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Sellers: You Need a Home Warranty (and It Might Not Cost You a Dime)

By
Real Estate Agent with Coldwell Banker Weir Manuel

 First let me say that I am a born skeptic, and I am frugal. I NEVER buy the extended warranty when I buy a new appliance or other major purchase. In my mind I think that extended warranties are a scam and I would like to assume that the product that I am buying is well enough made that it should last for 3 years or so without me needing an expensive service call or a warranty to pay for the service call. Heck, I have a refrigerator in my basement that I think is about 15 years old and it runs just fine.

So, for me to state that sellers should have a home warranty seems a bit hypocritical. Yet I always offer them to my seller clients and I suggest that I place an order right when I take the listing. In my opinion, there really is no reason for a seller not to have a warranty. First of all, the warranty is free until closing. If its not negotiated in to the contract, you never pay for it. Second, the seller is covered for lots of things during the listing period, even without purchasing the warranty, and the all the seller pays is the deductible for the service call. Not bad, huh? 

And just so nobody thinks I am trying to scam the warranty company, our sales rep from the company is the one who sold me on this whole concept.

Last month we had a seller of a newer condo in Birmingham, Michigan whose stove stopped working the week that her condo went under contract. She was faced with getting the stove fixed or replacing it before close. Fortunately for her, we had ordered the warranty so she paid about $60 to have her stove fixed. Not bad. And if the problem had been worse, that would have been covered too.

On the other hand, I had a seller a year ago who told me he didn't want me to order the warranty because his home was in pristine shape.  The hot water heater died shortly in to the listing period.  He got to pay for a new one on his own.  Oh well.  I tried.  

The warranty can also help if there are negotiations after a home inspection. We sold a home last winter with some older appliances in it, and the buyers were comforted by knowing that a home warranty would take care of any breakdowns in their first year.

The verdict: a warranty warrants serious consideration. 

self portrait by Glutnix

 

Comments (37)

Rick Beal
Coldwell Banker Residential Brokerage - Portland, ME
I think I can clarify.  My company uses AHS and yes, if the seller takes it, they don't pay until closing and they are covered through the listing period and the first year after closing.  Maureen, if you offer the home warranty to be paid by the seller and the buyer's agent doesn't put that in the purchase and sale agreement, you and the seller should thank your lucky stars.  And the buyer should replace their agent, that is incompetence.
Jan 14, 2007 09:17 AM
Don Fabrizio-Garcia
Fab Real Estate - Danbury, CT
Owner/Broker/Trainer - Fab Real Estate

I've never closed on a home without a home warranty.  Sure, the service isn't always as speedy as one would like, but here's a list of items that have been covered just in my own personal residences: new furnace, new stove, new clothes dryer, furnace repair (not on the new furnace noted earlier!), pool pump repair, garage door opener repair, multiple clothes washer repairs, dishwasher repairs.  With the exception of the furnaces, all of these appliances were less than 6 years old at the time of the repairs.

I've had clients receive new air conditioning units, new furnaces, and lots of appliance repairs.

Jan 14, 2007 09:33 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

I would NOT sell a resale home without a One Year Home Warranty.  If the seller won't pay for it, I do.

This has been my absolute procedure since 1995.  No late night phone calls about the furnace won't start.

No threats about undisclosed defects.  It's the best $399 peace of mind in REALTORDOM.  And it is a great advertising benefit. 

SEE:  http://www.homesforsalemdva.com/

Jan 14, 2007 09:37 AM
Monika McGillicuddy
Prudential Verani Realty - Atkinson, NH
NH Real Estate Broker

Maureen. We use a home warranty as well and it is free for the seller until closing...works well especially with an older home. Thanks for reminding us how it can be used as tool.

 

Jan 14, 2007 10:07 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude
Home warranties are part of the actual contract paperwork here. The buyers request the seller to provide them, in some dollar amount, as part of the offer to purchase, and the seller can agree or offer another amount (or there coudl be some other negotiation). I wouldn't go so far as to say they are mandatory but they always seem to be there (I've only been here is CA 18 months so....)
Jan 14, 2007 10:09 AM
Doug Lindstrom
eXp Realty - Loveland, CO
Can you tell us who the warranty company was? I think this a great tip and may give us (agents) an advantage during the listing appointment.
Jan 14, 2007 12:03 PM
Steve Dalton
219-465-8352 - Valparaiso, IN
Northwest Indiana Home Builder

Very interesting loophole with the warranty during the listing period. 

I guess I would wonder if it applies to new construction during a listing period?  Also, for those of you that sell new homes, do you care if the builder has an insured warranty program?

Jan 14, 2007 01:33 PM
Maureen Francis
Coldwell Banker Weir Manuel - Bloomfield Hills, MI
Coldwell Banker Weir Manuel

Steve, its not a loophole.  Our rep openly suggested it.  Even when they don't get the business on that house, we do give them our other business.  

Doug, we use First American.

Other companies offer this too.   

