I recently listed a house in Mooresville that was built in 2001 and discussed with the sellers the value of having a homeowner warranty for them and the sellers. They agreed that it would be a good incentive for buyers and would also lessen their worry of having a large repair expense on a house they are planning to sell. Here are some of the reasons that caused them to decide to do this.
- Home purchase contract prices are negotiated prior to inspections and repair negotiations. Buyers will discount their price to cover possible repairs that they may have to do later. Having a warranty makes them feel more comfortable to offer a higher price. To the seller, this means they’re likely to get a higher price and sell sooner.
- The warranty covers both the seller during the listing period and the buyer for one year after closing (and can be renewed by the buyer)
- If a covered system needs repair or replacement during the listing period, the seller is covered.
- There is no cost to the seller during the listing period. The warranty is paid for at closing.
We use American Home Shield to provide our warranties. AHS created the concept of a home warranty and provides top notch service. Their current basic plan price for listed homes is $505 covering seller and buyer or $445 covering just the buyer. You can get a cheaper warranty, but think about it. How does a warranty company manage to charge less? By using contractors who likely will not provide the quality and timely service that you’d want if you were paying them directly. That’s “penny wise and pound foolish.”
Do these warranties pay off? AHS in 2008 paid out over $318,000,000 in claims with air conditioning and plumbing as the two largest categories of repairs and replacements.
