Michigan

Michigan is a non-attorney closing state with a strong title-company convention. Closings are coordinated by title companies; attorneys are involved only when retained specifically. The state's Statewide Buy-Sell Agreement form (published by the Michigan Realtors) is the dominant contract template, with riders for specific contingencies.

Michigan has gone through dramatic property-market cycles, the post-2008 collapse hit Detroit and surrounding counties harder than almost anywhere else, followed by a multi-year recovery and now sustained appreciation. The state's structural property-tax framework, set by Proposal A in 1994, is the single most distinctive feature of Michigan residential real estate and shapes both the assessment math and the buyer-side conversation about expected first-year property tax bills.

Proposal A and the taxable-value cap

Michigan's 1994 Proposal A caps the annual increase in taxable value at the lesser of inflation (CPI) or 5%, regardless of how fast the home's market value appreciates. When ownership transfers, the taxable value resets ("uncapping") to the state equalized value (SEV), which is roughly 50% of market value. The new owner's tax bill in year one is calculated on the uncapped taxable value, and Proposal A's cap then applies going forward.

The practical effect: long-held Michigan homes can have taxable values dramatically below market, a home a 20-year owner pays $2,500/year on may carry a $5,500/year tax bill for a new buyer after uncapping. Buyers should ask the listing agent or county assessor for the post-uncapping estimate before committing to a price, because the listed taxable-value-based property-tax line on Zillow or the seller's disclosure is often misleadingly low.

Michigan also has a principal residence exemption (PRE), a partial exemption from school operating millage, applicable to owner-occupied primary residences, that reduces the effective rate by roughly 18 mills (about 1.8% of taxable value). New owners file the PRE form with the local assessor after closing to claim the exemption going forward. The form is short and free; missing it can mean an extra $1,000–$3,000 in property tax annually depending on property value.

State and county transfer tax

Michigan's state transfer tax is 0.75% of consideration, paid by the seller. Counties also charge a transfer tax of $0.55–$1.10 per $1,000 (0.055%–0.11%), also seller-paid. Combined seller transfer tax is roughly 0.81%–0.86% of sale price, modest by national standards. On a $400,000 sale, that's $3,200–$3,440.

There's no state-level income tax cap-gains layer above the federal rate, Michigan's flat 4.25% income tax applies to long-term cap gains as ordinary income.

What buyers should know

The Michigan Statewide Buy-Sell Agreement gives buyers explicit contingency periods. Inspection contingencies typically run 7–14 days; financing contingencies run 21–35 days. The contract is well-tested.

Title insurance in Michigan is not state-promulgated, but rates are filed and don't vary materially among insurers. The lender's title policy is required and customarily paid by the buyer; the owner's policy is customarily paid by the seller in most Michigan markets.

Property tax in Michigan varies substantially by county and city. Wayne County (Detroit metro) and Macomb County run higher rates because of city-level millage; Oakland County, Washtenaw County (Ann Arbor), and Kent County (Grand Rapids) are at moderate levels. The post-uncapping estimate matters for buyer affordability, a 1.5% effective rate on $400,000 is $6,000/year, plus a roughly 18-mill reduction once PRE is filed.

The buyer-broker agreement (post-2024 NAR settlement) is required before showings.

What sellers should know

Michigan seller closing costs are modest. On a $400,000 sale: 5–6% commission ($20,000–$24,000), $3,200–$3,440 state-plus-county transfer tax, $1,000–$1,500 title insurance, $300–$800 closing fee, remaining smaller items. Total seller closing costs typically run 6–8% of sale price.

Capital gains in Michigan are taxed as ordinary income at the state's flat 4.25% rate. Combined with federal long-term cap gains (0/15/20%) and the 3.8% NIIT for higher earners, sellers above the federal § 121 exclusion face combined effective rates of 22–28%.

The Michigan Seller's Disclosure Statement is required for residential sales (with limited exemptions for foreclosure / inherited / new-construction). Sellers complete the form covering known defects, environmental hazards, and material conditions. Michigan enforces disclosure obligations, non-disclosure of known defects is a meaningful post-closing-liability risk.

Detroit recovery dynamics

Detroit and several surrounding cities (Hamtramck, Highland Park, parts of Inkster) went through post-2008 collapses where many properties lost 50%–80% of value, then partial recovery over the following decade. Title issues from foreclosure-era transactions, tax-foreclosure auctions, and city-level land-bank programs occasionally surface in current-day closings; Detroit-specific transactions benefit from a title officer or attorney who knows the local recovery-era nuances.

How closing typically works

Closing happens at the title company. The buyer signs loan documents at the title office or via mobile notary; the seller signs the deed and disclosures; the title officer prepares the settlement statement and coordinates funding; funds wire from the lender to the title company; the deed records at the county register of deeds, typically electronically.

Total time from offer acceptance to recorded deed runs 30–45 days for financed transactions. Cash purchases close faster.

For Detroit-specific transactions, properties with title-history complications, or any cross-state purchase, a Michigan real estate attorney can supplement the title-company process. The structural framework is here; closing-cost math runs through the closing-costs estimator with the MI state base.