Why You Need A Seller's Home Warranty
Home warranties are quite common in Georgia real estate transactions, but they're usually only seen as a benefit to the home buyer. Sellers should be aware that a home warranty can also be very beneficial to them as well.
A seller's home warranty is essentially the same warranty policy buyers get after the purchase of a home, but this one covers the property while it's on the market, then is transferred to the buyer at the time of closing.
Offering a warranty to buyers is not only a great marketing tool, but it could also cover the cost of expensive repairs while the home is being advertised for sale. Here are some additional reasons why you may want to consider enrolling in a warranty when listing your home for sale.
Why Offer A Warranty?
Give Buyers Confidence In Your Home
So you may be asking, why should you as a seller, offer to pay hundreds of dollars for a home warranty that will protect the buyer? Well, why do the makers of cars, televisions and other consumer products offer warranties? Peace of mind! Someone buying a home is making a huge investment, and they usually want to know their investment is protected.
In addition, many buyers drain their savings to come up with a down payment and cover the cost of moving & furnishing their new home. The last thing they want to encounter is the huge unexpected expense of something breaking in their new home. Plus, if something does go wrong after the sale, the buyer can turn to the warranty company for repairs, not come asking you, the seller, why something's already gone wrong.
A Great Feature To Advertise
Do you own an older home? Is it lacking the fancy new upgrades that spark a buyer's interest? A home warranty could be a way to increase the appeal of your home for a minimal cost. Many buyers are going to ask for one anyway, so why not advertise it upfront and have your home stand out from the competition? Buyers will perceive your home as being maintained much better than those without a warranty, because you, the current owner, have the home "protected".
Prevent Requests To Replace Aging Systems
When the buyer gets your home inspected during their due-diligence period, it's likely they'll receive a full report (sometimes 50-60 pages) listing all the current and potential issues present in the home. Depending on the buyer, they could request you, the seller, replace some of the aging components of the home prior to closing. Otherwise, the buyer could decide to walk away from the deal if repairs aren't made!
Wouldn't it be nice to avoid replacing things that still work by citing their coverage in the home warranty you're providing the buyer? Preventing the need to replace or repair even one major appliance or system could essentially pay for the entire cost of the home warranty!
Seller Protection - What Is Covered?
Both buyers and sellers should be aware of what is actually covered by the warranty. Typically, the seller coverage is a little more limited than what it is for buyers. Buyer plans usually allow for enhanced coverage options and upgrades, but these do increase the cost of the policy.
Either way, you can't expect the cost of every single repair or damage to your entire home be covered by a warranty, not for a couple hundred dollars a year! It's also important to note that a home warranty is not the same thing as homeowner's insurance.
Review Coverage Exclusions & Upgrades
Each company has their own coverage policy that should be read prior to enrolling a warranty. Some policies may better suit your home than others, depending on what may need to be covered. Read the fine print to discover any exclusions and check out the additional cost for "extras" that may not be covered under the standard policy. Doing your homework ahead of time could save you and the buyer of your home thousands in repair costs if something does fail during the term of the policy.
What Is The Cost?
Home warranties from the major providers typically range from about $350-$750 dollars, depending on what all is covered and what service charge you choose (typically ranges from $50-$100). The best part about enrolling a seller's home warranty when you list your home with a REALTOR® is that it typically doesn't cost you a penny... until closing that is.
If the policy is paid from your net proceeds at closing, you really never see the expense, except on paper. Hopefully the additional sale price and savings on repair requests more than pays for the warranty in the end.
Looking For A Home Warranty Provider?
These companies are some of the major home warranty providers in the country. Check out their websites to learn more about coverage, costs and to enroll your warranty today.
2-10 Home Warranties
American Home Shield
HSA Home Warranties
Old Republic Home Protection