What do YOU need to know before you buy an new home from MLS?
Working with a Real Estate Agent: What First-Time Buyers Need to Know!
Why You Need a Real Estate Agent & What Does a Real Estate Agent Do?
Buying your first home is like stepping into a new world — exciting, a little overwhelming, and full of possibilities.
Whether you’re dreaming of a cozy bungalow in Ann Arbor or a modern condo in Detroit, the journey to homeownership comes with a lot of decisions.
One of the smartest moves you can make as a first-time buyer is partnering with a real estate agent. But what exactly does an agent do?
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How do you pick the right one? And what should you know about costs like commissions and closing fees in Michigan?
This guide is your roadmap to navigating the home-buying process with confidence, packed with practical tips to make your experience smoother and more rewarding.
Why You Need a Real Estate Agent & What Does a Real Estate Agent Do?
As a first-time buyer, you might wonder if you really need an agent. After all, the internet is brimming with home listings, and you’ve watched enough HGTV to feel like a pro.
But here’s the reality: buying a home is a complex process with legal, financial, and emotional layers that online tools can’t fully address.
A real estate agent is your guide, advocate, and negotiator, helping you avoid costly mistakes and ensuring you find a home that fits your needs and budget.
Agents bring expertise to the table. They know the local market, understand the paperwork, and can spot red flags you might miss.
They also have access to the Multiple Listing Service (MLS), a database of properties that’s far more comprehensive than public sites like Zillow. Plus, they’re skilled at negotiating offers, which can save you thousands.
For first-time buyers in Michigan, where the median home price is around $245,800, having an agent by your side can make the difference between a stressful ordeal and a successful purchase.
A buyer’s agent (also called a buyer’s representative) is your partner throughout the home-buying process. Here’s a breakdown of their key roles:
- Understanding Your Needs: Your agent starts by listening to your goals. Are you looking for a family-friendly neighborhood in Grand Rapids? A fixer-upper in Lansing? They’ll help you clarify your priorities, like budget, location, and must-have features (think: a big backyard or a modern kitchen).
- Finding the Right Properties: Agents use the MLS and their local knowledge to find homes that match your criteria. They’ll schedule showings, point out pros and cons, and even introduce you to neighborhoods you might not have considered.
- Guiding You Through the Process: From making an offer to closing the deal, your agent handles the logistics. They’ll explain terms like “earnest money” and “contingencies,” ensuring you understand every step.
- Negotiating on Your Behalf: Whether it’s pushing for a lower price, asking the seller to cover repairs, or negotiating closing cost concessions, your agent is your advocate. In Michigan, where sellers often cover the buyer’s agent commission, your agent can also help you request concessions to offset other costs.
- Connecting You with Experts: Need a home inspector, lender, or title company? Your agent has a network of trusted professionals to recommend, saving you time and hassle.
- Handling Paperwork: Real estate transactions involve a mountain of documents. Your agent ensures everything is completed accurately and on time, reducing the risk of delays or legal issues.
By taking on these tasks, an agent simplifies the process, letting you focus on finding a home you love.
But How to Choose the Right Real Estate Agent?
Not all agents are created equal, so picking the right one is crucial. Here’s how to find an agent who’s a perfect fit for you as a first-time buyer:
1. Look for Local Expertise: Choose an agent who knows the Michigan market, especially the areas you’re interested in. An agent familiar with Detroit’s up-and-coming neighborhoods or the suburbs of Grand Rapids will have insights into property values, school districts, and market trends. Ask about their experience in the specific cities or counties you’re targeting.
2. Seek a Buyer’s Agent with First-Time Buyer Experience: Some agents specialize in working with first-time buyers. They’re familiar with programs like FHA loans or Michigan State Housing Development Authority (MSHDA) down payment assistance, which can be game-changers for new homeowners. Ask potential agents how many first-time buyers they’ve helped and if they can guide you through these programs.
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3. Interview Multiple Agents: Don’t settle for the first agent you meet. Interview at least three to compare their communication style, experience, and fees. Ask questions like:
- How long have you been a real estate agent?
- How many homes have you helped buyers purchase in the past year?
- Can you explain the home-buying process in simple terms?
- How do you handle negotiations in a competitive market?
4. Check Credentials and References: Ensure the agent is licensed in Michigan and has no disciplinary actions on their record (you can verify this through the Michigan Department of Licensing and Regulatory Affairs). Ask for references from past clients and follow up to hear about their experiences.
5. Understand Their Commission and Fees: In Michigan, the average real estate commission is 5.86% of the home’s sale price, typically split between the listing agent (2.93%) and the buyer’s agent (2.93%). The good news? Sellers usually pay both commissions, so you likely won’t owe your agent anything out of pocket.
However, recent changes from the 2024 National Association of Realtors (NAR) settlement mean buyers may need to negotiate their agent’s fee directly and sign an agency agreement before touring homes. Clarify these terms upfront to avoid surprises.
6. Avoid Dual Agency: Dual agency — when one agent represents both the buyer and seller — is legal in Michigan but can create conflicts of interest. To ensure your agent is 100% focused on your needs, opt for a dedicated buyer’s agent.
