The sale of residential real estate in Michigan is regulated by several statutes (including occupational statutes if you use a real estate agent or broker) designed to protect both sellers and buyers. These statutes provide exceptions for certain property and strict penalties for violating a law whether by misinterpretation or intention. Most individuals looking to buy or sell their residential property hire a professional either real estate agent through a broker or attorney.

Real Estate Agents and Brokers
Although oftentimes used, brokers and agents are not necessary conduct a real estate transaction. Real estate brokers offer a service to real estate agents and individuals. In Michigan, brokers are required to take a special exam authorizing them to advertise broker services. Brokers house a particular real estate license authorizing them to work with real estate agents, whereby the agent receives a commission for the sale of a property. Brokers and agents have access to a range of property valuation and listing services based on competitive information in the region. Brokers and agents offer a method of advertising to other brokers and agents representing an ‘inverse’ party (seller to buyer, buyer to seller). Not all “listed” properties through a broker and agent are necessarily part of the multiple service listing (a/k/a MLS); it is important that a seller is aware what their “listing” will include, ask the important questions and be certain to get a pin-point answer (ignore puffery).

Commission is a negotiable point with any broker or agent, a company may have a non-negotiable or ‘fixed’ rate of commission, but by law it is always negotiable. The commission is owed to the broker (not the agent), the agent gets paid by the broker (often times a commission, but from the broker not the seller). Commission rates between 3 and 7% are fairly common on both ends (buyer and seller). Individuals should be careful to understand which type and on what condition the commission is owed; sellers should consider carefully the terms of picking a broker (or agent) who attempts to acquire an exclusive listing.

Sellers and buyers, listen to your gut, brokers and agents have a motivation to sell the home quickly and cheaply because their payment is contingent upon the sale. Never buy or sell a home unless you are certain you are making a choice you can live with. Brokers and agents offer a valuable service, but by the theory of economics, the best broker/agent is the one who can convince the seller to sell low and the buyer to buy high; the number one priority of a broker or agent is to close the sale.

Real Estate Attorneys
Attorneys are brought into real estate transactions for a number of reasons… the buyer or seller want to be certain the purchase agreement accurately reflects their intent; there is a problem with the title; a land contract is asked for; there is a falling out between buyer, seller, and broker or agent; review of mortgage documents or due diligence; or the buyer or seller desire the legal security of a deeply loyal party on their side. An attorney will represent the buyer or seller in a range of services depending upon the desires of the client and how early or late the attorney is brought in.

Where as a broker or agent, either for seller or buyer, is driven off of commission and the desire to sell the property, attorneys by contrast represent the buyer or seller as if the seller or buyer’s interests are that of the attorney. The attorney does not concern him or herself with whether or not the closing will take place, merely on whether or not the real estate transaction is a wise choice for their client. The attorney’s first and only concern is that of their client’s interest; the client must be informed and protected. An attorney will advise a client when a piece of property is not in their best interest, no matter how close to closing they are; an attorney will enforce the rights of their client, when others would throw up their hands and say “its too late”.

The biggest draw back of hiring an attorney to be your loyal servant (over that of a commission based professional), particularly for smaller real estate transactions, is that an attorney will be paid even if the property never closes. This is why many individuals don’t hire attorneys; but you get what you pay for. In the moment, individuals don’t often contemplate the benefit to burden of–risking an investment of several hundreds of thousands of dollars–where if it goes poorly, losing everything or worse. Purchasing real property is one of the biggest, most important, and most risky action an individual will ever undertake.

Michigan forms and documents in some real property transfers:
– Purchase Agreements: Are binding agreements whereby the seller agrees to sell and the buyer agrees to buy real property; it should contain every term and aspect conceivable (pre-printed forms are wisely avoided).
– Seller Disclosure Statement: see MCL 565.957.
– Lead Disclosure
– Closing settlement statement and affidavits
– Real Estate Transfer Valuation
– Property Transfer Affidavit
– Mortgage
– Land Contract
– Notice to assessor of transfer
– Warranty/Quitclaim deed
– Bill of Sale
– Tax prorations
– Home owners association documents
– Condominium documents (often 100 pages or more)

Make inquiries where necessary.