Is offering a home warranty to a buyer worth it?
Buying a home is a
part of the Great American Dream. Some people like newly constructed houses,
some like to build their own homes while others prefer to move into pre-owned
homes that often come with pre-owned systems and appliances. In the last case,
concerns about the health and age of such items may be raised. As a seller or a
real estate professional, you may wonder, is offering a home warranty to a buyer worth it?
Most home warranty companies offer a special category of a home warranty for homes in the market,
called buyer’s or seller’s home warranty. These warranties can be purchased up
to 30 days after the closing of a deal. The objective is to make sure that the
buyer does not have to immediately spend money on repairs and replacements of
appliances on the off-chance that they may come with problems.
Considering that a
buyer’s primary concern is that after making such a large investment, there
shouldn’t be additional out-of-pocket unexpected expenses, a home warranty may
be worth it for a buyer. Here’s why:
Why a
Buyer’s Home Warranty Is Worth It?
When one moves into
a new home, whether it has been built from scratch or was standing for years,
there are always chances that some systems and appliances may malfunction.
Though most new appliances are designed to work smoothly for about 7 years on
average, it's very common to experience breakdowns before that time.
Expiry of Original Equipment Warranty
Most new appliances
and many new systems come with guarantees from original equipment
manufacturers. They facilitate easy repairs or replacements for about 2-3
years. A home warranty can help after the expiry of the same. For an annual
premium and a trade service fee per request, one can get coverage over the
systems and appliances deemed necessary.
Some companies
offer structural home warranties on new constructions that cover the systems if
anything goes wrong within 2 years of the construction. As a seller, here are
the advantages of having such warranties:
●
Faster closing of deals
●
No calls from irate buyers if
something breaks down
●
Delegating your liability for
repairs and replacements
As a seller or a
real estate agent, you are free to focus on sales and closing deals rather than
fixing up homes already sold.
The job of finding
a repair contractor who is licensed and skilled is the onus of the home warranty
company. A home warranty company often has tie-ups with original parts
manufacturers via their contractors, which makes it easier to leave the complex
repairs up to them.
For
Pre-Owned Homes
The likelihood of
breakdowns due to natural wear and tear increase with the age of the home.
Buyers are more likely to opt for older homes if they can be assured that
damages will not cost them from their pocket.
Real estate agents
usually recommend a home service contract so that they and the seller can rest
easy knowing that the buyer won’t call them. Seller warranties come with free
l; listing coverage and the contracts can be transferred to the buyer.
Buyer’s warranty
plans also cover conditions that typical home warranty plans don’t, such as
rust and corrosion damage and pre-existing conditions not identified during the
home inspection.
A Few
concerns
It is always
important to read the fine print of any home warranty plan purchased since they
don’t cover every eventuality. Sellers or agents can spruce up systems and
appliances best as possible before listing the house, taking advantage of any
existing homeowner’s plan.
The buyer’s
warranty is best offered after a home inspection to reduce seller liability for
damages that may arise later. Should the buyer choose not to purchase the
warranty as part of the deal, you as a seller will most likely not be held
responsible either way.
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