Home Selling in 48127>Question Details

Jen, Home Seller in 48127

does the home warranty help selling homes faster? and how much does it cost on average?

Asked by Jen, 48127 Tue Mar 11, 2008

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Jen,

That's a great question ... and also one that has puzzled me for many years.

When we bought our second home in Florida in 1983 and one of the features was a "home warranty" on a 15 year old home .. it was never really explained by the agent, we didn't know what it covered (if anything) and it didn't hinder or add to the sale .. we just thought is was good for us - like spinach or asparagus ...

Then the pool pump took a dive 3 months after being in the house, I'm thinking $300ish for that little repair with the new pump and plumbing connects .... and lets not forget the garbage disposal 6 months out that was shattered because my daughter was into coin collecting at the time, which in turn backed into the dishwasher plumbing .. I'm thinking $600ish for that little endeavour(?) .....

You can guarantee we renewed that puppy for $299 a year and a zero deductible (then) ... and you can bet we bought or renewed a home warranty on every property we ever bought or sold since then ...

The puzzling part is .. very few agents has used it, discussed it, pressed it or promoted it's importance ... the common remark is "throw it in as a last ditch effort.." -- "see what their first offer is, then maybe " ...

Sorry Charley .. if a buyer is looking at new builds and I'm in a 12 year old home, I'm not going to give that buyer 4 seconds to even think about him fixing a doorknob, let alone a 4 ton air system that "might" break down on Sunday morning ..l.o.l...

Yes Jen .. a home warranty works like a charm, probably 125 of the buyers I've met bought the home for that singular reason, no brain damage .... always give a buyer 22 good reasons to purchase - not 1 reason why not to buy ...

It's nice to see Derek and Keith and others are doing it now ...



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1 vote Thank Flag Link Tue Mar 11, 2008
Jen
In my market home warranties are almost standard. We are in a buyer's market, buyer's expect a home warranty. If one is not offered the buyer's Realtor will ask for it. For a three bed two bath home with central air, about $400 here.

BTW, any extra VALUE you can add when selling in a buyer's market is great. Include appliances (if they are over five years old they are probably not worth moving), patio furniture, etc.
1 vote Thank Flag Link Tue Mar 11, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
I would not say that a Home Warranty will sell a home faster. Like other amenities, it is another positive feature that the buyer will weigh that could lean them towards your property. Pricing yourself in the top five amongst your competition is the first strategy and stack the added incentives from there.
1 vote Thank Flag Link Tue Mar 11, 2008
Warranty covers your butt while the home is on the market and the price varies as to what type or how extensive your Warranty is! I personally think it is great for the seller, if a major item breaks down in the listing and selling process, the cost are kept reasonable, for the buyer oh God yes, you want to buy that warranty and keep renewing it each year that they will allow you to!
0 votes Thank Flag Link Fri Jun 24, 2011
Jen,

Yes and no. Depends on what that buyer is looking for Fannie Mae had an incentive a few months back and no one turned it down and a lot of my buyers thought the added bonus was fantastic.

Good Luck

Vera
0 votes Thank Flag Link Fri Jun 24, 2011
Funny I'm responding to this question 2 years later, but I'm considering suggesting this to my seller. The house is fairly new to the market but traffic is slow. I notice the competition is not really offering this sort of thing and I feel it could be help with selling the home faster.
Web Reference: http://www.maopenhouse.com
0 votes Thank Flag Link Fri Jun 24, 2011
From reading the answers, it seems that there may be some regional differences in terms of buyer expectations. In central Jersey, buyers do not expect home warranties on resale homes. I strongly encourage sellers to consider, particularly when the systems have some age to them. I have found it necessary to explain the home warranty to both buyers and sellers in great detail, indicating a lack of familiarity in the marketplace. Some buyers and sellers are familiar, but more are not.

A home warranty will not sell a home faster if the other aspects of the home are not positioned to meet buyer expectations. i.e. A home w/ dated decor on a busy street is not going to sell simply because it has a home warranty.

