Can including a home warranty on your house help you sell your property? Listing your home for sale is no easy task. You may choose to work with a qualified, professional real estate agent (and it’s recommended that you do!), but you’ll still need to invest some of your own time, energy, and money in preparing the house for sale. You and your agent work as a team, each doing your part to show the house in its best light.
Preparing your house for sale includes many projects, among which is considering the inclusion of a home warranty with the sale of your home. As a marketing tool, a home warranty works wonders. Buyers who may feel insecure about investing in a pre-owned home, especially an older home, can get the reassurance they need with a home warranty. That added security of the home warranty could be the trigger that moves a potential buyer from browsing to submitting an offer. Here’s your guide to offering a home warranty when selling.
- What is a Home Warranty
- How Much Does a Home Warranty Cost?
- Separating a Home Warranty from Homeowners Insurance
- What Does a Home Warranty Cover?
- How a Home Warranty Works
- It’s Not Just for the Buyer’s Benefit | Seller’s Warranty
- Compare Companies | Do Your Homework
- A Home Warranty as Part of Your Marketing Package
- How Staging Helps Sell a Home with a Warranty
- See What the Neighbors are Doing
- Your Real Estate Agent
What is a Home Warranty
A home warranty is a product you purchase from a warranty provider wherein if anything goes wrong with the house within a year of your purchase; the warranty covers it. Tempting as that may sound, it can also be misleading. A home warranty doesn’t cover everything in, on, and around the property and structure. Instead, major systems and appliances are defined and outlined as serviceable, provided they’ve received proper maintenance.
When consumers file complaints against home warranty companies, it’s generally because the consumer was unclear about what the warranty covered. It’s important to read and understand all of the terms of warranty before you purchase, so you and the buyer are clear on what’s protected.
Each company’s policies are different, as are the deductibles and qualifications. Research various warranty options to find out which plan or program best fits your needs in encouraging buyers to take action in the purchase of your home.
How Much Does a Home Warranty Cost?
When you purchase a home warranty, you can expect to spend approximately $300-$500 for the basic warranty. Read what the warranty covers, and explore all of the upgrade options. Typically, the warranty is valid one year from the date of purchase. There are options, however, where you can buy a home warranty that becomes active immediately and lasts through the listing, extending for a year after the sale.
Separating a Home Warranty from Homeowners Insurance
A home warranty offers some security and comfort to the buyer but is not the same as homeowners’ insurance.
The buyer is required to purchase a homeowners’ insurance policy when they purchase your home, particularly if they purchased with a home mortgage loan as opposed to cash. Lenders make it mandatory for buyers to purchase homeowner’s insurance.
A home warranty is a one-time purchase for limited time coverage whereas homeowners’ insurance is long-term, continuous coverage of the structure, property, and accidents that may occur. Home warranties and homeowners’ insurance policies do not cover the same items.
What Does a Home Warranty Cover?
Before you purchase a home warranty, research different companies to find out what their home warranties cover. Broken appliances or failing major home systems are usually protected by home warranties. These include heating and cooling systems, plumbing, electrical, water heater, dishwasher, stove, garbage disposal, or things of that nature. However, some warranties require that these items be updated to qualify for coverage. Furthermore, regular maintenance and routine cleanings must be verified before coverage is applied. So the warranty isn’t a generic, blanket, cover-all protection plan for anything that goes wrong with the house, but it can offer an added boost of confidence that if some appliances or systems malfunction, they’re covered without filing a claim against the homeowner’s insurance policy or paying for repairs out-of-pocket.
How a Home Warranty Works
The home warranty company provides a list of approved contractors – professional service providers the warranty company deems qualified. If the new homeowner experiences a malfunctioning appliance or system that is covered by the warranty, he or she will call one of the approved contractors. There’s a co-pay of between $50-$75 for the service call, but no expense for parts or labor if repairs are needed.
Homeowners who use the warranty provider’s contractors are encouraged to rate and review the service received by that contractor, so the warranty company knows if that contractor is a benefit to the company or if they should be removed from the list of qualified providers.
The low co-pay, provided contractors, and no-cost repairs offer just enough protection so that buyers who may be teetering on the fence will feel compelled to take action and submit an offer.
It’s Not Just for the Buyer’s Benefit | Seller’s Warranty
Even if the house you sold passed inspection and you provided all the accurate information in the seller’s disclosure, you might still be responsible for elements of the home that malfunction within the first year. Imagine getting all settled and comfortable in your new place just to receive a phone call or letter from the new homeowner or his or her attorney notifying you of a system malfunction that you have to repair or pay for a portion of repair costs.
When you purchase a home warranty to include with the sale of your home, you also provide protection for yourself so that you, too, have the convenience of a low co-pay and a list of qualified, approved service providers who can handle the problem at a fraction of the cost of seeking out an independent contractor and paying for repairs on your own.
