after the purchase agreement has been negotiated to allow for these inspections.

Should any of these inspections reveal conditions which were unforeseen or undisclosed during the negotiation of the purchase, purchasers have the right to ask the seller to remedy the problem, give the purchaser a credit for cost of resolving the problem or, in extreme cases, rescind the purchase agreement. All Coldwell Banker Weir Manuel Sales Professionals are trained in these matters and can provide you with advice and guidance should the need arise. TOP

What is Earnest Money?

There is no statutory provision requiring an earnest money deposit in the state of Michigan. Most sellers, however, are unwilling to accept a purchase offer unless there is a significant earnest money deposit. The amount of the deposit is negotiable. Typical deposits range from three to six percent of the purchase price, could be higher and lower depending upon the specifics of the transaction. By law, any such deposits must be held in the broker's non-interest bearing trust account to be disbursed at closing or as otherwise agreed to by the buyer and seller. TOP

How do Property Taxes work?

Property taxes in Michigan are collected by the local municipality and are subsequently disbursed to the cities, townships, school districts and counties. In most cases, taxes are billed and collected twice each year, in July and December. When investigating property taxes on a potential acquisition, it is important to verify property tax amounts with the local treasurer to ensure that you have been provided with accurate information including both summer and winter amounts, and that the amounts are based on the most recent tax assessment.

Property tax estimates are complicated by the fact that there are homestead and non-homestead millage rates and the taxable value will be "uncapped" upon sale or transfer of the property. Consult your Coldwell Banker Weir Manuel Real Estate Professional to help you understand these issues.

In most southern Michigan jurisdictions property taxes are paid in advance. This means that you will be required to reimburse the seller for the unused portions of all pre-paid taxes. This amount will be included in your real estate closing costs. TOP

What does "Escrow" mean?

"Escrow" can mean different things to different people. Michigan is a non-escrow state, meaning that the buyer and seller closings take place simultaneously with both parties normally present. Collectible funds are brought to the closing by the buyer and typically disbursed to the seller at the closing.

Frequently a portion of the seller's proceeds is 'held in escrow' after the closing by the real estate broker or title company for the future payment of water bills, seller occupancy charges or repairs that may need to be made to the property. These funds will only be held based upon the written agreement of both the buyer and seller and an escrow agreement which will be signed at closing. TOP

Should I get Legal Advice?

While licensed real estate salespersons and brokers are allowed to draft and negotiate legal documents relating to the lease, purchase and sale of real property in the state of Michigan, most brokers and salespersons are not attorneys. Therefore, they cannot give legal advice. It is recommended that anyone buying or selling real property seek the advice of a real estate attorney. When hiring an attorney, it is important to ask if the individual has specific knowledge of Michigan real estate statutes. TOP

What are Transfer Taxes?

State and County transfer taxes are charged on all real estate transfers in Michigan, other than on a few specific exempt transactions. Currently the charge is $8.60 per each $1,000 of the sale amount ($7.50 state tax, $1.10 county tax). Although by law the seller is required to pay this tax, the parties may negotiate a different arrangement in writing. The tax is collected out of the transaction proceeds at closing. TOP

What is Title Insurance?

Purchase agreements in Michigan typically call for the seller to convey marketable title to the purchaser, subject to certain restrictions such as zoning, building and use restrictions, easements, etc. Accordingly, most purchase agreements require the seller to insure the marketability of title by providing the purchaser with an owner's title insurance policy. The cost of this policy is normally paid by the seller.

If the purchaser is securing a new mortgage loan to finance the acquisition the lender will require that the purchaser secure and pay for a mortgage title insurance policy insuring marketable title to the lender in order to perfect the lender's lien. This will be part of the purchaser's mortgage closing costs. TOP

What about Powers of Attorney?

Sometimes sellers or purchasers may be unavailable to execute closing documents on the scheduled closing date. While this should be avoided if possible, under certain circumstances a power of attorney can be given to a spouse, attorney or other representative of the seller or purchaser to execute documents on their behalf. Any time this is necessary, the title company must approve the power of attorney form in advance. The title company will usually draft any necessary power of attorney forms for the parties. Please be aware that should a power of attorney be necessary, significant advance notice should be given to all parties. TOP

What are Dower Rights?

Michigan is a dower rights state which means that a married woman has an equal interest in any property owned by her husband, regardless of when the property was acquired or whether she is specifically named on the deed. For this reason, married men cannot acquire property in their name only if they are doing so with new mortgage financing, inasmuch as the lender will require the wife's signature and name on the deed to perfect their lien. A married woman may acquire property in her name only. TOP

What about the money?

Real estate purchases require that the purchaser bring collectible funds to closing. Closing funds are typically provided in the form of cashiers' checks issued by a bank or credit union. Purchasers and Sellers should be aware that funds from out of state sources may take several days to clear the banking system. Further, wire transfers not sent prior to 11:00 a.m. will most likely not be received until the next business day. TOP

What's the difference between Condominiums vs. Site Condominiums?

Most homes built in Michigan prior to 1980 are either single family detached residences on platted lots, unplatted acreage parcels (land and buildings are owned together by deed holder) or attached condominiums (land and structure owned by condominium association, interior of structure owned by deed holder). Many of the detached single family developments built after 1980 have been developed as "site condos". In these cases, both the land and the building are owned by the deed holder, but the common areas and use restrictions may be controlled by an owner's association. Consult with your Coldwell Banker Weir Manuel Sales Professional for details about the different forms of ownership and their advantages. TOP

Is buying a newly constructed home any different?

The procedures for acquiring new construction in Michigan vary significantly from those in some other states. Depending upon your geographic areas of interest, there may or may not be new construction available to you. Ask your Coldwell Banker Weir Manuel Sales Professional about new home communities that are located in your area(s) of interest. TOP

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