One of the benefits for the seller who offers a home warranty surfaces in post inspection negotiations. A property with an older water heater may be noted as such in an inpsection report. The warranty eases the buyers mind and aids in any negotiations. The amount of the warranty may be more than offset in the value provided here.

We use AHS and have had positive feedback from both buyers and sellers upon use of the warranty. Response has been quick and results have met or exceeded client expectations. I have had both sellers and buyers use the warranty.

A warranty can help a fence sitter who is worried about older systems make a decision to write an offer.

When one of the agents in our office signs a new listing, our office follows up w/ the seller to explain the home warranty, in case the agent did not review this option w/ the seller. When I personally represent a seller, I explain the warranty as part of my presentation.
0 votes Thank Flag Link Tue Mar 11, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
Jen, I am not convinced that a home warranty is a selling point. The one that I use can be applied for when I list a property and it will cover the seller in the event something happens to the furnace for example, during the listing period. They just have to pay the deductible. However, the seller does not have to pay the fee for it until the closing.

I find that most sellers are not too interested in putting these on, but will wait and see if a buyer asks to have a home warranty. I am not sure how it is in your area, but in my area, on the purchase agreement there is a line item that talks about a home warranty. So it will come up to a buyers attention no matter what when they are writing an offer. At that time the buyer will decide if they will ask for it or not.

I think if the buyer feels better about having a home warranty they will ask the seller. I don't think that a buyer is only going to look at houses that offer a home warranty on the listing card.

I do however, think it is a good idea at time of closing. It just kind of protects you in the event your hotwater heater croaks the day the buyers are moving in. (Yes. That happened to one of my sellers.)

In regards to cost. There are different plans out there so it is hard to specifically say. It depends on the plan that you pick. You should talk to your listing agent and see what they have to offer.

I hope this information helps! Best Wishes!
Web Reference: http://www.gomelinda.com/
0 votes Thank Flag Link Tue Mar 11, 2008
While a home warranty does not guarantee a sale of your home, it does help! Buyers like the comfort of knowing items will have some sort of warranty, in fact many will ask for a Home Warranty when they initially make the offer to purchase a home. It can never hurt to go ahead and place one on your home and advertise that for home buyers to see. It also shows buyers you keep up your home and take care of any problems when they come up.
Web Reference: http://www.purrfecthome.com
0 votes Thank Flag Link Tue Mar 11, 2008
Jen, There are varying costs for home warranties. Most start around $350 and move up depending upon what is added to the policy. I suggest asking your agent to see several different policies and see what you're willing to pay for. Some items like air conditioning are more and not covered by some basic policies. Major real estate companies will have brochures from more than one provider.

If you decide to purchase one, I suggest getting one that the buyers can renew yearly and include that in your marketing.

There are also companies that will cover your basement with a similar policy.
Web Reference: http://www.mi-living.com
0 votes Thank Flag Link Tue Mar 11, 2008
Jen,

Home warranties have become a standard but one thing no one has mentioned is the peace of mind value they offer new buyers. When new buyers are looking at homes, they typically have heard someone talk about when they moved into their first house and within the first month they were replacing the furnace and the...

I have also seen examples where a home warranty saved the situation after a home inspector did not find an intricate detail on a furnace that when the gas company came to light the pilot, did. (Now I always get a safety check on all gas furnaces from the local gas company, they are free and more detailed than the home inspectors check.) The buyer was pretty upset until they realized it was only going to cost a $150 deductible to get a brand new furnace.

They are worth the $350. Companies are now getting more competitive with pricing and adding spas and pools for much less. Definitely a good idea.
0 votes Thank Flag Link Tue Mar 11, 2008
Jen - I agree with my colleagues. Home warranties, priced anywhere from $300 to $500, are an expectation anymore, not a perceived value-add. This especially if the home is older and/or has older appliances.

If you are selling a home, I would say plan on that expense to begin with and make it known that it is being offererd. Don't, however, expect your house to fly off the shelf solely because you are offering a warranty.

Best of luck!
Web Reference: http://www.doortodreams.com
0 votes Thank Flag Link Tue Mar 11, 2008
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