Commission Rates in Michigan
Understanding commission rates is key to budgeting for your home purchase. In Michigan, the total real estate commission averages 5.86% of the home’s sale price. For a $245,800 median-priced home, that’s about $14,404, split as follows:
- Listing Agent: 2.93% ($7,202)
- Buyer’s Agent: 2.93% ($7,202)
Traditionally, the seller covers both commissions, deducted from the sale proceeds at closing.
However, the 2024 NAR settlement has introduced changes:
- Buyers must now sign an agency agreement outlining their agent’s compensation before touring homes.
- Sellers are no longer required to offer a buyer’s agent commission, though many still do to attract buyers.
- If the seller doesn’t cover the buyer’s agent fee, you may need to pay it yourself, typically 2.93% of the purchase price, or negotiate a concession to offset it.
Tip: When making an offer, ask your agent to include a seller concession to cover your agent’s commission or closing costs. This can reduce your out-of-pocket expenses.
Closing Costs and other fees in Michigan
As a first-time home buyer in Michigan, budgeting for closing costs is just as important as saving for your down payment.
These one-time fees, which typically range from 2–5% of the home’s purchase price, can add up quickly — anywhere from $4,500 to $13,000 for a median-priced home of $245,800.
Knowing what’s included can help you avoid sticker shock and plan ahead. Closing costs cover a variety of expenses, starting with loan-related fees if you’re getting a mortgage.
These might include loan origination fees (often 0.5–1% of the loan amount), appraisal fees to confirm the home’s value, and credit report fees to verify your financial history.
Your lender will provide a detailed breakdown, and your real estate agent can help you shop around for competitive rates to keep these costs in check.
Another chunk of closing costs comes from title and escrow fees, which ensure the property’s title is clear and the transaction is secure. This includes title searches to confirm there are no liens or disputes, title insurance (specifically the lender’s policy to protect their investment), and escrow services to manage funds during closing.
You’ll also face prepaid costs, like property taxes, homeowners insurance, and prepaid interest for the first month of your mortgage. These can feel like a surprise, but they’re standard and help you start homeownership on solid footing.
For example, Michigan’s property taxes average 1.64% of a home’s value, so pre-paying a portion at closing ensures your taxes are covered until the next billing cycle. Your agent can walk you through these numbers, making sure you understand what’s due and when.
Don’t forget about fees for inspections and appraisals, which are critical steps in protecting your investment.
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A home inspection, costing $300–$500 depending on the property’s size and location, uncovers potential issues like faulty plumbing or a worn-out roof.
An appraisal, typically $300–$600, is required by your lender to verify the home’s market value matches your loan amount. These upfront costs are non-negotiable for most buyers, but they’re worth every penny to avoid costly surprises later.
In rare cases, if the seller doesn’t cover your agent’s commission (averaging 2.93% of the purchase price), you might need to pay this at closing as well.
Thanks to recent changes from the 2024 National Association of Realtors (NAR) settlement, you’ll sign an agency agreement upfront clarifying who pays this fee.
Your agent can negotiate seller concessions to offset these costs, easing the burden on your wallet.
Sellers in Michigan face their own set of closing costs, which can inform your negotiation strategy as a buyer. On average, sellers pay 4.21% of the sale price — about $10,346 for a $245,800 home — plus real estate commissions.
Their costs include transfer taxes ($3.75 per $500 of value, or roughly $1,839 for a median-priced home), title insurance (the owner’s policy to protect against future title disputes), and recording fees to finalize the sale with the county. Understanding these expenses gives you leverage when making an offer.
For instance, if a seller is stretched thin by these costs, they might be 1000% agree to cover part of your closing costs or make repairs to close the deal. Your agent’s negotiation skills can turn this knowledge into savings, helping you stretch your budget further.
How an Agent Simplifies the Home-Buying Process, (If they are a good agent.)
The home-buying process can feel like a maze, but a good agent makes it manageable.
Here’s how they streamline each stage:
1. Pre-Approval and Budgeting
Before you start house hunting, your agent will recommend getting pre-approved for a mortgage. This shows sellers you’re a serious buyer and helps you set a realistic budget. Your agent can connect you with lenders and explain how much home you can afford based on your income, debts, and down payment.
2. House Hunting
Your agent curates a list of homes that fit your criteria and arranges tours. They’ll point out details you might overlook, like the condition of the roof or the quality of the school district. If you’re buying in a competitive market like Ann Arbor, where commissions can hit 6%, your agent can help you craft a strong offer to stand out.
3. Making an Offer
When you find the right home, your agent will help you craft an offer based on market conditions and comparable sales. They’ll advise on contingencies, like a home inspection or financing, to protect you if issues arise. In Michigan, where the market can vary from a seller’s market in Detroit to a buyer’s market in rural areas, your agent’s negotiation skills are critical.
4. Inspections and Due Diligence
After your offer is accepted, your agent coordinates a home inspection to uncover any issues, such as a leaky basement or outdated wiring. If problems are found, they’ll negotiate repairs or credits with the seller. They’ll also ensure the appraisal meets the lender’s requirements.
