If you’ve been reading the headlines about the surge in housing prices, you might be considering whether you should sell your house in Michigan. Home values have indeed surged in the Great Lakes State, notching a 10.6 increase in average sales price so far in 2022 versus 2021, according to Michigan Realtors data. However, it’s not the same story in every part of the state. For example, while home prices are up by a whopping 38 percent in Hillsdale County, they have jumped only 5.6 percent in St. Clair County.
And while thinking about putting your home on the market may have you adding up your potential profits, don’t move so fast: There are plenty of costs associated with selling your house. Read on to understand how to get your home in Michigan ready to sell, when to list it and what to expect from the entire process.
Are you ready to sell?
Should you sell your house now, or should you wait? There isn’t a one-size-fits-all answer to the question of timing. But if you’re waiting because you think housing prices will continue to soar, think again. Goldman Sachs economists recently predicted that housing prices will remain flat in 2023, so don’t expect another huge bump in average home prices in Michigan.
Make sure you’re prepared, though. If you’re trying to sell your house while buying another, have a plan in place in case things don’t go perfectly (which they rarely do in real estate). What if your home takes longer to sell than you expect? What if you can’t find another place to buy? Are you willing to potentially deal with the cost of a short-term rental?
Additionally, if you’re selling your home in Michigan with plans to move to another state, you need to consider the cost of living in your new destination. Bankrate’s cost of living calculator can help you understand what you can afford in different cities. For example, if you want to flee the winter cold of Grand Rapids for the sunny skies of Fort Lauderdale, get ready for your cost of living to increase by 30 percent.
Preparing to sell
If you’re ready to sell, you’ll need to get your place ready to wow any buyer that walks through the door. Consider these three key questions:
1. Is it worth upgrading your home before you sell?
Making major upgrades, like remodeling your kitchen or finishing your basement, might sound like they will help your home bring in a hefty sum. However, the reality is that even the best home improvements don’t normally manage to recoup their full costs at resale. It’s better to consider cheap and easy ways to boost your home’s value.
2. What should you repair before you sell?
Homebuyers are spending more money than ever on purchasing new homes, so the last thing they want to do is pay even more to deal with problems. With that in mind, it’s wise to think about any obvious faults that you wouldn’t want to inherit if you were buying the place, like leaky faucets or cracked tile. You don’t have to deal with everything, though — some issues are not worth fixing.
3. Should you pay for staging?
You get dressed up for a first date, right? Your house may need to do the same. First impressions matter, and staging your home can give the property that extra shine that turns the heads of prospective buyers. They may dig even deeper into their wallets: Staged homes sold for around $40,000 more than their asking price in 2021, according to figures from the Real Estate Staging Association. Ask your agent if your home could benefit from paying a professional to declutter, organize and spruce things up.
When is the best time to sell a house in Michigan?
The month of May has proven to be the magic ingredient for home sellers in Michigan. It’s when homes spend the shortest amount of time on the market, which is a big indicator of the best time to sell a house. The longer a home sits without selling, the higher the risk that you might need to drop the price.
Redfin data shows that the typical Michigan home spent just 13 days on the market in May 2021, and 12 days on the market in May 2022 — compare that to the 26 days it took to sell a property in January of this year. It makes sense, too: Buyers aren’t exactly excited to pile into the car in the middle of a Midwest winter to go tour homes. So, put your house up for sale when it feels like it could be on a “Pure Michigan” postcard.
Find a local real estate agent in Michigan
The right real estate agent can be the difference-maker in selling your home, in Michigan or anywhere. While some sellers are tempted to take the FSBO (For Sale By Owner) route, selling on your own means doing a ton of work: crafting and marketing the listing, coordinating showings, negotiating with potential buyers and more. And all that work might actually wind up getting you less money. Statistics from the National Association of Realtors show that agent-assisted sales usually sell for around 18 percent more than sales without an agent.
If you’re really concerned about paying a Realtor’s commission fee, don’t forget that commissions are negotiable. Ask agents if they’re willing to offer a discount. If you can score a 0.5 percent break from the typical 3 percent, you would save $1,500 on a $300,000 sale.
