Negotiating a Home Warranty with your Florida Real Estate Sale

By
Real Estate Agent with Florida Property Experts
https://activerain.com/droplet/4jsb

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If you're buying real estate in Florida, and you're using a REALTOR® professional, then depending on where you live, there's a good chance your real estate agent is using the FAR/BAR Real Estate Contract for Sale and Purchase or the FAR/BAR "As Is" Real Estate Contract for Sale and Purchase. One of the great things about the FAR/BAR real estate contracts is a clause that was added a few years ago, regarding Home Warranties.

  • If your REALTOR® is using the FAR/BAR "As Is" contract, the home warranty clause is found on lines 98 and 99.
  • If your REALTOR® is using the regular FAR/BAR contract, the home warranty clause is found on lines 99 and 100.

There are many differences on the two contracts, but the verbiage for the home warranty clause is the same on both.

home warranty

 

 

I don't know of any REALTORS® who don't like the addition of this clause. It's just one less item among hundreds, that we have to remember. But it needs some tweaking. Here's the problem. Most home warranty plans offer more than one option. For example, the plan I prefer has several tiers, depending on whether or not the coverage is for a house or condo, the square footage, and whether the policy is for both the buyer and seller, or only for the buyer.

As an example for this post, I'm going to use the price options for buyer coverage only, on an average sized house.

  • For $395, which is paid at closing, if anything that is covered by the plan breaks during the one year policy (policy goes into effect at closing), the new owner pays a $55 service call fee and the warranty company will repair or replace whatever is broken.
  • For $365, which is paid at closing, if anything that is covered by the plan breaks during the one year policy, the new owner pays a $75 service call fee and the warranty company will repair or replace whatever is broken.

interior of house for saleSo have you spotted the problem yet? If not, allow me to help.

The actual clause in our FAR/BAR real estate contracts first specifies who will pay for the warranty. This part is only a problem if a REALTOR® has agreed to pay for the warranty, so the pre-specified options have to be crossed through, and the agent's name and brokerage has to be written in. But that's only a minor issue.

The next section is just the line to specify which home warranty company will issue the plan. This is only a problem if an agent makes it a problem, which is unnecessary. So the biggest problem can happen on the last line

You'll notice the verbiage on the last line says the home warranty plan is "at a cost not to exceed $________." Now in my experience, I've found that most agents don't attend the instructional classes that are offered each time the contract is changed (usually every 2-4 years) and/or, they don't comprehend/pay attention to what they're reading.  So most REALTORS® just fill in this blank with the amount of the policy they want for their buyer. So what happens when the REALTOR® who is representing the seller provides the warranty that costs the seller less, but costs the buyer more if there's a problem with a covered item, during the coverage period? Granted, we're not talking about large amounts of money here, but things can get very heated during negotiations, when emotions are running high.

Fortunately for my buyers and sellers, I do attend the instructional classes that are offered, each time the contract is changed. I also read the fine print. And the last line of this clause can be fixed with a very simple modification. I just cross through the words "a cost not to exceed" and replace them with "of". So the last line of this clause will now read "at a cost of $________ .

This simple fix is just one of the many ways I give my clients the best service, by looking out for their interests.

If you're a real estate buyer or seller in the Daytona Beach area, stay tuned when I share another tip this week. I can't give away all my secrets, since I don't want to educate my competition too much *ssshhh, they might be reading this* but I do have one more important item on the FAR/BAR real estate contracts that needs to be addressed, since I see agents do it ALL the time! I've even tried to explain the problem to them, but they won't take me seriously until they find themselves in a big, sticky mess!

Lisa Hill the Smart Choice for all your real estate needs

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If you're unclear on the definitions of anything you've read, read this Glossary of Real Estate Terms.

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www.DaytonaBeachRealEstateSales.com

 

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Rainer
334,480
Tom Davis
Harrington ERA,DE Homes For Sale, $$ Save $$ Buy Today ! - Dover, DE
FREE Delaware Homes Search!, $$ Save $$ - Find Homes! Delaware Realtor
You always have some interesting posts, negotiating a home warranty is important!
Mar 16, 2008 04:58 PM #1
Rainmaker
1,530,349
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County
I always include the specific warranty (price, deductible, etc). I know what you are saying and you are right on track!
Mar 17, 2008 01:44 AM #2
Rainmaker
595,456
Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate

Tom- Thanks. You must be a lurker =P  

Gary- Good job! That's another great way to cover this one. 

Mar 17, 2008 09:52 AM #3
Rainmaker
728,802
Christine Bohn
RE/MAX Professionals - Gainesville, FL
The Bohn Team, Gainesville FL
Lisa - We don't use FAR/BAR's here and our contract lets us fill in the max dollar amount for the Home Warranty.  I suggest all my listing clients to offer this, and with all my buyers - I ask for it anyway in their offer.   I will admit, I have been know to pay for it personally as a gift to my buying clients.
Mar 17, 2008 10:07 AM #4
Rainmaker
595,456
Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate
Christine- In your area, is the FAR contract the one that's usually used?
Mar 17, 2008 12:14 PM #5
Rainmaker
251,788
Katrina Madewell
Charles Rutenberg Rlty- More than 5,000 agents(813) 777-1196 - Tampa, FL
Tampa FL Homes for sale | Tampa Bay - (813) 777-1196
I always plug in the one I like the best, and choose at a cost not to exceed $400, that normally covers the best one or close to it.  The buyer can always write a small check for any difference on an upgraded warranty.
Mar 18, 2008 07:33 PM #6
Rainmaker
595,456
Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate
Katrina- I was approaching this post from the perspective of a buyer's agent. In that case, the listing agent could take advantage of the "not to exceed" phrasing and stick the buyer's agent with a cheaper warranty if the wording isn't changed. It took me a minute to figure out how you were thinking. ;)
Mar 19, 2008 03:21 PM #7
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Rainmaker
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Lisa Hill

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