5. Closing
As closing approaches, your agent works with the title company, lender, and seller’s agent to finalize paperwork and resolve any last-minute issues. They’ll review the closing disclosure with you to ensure all costs are accurate.
Additional Tips for First-Time Buyers in Michigan
Navigating Michigan’s housing market as a first-time buyer can feel like a whirlwind, but a few smart strategies can set you up for success. One of the best places to start is by diving deep into neighborhood research.
Michigan’s real estate scene is incredibly diverse — urban hubs like Detroit might tempt you with lower commission rates around 5.7% and up-and-coming areas, but they often require extra scrutiny for property conditions.
Meanwhile, suburban spots like Warren or Rochester Hills offer family-friendly vibes and top-notch schools, though competition can be fierce. To get a true sense of a neighborhood, visit at different times of day or even chat with locals about safety, amenities, and community feel.
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Your agent can provide data on property values and growth trends, helping you pick a location that’s both a good fit and a solid investment.
Another key step is understanding Michigan’s seller disclosure laws, which require sellers to provide a Seller’s Disclosure Statement detailing the home’s condition.
This document is a goldmine, revealing issues like past flooding, pest infestations, or structural repairs. Your agent can walk you through it, flagging anything that might signal future headaches. For example, a history of water damage in a basement could mean costly waterproofing down the line.
Don’t be afraid to ask questions or request clarification from the seller — this is your chance to avoid surprises after move-in. Pair this with a thorough home inspection, and you’ll have a clearer picture of what you’re buying.
Budgeting for homeownership goes beyond the purchase price, so it’s wise to plan for ongoing costs.
In Michigan, property taxes average 1.64% of a home’s value — around $4,030 annually for a $245,800 median-priced home. Homeowners insurance typically runs about $1,200 per year, and maintenance (think lawn care, HVAC servicing, or unexpected repairs) can eat up 1–2% of your home’s value annually.
These expenses can sneak up on you, especially in your first year, so build a cushion into your budget. Your agent or lender can help you estimate these costs based on the properties you’re eyeing, ensuring you’re financially prepared for the long haul.
For extra peace of mind, consider hiring a real estate attorney, especially for complex deals like for-sale-by-owner (FSBO) properties or homes with title issues.
While not mandatory in Michigan, an attorney can review contracts, flag legal risks, and ensure your interests are protected. Expect to pay $500 to $1,500, depending on the complexity of the transaction.
Your agent can recommend trusted attorneys, but shop around to find one who specializes in real estate. This small investment can save you from costly disputes or delays, particularly if you’re navigating a competitive market.
Michigan’s housing market in 2025 may lean toward buyers in some areas, thanks to higher interest rates and slower sales in certain regions.
This creates opportunities to negotiate better terms, like asking the seller to cover closing costs (2–5% of the purchase price) or make repairs before closing.
Your agent’s negotiation skills are critical here — they can craft offers that stand out without breaking your budget.
For instance, in a buyer’s market like parts of rural Michigan, you might snag a lower price or concessions that ease your upfront costs.
Stay flexible with terms, like closing dates, to sweeten your offer while keeping your finances intact.
Energy efficiency is another area where Michigan buyers can save big. Programs through DTE Energy or Consumers Energy offer rebates for upgrades like better insulation, energy-efficient windows, or even solar panels. These improvements can lower your utility bills and boost your home’s value over time, think 7 to 12 years.
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Ask your agent to point out homes with existing energy-efficient features or connect you with resources to fund upgrades after closing. For example, a $500 rebate on a new furnace could make a big difference in your first winter.
Plus, eco-friendly homes are increasingly attractive to future buyers, giving you an edge if you sell later.
No matter how much you love a house, never skip the home inspection. Even in a hot market like Ann Arbor, where bidding wars are common, a $300-$500 inspection is your safety net against hidden issues like faulty wiring or a crumbling foundation.
Attend the inspection to ask questions and learn about the home’s systems — it’s a crash course in homeownership. If the inspector uncovers major problems, your agent can negotiate repairs or a price reduction.
In some cases, you might walk away, but that’s better than inheriting a money pit. Trust your agent to guide you through this step with clarity and confidence.
Finally, think of your real estate agent as more than a one-time helper — build a relationship for the long term.
A great agent isn’t just there to close the deal; they can offer advice on future real estate moves, like renting out your home or selling it years down the line.
Stay in touch, ask for recommendations on local contractors, or tap their market insights if you’re curious about property trends.
In Michigan, where markets can shift from Detroit’s urban revival to the quiet charm of Kalamazoo, a trusted agent is a lifelong resource for your homeownership journey.
Thoughts at The Real Estate HUB!
Buying your first home in Michigan is a big step, but with the right real estate agent, it’s an achievable dream. From finding the perfect property to navigating commissions (averaging 5.86%) and closing costs (2–5% for buyers), your agent is your partner in making the process less daunting.
By choosing an experienced, local agent who understands first-time buyers, you’ll gain a trusted ally who simplifies the journey and helps you avoid pitfalls.
Take your time to interview agents, ask about programs like MSHDA, and lean on their expertise to negotiate the best deal. With these tips in hand, you’re ready to unlock the door to your new home and start building memories in the Great Lakes State.
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