Price your home competitively
Now, it’s time for the most important piece of the selling puzzle: determining an asking price for your home. To get started you can use some online tools to estimate how much your home is worth, but don’t put a lot of faith in those numbers. Computer algorithms don’t know if you turned an unused bedroom into a great home office, for example, and they don’t know about the high-end appliances you installed in your kitchen. So you’ll want to get expert advice from a knowledgeable local real estate agent. An agent will walk you through comps of recently sold homes that are similar to yours and create a thorough comparative market analysis. It’s an important exercise that shows what buyers have been willing to pay for properties like yours.
In addition to thinking about your home’s value, you may want to consider the current state of the market. While the shortage of housing supply in Michigan spells good news for you as a seller, concerns about a potential recession and surging mortgage rates can create trouble. Your agent can help you find the magic number that convinces buyers it is a great time to buy your home.
Documents and disclosures in Michigan
Has your home ever been damaged in a flood? Is it in a restricted parking area? How old is the water heater? These are just a few of the questions you’ll need to answer on the state’s seller’s disclosure statement. Michigan sellers are required to complete this, with all knowledge about any defects that the buyer should be aware of before agreeing to purchase the home.
In addition, if your home is part of a homeowners association, you should be prepared to hand over a range of documents about the association. These can include bylaws, past meeting minutes from the board and any upcoming special assessments that the buyer will need to pay.
Need to sell your home fast?
While homes in Michigan have been selling fairly quickly, you might not have a minute to waste. If that’s the case, here are three options to sell your house fast.
- Find an iBuyer: Depending on where in the state you live, you might be able to sell to an iBuyer — an online company that will make an offer on your home in less than 24 hours. For example, Opendoor, one of the biggest names in iBuying, purchases properties in Detroit. It’s a fast track to a sale, but you’ll bring in less money than you would get with some patience on the open market.
- Sell for cash: You may want to search for companies that buy houses for cash, particularly if your home is in need of major repairs that you don’t want to make. As with iBuyers, though, you probably aren’t going to get top dollar — these companies are typically real estate investors, and investors need to buy low so they can turn a profit.
- List as-is: One reason why it can take so long to sell a house is the back-and-forth negotiation between buyer and seller. If you list the home as-is, you’re telling a buyer that you aren’t going to deal with that kind of bargaining: What they see is what they get (no matter what the home inspection turns up).
You’re almost done with all the work of selling your house in Michigan! When you get to the closing, there’s not much left to do other than hand over the keys to the buyer and hand over some cash to cover your closing costs.
Cost of selling a home in Michigan
Selling a home isn’t free. For starters, you’ll need to pay commission fees, typically 3 percent of the sale price to your own agent and 3 percent to the buyer’s agent. On a $300,000 sale, that wipes away $18,000 of profits immediately. Here are some other closing costs that can impact your net proceeds:
- Title insurance: While the buyer will likely pay for the lender’s title policy, sellers typically cover the cost of the owner’s policy in Michigan. On a $300,000 sale, that comes out to around $1,424.
- Transfer taxes: Michigan charges some hefty real estate transfer taxes, and unfortunately, these are usually covered by the seller. The state charges one fee of $3.75 for every $500 of value — and the county charges an additional $0.55 for every $500 of value. So, if you sell your home for $300,000, the transfer taxes add up to $2,580.
- Attorney fees: You aren’t required to hire an attorney when you’re selling a home in Michigan, but it’s always smart to have professional legal help when you’re dealing with a large sum of money and potential contract liabilities. The cost varies based on their rate and the number of hours they need to put into your deal.
- Concessions: Often, if an issue turns up in the home inspection, the buyer will ask the seller for a concession, or a dollar amount to cover the cost of the needed repairs. If you agree, you’ll wind up paying a portion of their closing costs. However, you don’t have to say yes. Your agent and attorney will be trusted resources when reviewing concession requests.
Take the first step
Are you ready to make the most of the current seller’s market in Michigan? It’s time to arrange interviews with a few different real estate agents. Some agents might have decades of experience in your Michigan town, and others might be in the early part of their careers. Do your research about how they’ve performed for clients in the past, and ask each candidate about how they will approach your business.