You want to buy a home in Metro Detroit, Michigan. You’ve found that perfect high-rise condo in downtown Ann Arbor. Or that amazing Victorian in downtown Northville. Or that completely rehabbed bungalow a short walk to Kellogg Park in the center of Plymouth. Or that home you’ve had your eye on in Novi, Livonia, Birmingham or Farmington Hills. What now? Where does the process begin for a buyer of real estate? Understanding for buyers begins with an understanding of several key concepts one needs to grasp before taking any action, or making any decisions, regarding the purchase of a home.
These key concepts are:
On this page, we’ll cover these five points, in order.
It is imperative that every buyer fully grasp the legal concept of “agency.” It is equally crucial that every buyer be represented by a “Buyer’s Agent” (you’ll find more on “Understanding Buyer Representation” below).
Those things said, here are the key things to understand about real estate agency in Michigan:
Every Realtor in the State of Michigan is legally required to have every client sign Michigan’s “Disclosure Regarding Real Estate Agency Relationships,” a document that specifies the nature of the agency relationship between the Realtor and their client. Following are the different types of agency relationships that exist within real estate:
A buyer’s agent, under a buyer’s agency agreement with the buyer, acts solely on behalf of the buyer. A subagent of the buyer is one who has agreed to work with the buyer’s agent and who, like the buyer’s agent, acts solely on behalf of the buyer. Buyer’s agents and their subagents will disclose to the buyer known information about the seller which may be used to benefit the buyer. The duties a buyer’s agent and subagent owe to the buyer include:
A seller’s agent under a listing agreement with the seller acts solely on behalf of the seller. A seller can authorize a seller’s agent to work with subagents, buyer’s agents and/or transaction coordinators. A subagent of the seller is one who has agreed to work with the listing agent, and who, like the listing agent, acts solely on behalf of the seller. Seller’s agents and their subagents will disclose to the seller known information about the buyer which may be used to the benefit of the seller. The duties that a seller’s agent and subagent owe to the seller include:
A real estate licensee can be the agent of both the seller and the buyer in a transaction, but only with the knowledge and informed consent, in writing, of both the seller and the buyer. In such a dual agency situation the licensee will not be able to disclose all known information to either the seller or the buyer. As a dual agent, the licensee will not be able to provide the full range of fiduciary duties to the seller or the buyer. The obligations of a dual agent are subject to any specific provisions set forth in any agreement between the dual agent, the seller and the buyer.
A transaction coordinator is a licensee who is not acting as an agent of either the seller or the buyer, yet is providing services to complete a real estate transaction. The transaction coordinator is not an agent for either party and therefore owes no fiduciary duty to either party. The transactional coordinator is not the advocate of either party and therefore has no obligation to negotiate for either party. The responsibilities of the transaction coordinator typically include:
Once you learn the basics of agency law, you will more than likely come to the same conclusion that most of our buying clients reach: your preference will be to be represented by a “buyer’s agent.” We completely agree with that conclusion, as this is the alternative that is most logical in such circumstances. The goal of a buyer’s agent is to find the perfect point of connection between the homes available in the market and the needs and financial capacity of you, the buyer.
A buyer’s agent, under a Buyer Agency agreement, acts solely on behalf of the buyer. A subagent of the buyer is one who has agreed to work with the buyer’s agent and who, like the buyer’s agent, acts solely on behalf of the buyer. Buyer’s agents and their subagents will disclose to the buyer known information about the seller which may be used to benefit the buyer. The duties a buyer’s agent and subagent owe to the buyer include those things spelled out in the prior section under “Buyer’s Agent.”
The bottom line: a Buyer’s Agent represents YOU, the purchaser. Here are some of the advantages of this relationship when working with a Professional One Real Estate agent:
The State of Michigan requires every seller of a home to provide the following disclosure statements:
As the name implies, the Seller’s Disclosure Statement is intended to disclose information about the condition of the property of which the current owner is aware. Experience shows that the five most common defects in residential properties are as follows:
Accordingly, particular attention should be paid to these specific topics when reviewing the Seller’s Disclosure Statement.
Other important points relating to this document are as follows:
The Lead Based Paint Disclosure Statement is intended to inform a prospective buyer about the potential existence of lead based paint in a home. Specifically, the homeowner is required to disclose whether they are (1) aware of lead based paint in the home, and (2) in possession of any records or reports relating to any lead based paint testing that has been performed. This disclosure is only applicable to homes built prior to 1978. Experience has shown that in our particular market very few homeowners actually test for the presence of lead based paint, and accordingly this disclosure typically yields no information of benefit to a prospective purchaser.
Read the EPA-prepared Protect Your Family from Lead in your Home for more information about the hazards associated with lead based paint.”
No thinking, rational purchaser can make a fully informed decision on whether or not to move forward with a purchase without first having a home inspection. The primary purposes of an inspection are as follows:
Those things said, the purpose of an inspection is not for the seller to repair every item found during an inspection, particularly those things already properly disclosed by the seller on their Seller’s Disclosure Statement.
And while an estimated 70 percent of all homes sold annually involve a home inspection, a surprising amount of confusion remains over what the process does, and doesn’t, involve. Here are seven common misconceptions about home inspections:
Similar to having a home inspection, we feel it is absolutely imperative that every purchaser have a radon test performed on any home they intend to purchase.
Without going into too much detail or getting too scientific, radon is a colorless, odorless gas that has been linked to lung cancer. It has also been know to affect peoples’ perceptions about homes, so even if you don’t think radon is an issue, be aware that the next purchaser of a home you may be thinking about buying may care greatly about radon even if you don’t.
Here are links to key research materials you may review if you’d like to be more educated on this topic:
The bottom line: every purchaser should have a radon test. The good news: if a radon problem is found, it is not expensive to fix (usually no more than $1,000), and sellers almost always agree to pay for this (because they know they’ll have to fix the problem one way or another, even if you decide not to buy the home).
Send this to a friend