Should I be Offering Home Warranties? Do we need them?

By
Real Estate Broker/Owner with HUNT Real Estate ERA

Our company is in upstate New York.  We are not offering home warranties at this moment and I have not had any experience with them.  It is not obvious to me that any of the companies in our area are offering home warranties.  If they are, they are not advertising them.

New York State has an elaborate seller disclosure in place and I am not certain if bringing in a home warranty program has any value.  If the seller disclosure is minimizing our risk and the risk to the seller, would a home warranty program complicate matters?

It appears that in one breath we are reassuring the seller that the seller disclosure is important to complete as it provides protection to the seller in the event of future issues with the property and in our second breath , we are selling them an additional safety net , just in case the first one fails. 

The case in point could be a furnace failing.  If the seller has stated in the disclosure that he has had previous issues with the furnace and the buyer acknowledges this fact by signing the disclosure,  and accepts the condition of the furnace and purchases the property and after the closing the furnace dies, so be it.  I do not see liability for the seller nor the broker. 

Why muddy the waters with a home warranty program? What am I missing? I would appreciate any comments. 

 

Comments (14)

Charlie Ragonesi
AllMountainRealty.com - Big Canoe, GA
Homes - Big Canoe, Jasper, North Georgia Pros

The furnace never has had a problem or the hot water heater is fine thank you very much. The hot water heater or the furnace break 6 months after closing. That's why you do this. IThink about it. How much warning does a hot water heater give you before it decides to spill its guts all over a new basement carpet?

The warentee is just a way to get peace of mind

Sep 25, 2008 12:45 AM
Suzanne Champion
N.J. Realty - Westerville Ohio - Columbus, OH

Well, since a home warranty can cover many things, it's a nice selling point to have that may help reassure a buyer about things the seller didn't know about or things that appeared ok at the time of sale which fail afterward...I think that's what Charlie was getting at?

Sep 25, 2008 12:50 AM
Jane Page Thompson
Aiken Properties - Aiken, SC

Joe, do you believe in title insurance?  A home warranty plan is similar, it protects a new owner from something the former owner may not have known.  I do not like being the sales agent for these plans, but that is how most are run, your company will hold the account to sign-up for the policy and sometimes, you get a small fee for your trouble.  Our office puts these fees toward an SPCA or Habitat project, so the agents are not perceived as accepting a kick-back, and the fee, it is disclosed.

Sep 25, 2008 01:00 AM
Tammy Anderson
"The Gateway Home Team" of RE/MAX Alliance - Collinsville, IL
Owens, Broker/Owner

I do agree with giving a Home Warranty however, I usually don't put these on the original listing.  I think it's a great negotiating piece when the offer comes in. 

Sep 25, 2008 01:01 AM
Brenda Harmon
Century 21 Beal, Inc College Station, Texas - College Station, TX

The use of warranty is fairly commonplace in our area.

I really resisted this at first (14 years ago) but now I present them.

Give example of the pros and cons and let the buyer/seller decide.

Sep 25, 2008 01:16 AM
Rich Mielke
REMAX Results, Frederick MD - Frederick, MD
REALTOR, Frederick Maryland Real Estate

We ask each seller if they would like to offer a warranty when we list their house, they sign yes or no. We recommend that each buyer get a home inspection and sign a form stating so. We inform each buyer that they have the option to purchase a home warranty and they sign yes or no. This is all part of liability reduction for all parties involved.

Sep 25, 2008 01:26 AM
Evelyn Panning
Property Connections Realty Inc. - Alturas, CA

There is something comfortable about knowing you're covered when you purchase a resale home.  It isn't like buying a new home with a builder warranty.  I like offering them for that reason alone. ~ Evelyn

Sep 25, 2008 01:46 AM
Pat Champion
John Roberts Realty - Eustis, FL
Call the "CHAMPION" for all your real estate needs

I agree with the home warranty.  This protects and puts the buyers mind at ease should any problems arise after the closing.  I use it as a neo. tool for my buyers.  I believe in them so much that if a seller won't pay for them I have paid for them just to put my buyers mind at ease. 

Sep 25, 2008 01:50 AM
Richard Shuman
The Only B.S. I Have is from the University of Massachusetts - Lake Mary, FL
Real Estate Broker - Orlando Area - Love Referrals

I personally have a home warranty. Things can go wrong in a home that never presented a problem before. The perfect example, my dishwasher. We have a fairly nice and dishwasher in our home, not top of the line but pretty close. Never having any problems with it, we couldn't figure out why one day it just up and quit. One call to the warranty company and they had a guy at our house the next day. It turns out, a powder rinsing agent that was suggested to us by a friend was the culprit. It was not a repair we could have made personally and instead of costing hundreds of dollars for a plumber it ended up costing us our $50 fee.

I always mention it to clients, letting them know it's out there if they want it. More often than not, the choose to get it.

Sep 25, 2008 02:24 AM
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Hi Joe

Home warranties can help sell your home faster and at a higher price by creating a comfort zone for the buyers as a result of the home warranty.

Good luck and success

Lou Ludwig

Sep 25, 2008 07:02 AM
Joe Woutersz
HUNT Real Estate ERA - Queensbury, NY

I can see from the scope of the comments , that everyone who chimed in felt that the waranties were a good idea.  I am going to start shopping them and see where it goes.  Thank you to everyone who took a few minutes to comment.   I really appreciate the advise.  Thank you!

Sep 25, 2008 12:13 PM
Cherimie Crane
Cherimie Crane & Associates - Beaufort, SC

This is something I have been doing for a long time now. I purchase a home warranty for every buyer. I present it as a closing gift. My clients are extremely appreciative.

Sep 28, 2008 11:33 PM