Jan 14, 2007 01:47 PM
Phyllis Pafumi
ReStyled to Sell Home Staging New Jersey - Old Bridge, NJ
ReStyled to Sell Staging Homes NJ

Great Realtor, Home Warranty, Stager....Priceless. If only all sellers would follow that pattern

Phyllis Pafumi

Jan 14, 2007 01:57 PM
Kengo Ueno
Prudential Locations LLC - Honolulu, HI
(R)
Excellent tip Maureen.  I wasn't aware that it was free during the listing period also.  I always recommend them to my Sellers.  Thanks for the tip.
Jan 14, 2007 02:34 PM
Angus in Naperville IL
RE/MAX of Naperville - Naperville, IL

Maureen - Great Information! I was under the impression that once they signed up for the warranty (including the free listing period) that they were obligated to purchase it and provide it to the buyer if the property sold during that listing... I'll need to re-read some of our agreements.

Do you promote the warranty with the house? If so, how is it that it gets negotiated out 80% of the time?

Enquiring minds... great post & topic!

active moo

 

Jan 14, 2007 02:42 PM
Maureen Francis
Coldwell Banker Weir Manuel - Bloomfield Hills, MI
Coldwell Banker Weir Manuel

Angus, I do put it on marketing materials, but I don't put it on the MLS listing.  If I have a half million dollar home listed I have more than enough to say about it without putting a $365 item in my limited space.  I honestly don't think a buyer has ever bought a home because there was a warranty listed on the MLS.  

  

Jan 14, 2007 02:49 PM
Kristal Kraft
Novella Real Estate - Denver, CO
Selling Metro Denver Real Estate - 303-589-2022

I use a warranty on listings, ask for one for my buyers.  IF someone doesn't want one, I get a waiver signed.  In the past I've had customers "forget" they were offered one...now I have the docs to refresh the memories! 

 

Jan 14, 2007 02:50 PM
Mitchell J Hall
Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn

Hi Maureen,

I'm with you about warranty's on appliances. I 'm a skeptic too. Whenever they try to sell it to me I just say I'll take my chances or I'll buy a new one when it breaks.

Home warranty's are not really big in Manhattan, but I remember a few years ago we listed my parents house with a REALTOR® from GMAC and they insured the house during the listing. It came in handy -All those REALTORS® and buyers roaming through the house someone did break something to the electrical power and what ever needed to be repaired was taken care of.

Jan 14, 2007 02:58 PM
John Novak
Keller Williams Realty The Marketplace - Las Vegas, NV
Henderson, Las Vegas and Summerlin Real Estate

We have a couple of companies in Las Vegas that cover the seller for the term of the listing. 99% of the time the buyer is going to ask for it anyways, so it's just one less thing to worry about while we're getting the home sold.

Jan 14, 2007 05:01 PM
account deactivated
not listed - Concord, MA

More proof that Home Warranty works.  In our area, we had a home sit on the market for 8 months.  Even price reductions did not motivate a sale.  Within 2 weeks after adding the home warranty, the home sold.  Certainly got my attention.

Lisa

Jan 14, 2007 10:13 PM
Chris Griffith
Downing-Frye Realty, Bonita Springs, FL - Bonita Springs, FL
Bonita Springs Listing Specialist - Agent

I will be listing my home shortly.  It's in great shape, but i'll offer a warranty with the home since it's 10 years old and competing with newe

r homes.

Jan 14, 2007 10:39 PM
Professor X
NONE - Ludington, MI

I know this is a slightly older post, but I am catching up.

I am not a big fan of home warranties...in some cases they make sense, and obviously if they are free to the buyer, then why not take it, but in my personal experience...

When I bought my home in 2002...it was an older home, and the home inspector warned me that the avacado green, giant hot water heater, that was wrapped in pink panther insulation in my basement was from the 70s and it could go at any time....

A few weeks later I walked into my basement and to my surprise was ankle deep in beatiful brown rusty water.

I immediately called the Home Warranty company and they sent somebody else....

A few hundred dollars later and I was fixed...

It seems my actual new hot water heater was covered, but I had to pay for labor...and the warranty company picked the company.  Disposal of the tank was not covered, and neither was all the upgrades it took to bring my pipes and such up to current code. (which had to be done before it could be repaired.)

Still not sure what the point of my warranty actually was???

Jan 15, 2007 12:00 PM
Patricia Beck
RE/MAX Properties, Inc., ABR, GRI, SRES - Colorado Springs, CO
Colorado Springs Realty
Thanks for the post, I found it helpful.  I think having a warranty with the home can really help!  I'll consider this next time, thanks!
Jan 16, 2007 05:25 PM
Paul Silver
Tiverton, RI
Rhode Island full service real estate firm
I had never considered this sort of warranty option, since I was unaware of the fact that your coverage would commence BEFORE the payment... Great marketing idea as well as great coverage for the seller... BRAVO Maureen... Keep those thoughts and letters coming...
Jan 18, 2007 04:23 AM