By Brad Boisvert
You’ve done
everything you can to make your house sellable.
You’ve made all the necessary minor repairs. You’ve
repainted. You’ve spruced up the spruces and the other
landscaping. And you’ve cleaned and cleaned and cleaned.
Let’s face it, your house is immaculate. You’ve done so
well, in fact, you can’t understand why any buyer wouldn’t see
owning your home as owning a little piece of heaven.
Yet, buyers in today’s market may want more. They may want
a little peace of mind, as well.
And in that light, to sweeten the deal and entice more
buyers, you may want to add a home warranty to your offering.
No doubt, many buyers are anxious about the dependability
of appliances and mechanical components within a home --
especially first-time buyers, who may have previously always
relied on landlords and rent agreements to make and pay for
repairs.
To counter, home warranties can help ensure that homebuyers
won’t incur significant repair expenses within their first
year of ownership. They are, in essence, short-term insurance
policies for major mechanical systems and appliances. Most
warranties cover plumbing, heating and air conditioning, and
electrical systems. Additional coverage can be purchased for
roofs, water heaters, washers and dryers, refrigerators,
foundation walls, basement walls ... even swimming pools.
Typical policies will pay for the cost of fixing and, if
necessary, replacing covered items. Generally, they do not,
however, pay for service visits. And they do not cover
pre-existing damages and cosmetic repairs, such as rust or
paint.
Yet, for a seller, a home warranty can be an excellent
selling tool. If you list your house as fully warranted,
buyers can feel more confident in their purchase decision.
They realize that, with the cost of a down payment and closing
fees, their cash reserves may be depleted.
A home warranty will help hedge the odds that they won’t be
stuck with a huge repair bill during their first year of
ownership.
For example, a typical furnace repair could cost thousands
of dollars. That would be a tough bill to handle in the wake
of myriad closing and moving costs. With a home warranty, the
same repair may only cost the price of a service visit plus or
minus any policy-specific deductibles.
If you have your home up for sale, consider the following:
- According to a Gallup poll, 8 out of 10 buyers prefer to
buy a warranted house. (The real question, however, should be
what are those other two buyers thinking?)
- According to the National Home Warranty Association,
properties offered for sale with a home warranty sell up to 50
percent faster than similar properties for sale without a
warranty.
- According to Business Week, offering your home for sale
with a home warranty may increase the sales price, up to 3
percent on average.
Quicker sales. Higher prices. As a seller, why wouldn’t you
want to include a warranty?
For starters, a basic warranty fee can run from $250 to
$600.
However, it often can be paid at closing and represent no
money out of your immediate pocket. But $600 is $600.
And, in truth, warranties are not a panacea for all repairs
that ail a homeowner. Coverage is limited. And there are
deductibles. These issues are more of a concern for buyers
than sellers, of course. But if you want to stake your
reputation on a policy, make sure you’re working with a
reputable warranty company -- one that you wouldn’t mind doing
business with yourself.
In some cases, you may indeed be working with the
warranting agency. When you offer a warranty as a seller, you
may be covered for certain repairs should an item malfunction
while your house is on sale.
But before you invest in a home warranty, check with your
real estate agent first. Lately, some agencies have been
including home warranties as part of their services to attract
customers. Besides, given the current market conditions, your
agent should be able to tell you whether issuing a home
warranty on your house is a good idea ... or if it would be
unnecessary or redundant.
Offering a home warranty may be just the enticement you
need to close a deal. But remember, buyers shouldn’t consider
it an adequate substitute for a professional home inspection.
If a home inspection finds major flaws with your plumbing,
electrical systems or appliances, you may be faced with other
negotiating point altogether.
And, in the end, that may warrant some other enticements.
Brad Boisvert is a real estate professional with RE/MAX
Coast to Coast Properties in Portsmouth. Call him at 431-1111,
Ext. 3812 or e-mail bradb@worldpath.com.