Compare Companies | Do Your Homework
The Internet has made it incredibly easy to research any company. You can find out what kinds of experiences others are having before you commit to one company or another.
When comparing home warranty companies, you’ll weight not only the cost of the one-year basic warranty but also the systems and appliances each company covers. You’ll want to compare service deductibles, any exclusions, and anything that could nullify the warranty such as building an addition to the home.
You may wish to extend your research beyond the obvious social network posts and reviews. Check with your state to make sure the company you’re considering is legally licensed and insured to operate in your area.
If you’re going to go through the time, trouble, and expense of including a home warranty with the sale of your house, make sure it’s worthy of your investment.
A Home Warranty as Part of Your Marketing Package
Telling a buyer that you include a home warranty is one thing, but packaging that warranty in proof of care may be all you need to seal the deal.
Gather the receipts, paperwork, manuals, and warranties on all of your home’s appliances and systems. Note that if an appliance is currently covered under a manufacturer’s warranty, the home warranty will not cover that appliance; the responsibility defaults to the manufacturer’s warranty.
If you’ve had any service provided on the appliances, include those receipts and documents as well so that buyers can see the history of each appliance for themselves as well as having the assurance of knowing things are covered by a warranty.
You may also choose to include a C.L.U.E. report or a report that details with transparency all insurance claims filed against the property.
Other items you could include in your “marketing package” could be a listing appraisal and an inspection. The appraisal and inspection won’t hold value for the buyer’s lender, and some buyers may view these tools as biased, but most will appreciate the information provided for their benefit. You’re willing to show up-front that you’ve got nothing to hide and are willing to allow inspectors and appraisers attest to the condition of their property.
Some people may argue that a home warranty may be a waste of money for a seller whose focus should be on his or her next move, not on protecting the interests of a buyer. The same could be true about listing appraisals and inspections. This is especially true in cases of responsible homeowners who paid attention to detail regarding maintaining the house. In fact, as a homeowner, you may feel certain that there’s no need for a warranty, and that the warranty may expire after a year without having been used by the buyer. That’s okay. Don’t look at it as a wasted or unused item. Instead, consider the warranty a marketing tool – and if that marketing tool inspired a buyer to move from thought to action, then that marketing tool did its job.
How Staging Helps Sell a Home with a Warranty
Staging is the act of arranging the house, cleaning, and designing in such a way that makes the house appear in its best light. The idea is to present a project-free, move-in ready house that buyers can envision themselves living in with their loved ones. When a house is clean, well-decorated, and appealing to buyers, the perceived value of that house escalates. On the contrary, a house that is cluttered, dirty, stuffy, or ill-prepared may have buyers wondering if the house was well-kept. They imagine that if the house is unsightly on the surface, it could be downright unhealthy or unsafe in deeper areas that aren’t out in the open.
You can nurture the idea that your home has been immaculately maintained and is supported by a home warranty that reflects the owner’s care for the property.
See What the Neighbors are Doing
When you’re listing your house for sale, it’s a good idea to see what your neighbors, who are also selling, are doing with their sale. There are lots of reasons you want to scope out the competition in your neighborhood for houses for sale. Imagine yourself as a buyer shopping for houses in your area. Visit each house for sale to see what impression you get, to understand how your home’s price stacks up against the competition, and whether other sellers in your area are including home warranties with the sale of their houses.
Your Real Estate Agent
Your real estate agent is your greatest resource when planning to list your house for sale. Your agent may be able to offer you advice about obtaining a home warranty as a marketing tool for the sale of your home, but can take that further by recommending home warranty companies for you to consider. Your agent can help you understand all the marketing strategies that can be implemented in selling your home, and how you can cover the costs for those marketing tactics when you set the asking price for your house for sale.
Obtaining a home warranty for the buyer when you sell your house is not necessary. There is no law or requirement that says you must include a home warranty with the sale of your property. However, motivated sellers understand that buyers, especially first-time buyers, may be hesitant to buy an older home. When you include a home warranty with the sale of your house, you’re connecting with the buyer’s concern, ensuring them that you have no intention of leaving them alone holding a lemon. On the contrary, when you invest in the home warranty and offer it up front with the sale, you’re telling buyers that you believe in the quality of your property, and are confident in how well maintained the home’s appliances and systems have been under your ownership. And if all it takes to help a buyer whose teetering on the fence decide to submit an offer, then your marketing investment was well made.
You may know that your house will never need to take advantage of a home warranty, but it’s also well worth the peace of mind for the buyers – and for you – that if anything goes wrong within the first year after the sale, you’ve got it covered.
Call The Wright Choice Team today at 804-307-2589 to tour available homes for sale in the Chesterfield County area.