Should sellers advertise a home owners warranty? Or does that signal something wrong with the house?

Asked by Gluchus1, Downingtown, PA Mon Jan 23, 2012

Also, rather than replace the carpet, how about offering a flooring package? Or should the house price just be reduced enough to allow for the worn carpet. My feeling is that flooring is so individual to taste that replacing it just drives up the cost with no guarantee that buyers will even like it. If I were the buyer, I would rather have a reduced price so I could put in hardwood than have someone spend money on carpet that I might not want. And if you offer a flooring package as a seller, should that be advertised, or just be a negotiating point? (We would be the seller.

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12
Don Tepper, Agent, Burke, VA
Tue Jan 24, 2012
As the others say, a homeowner's warranty is a good marketing tool. It's not a red flag; it's more like a green light.

As for flooring, you've gotten a wide range of opinions on that. First, if the expectations/customs in Downingtown are clearly on one side or the other (and your Realtor can advise you if that's the case), go with that. However, let's step back a minute and analyze the situation.

If you do nothing--leave the worn carpet in place--let's assume you get 10 people looking at your home. These numbers aren't exact, but in many cases it'll be something like: 5 people take a look; their reaction is "shabby house, ratty carpeting, let's move on." 2 people take a look: their reaction is "We'll have to put in new flooring. It may cost $10,000. We can't afford that. Let's move on." 2 people take a look: their reaction is: "We'll have to put in new flooring. It may cost $10,000. So let's make an offer, but let's make it $10,000 less than if the flooring were good." And 1 person takes a look and says, "Good potential. Let's ask for a $3,000 allowance. Or let's reduce our offer by $3,000."

So AT MOST 1 or 2 out of 10 would even consider consider making a reasonable offer if the rest of your house is OK and meets their needs. The others won't make any offer, or they'll overestimate the expense of the flooring. (Happens all the time.)

Now consider the alternative. You put in $2,000 worth of carpeting, or $3,000 worth of wood floors. Your home price is the same; you're just not offering the allowance for flooring. You get those same 10 prospects through your house. They're all looking for precisely your type of house in your price range.

5 out of the 10 don't even notice the flooring. It's fine. It's good. 3 out of 10 love it. They love the new wood and the fresh carpeting. 1 hates it. They love green shag carpeting, and you went and put down a nice neutral pile carpeting. And 1 was looking for a bargain, a fixer-upper. But now you've gone and put some money into the property, so now their low offer is less likely to be considered.

In this scenario, if those 10 are looking for your type of house in your price range, and the rest of the house is good, the new flooring is a positive to 8 of those 10. It's only a turn-off or a negative to 2 out of those 10.

So, which works better for you: 8 out of 10 being turned off, not making an offer at all or making an unreasonably low offer because of ratty carpeting? Or only 2 out of 10 being turned off because you replaced the ratty carpeting with nice, new carpeting or even wood?

Replace the carpeting.

Hope thathelps.
1 vote
Frank Dolski, Agent, Lahaska, PA
Thu Jan 26, 2012
I'll start with the Home Warranty. If it is a home thaat is 15 plus years old, I would offer it to the potential buyers right off the bat. It is a great way to say that you are warranting the home. I would also suggest that you obtain a seller's warrantly during the listing contract with HVAC seller coverage. And as you mentioned, it is also leverage during negotiations.
Now for the carpet and flooring. I had my second best year in 2011 since I have been in the business.I attribute this to many things but one thing that I always try to suggest to sellers is that we are in a much different market and it changes almost dainly. With that being said, I would replace tha carpet, paint, stage and do everything in your power, within reason, to have your home stand out among the competition. It willl sell faster and for more money. Please contact me if you'd like to just discuss some ideas.
Good Luck!

Frank Dolski MBA, ABR, e-PRO
Associate Broker
CARTUS & SIRVA Certified Relocation Specialist
Previews Luxury Home Specialist
Coldwell Banker Hearthside Realtors
215-803-3237 (mobile)
215-794-1070 x-103
f.dolski@cbhearthside.com
http://www.FrankDolski.Com
Web Reference:  http://www.FrankDolski.com
0 votes
Bela Vora, Agent, Exton, PA
Tue Jan 24, 2012
Hello Gluchus

A sellers disclosure reveals the updates you have done to your home - windows, heater, air conditioner, garage door etc. so the prospective buyer will be aware -and know what they are getting. I would read the warranty carefully to see what it covers and then evaluate it for your specific situation - roof? appliances? ??. Remember once you advertise - you have to give it. Alternatively, you can get it only if specifically requested by the buyer as a part of the negotiation.

Also - I am not sure if you will benefit from upgrading just the flooring when your kitchen, baths, siding etc are not updated. It is a tough market for owners trying to sell their home themselves. I recommend that you speak with a good Realtor who will look out for YOUR best interest and give you the right advice.

Good luck!
Bela Vora
bela@belavora.com
0 votes
Mary Robins, Agent, Wayne, PA
Tue Jan 24, 2012
A home warranty is always a positive thing to offer if you are selling, and a good thing to get as a buyer. It gives peace of mind and, as a buyer, you hope you never need to use it!

Mary Robins
http://www.Marys-Homes.com
0 votes
Nick & Trudy…, Agent, Devon, PA
Tue Jan 24, 2012
Offering a home warranty does two things, as a seller many provide you with coverage if something breaks whilst the home is listed and it does not send up red flags but does provide a level of comfort to a buyer. Of course it is also a negotiating point if the buyers offer to low a price you can remove the home warranty.

As was mentioned many buyers today have little or no funds to put into replacing things, such as carpet or flooring, it is always best to replace, it does not necessarily get you more money but removes an objection and allows you to sell the home quicker and for the buyer it is something less they have to do after settlement.
Web Reference:  http://VandekarTeam.com
0 votes
My NC Homes…, Agent, Chapel Hill, NC
Tue Jan 24, 2012
Home warranties don't send up red flags, in fact they can serve to remove some objections and can offer some pece of mind to a buyer about the major mechanical componets.

If your carpet is really bad you probably should replace it, however if it's tired but not filthy and stained, offering a flooring allowance or negotiating the price down in lie of replacing it is perfectly fine. You are correct that it's specific to an individual and that there are some buyers who might prefer to have it replaced with hardowood or some other floor covering.
0 votes
Terry Cherry, , West Chester, PA
Tue Jan 24, 2012
A home warranty is a great marketing tool and makes a huge difference when the home inspector starts talking about the life of items like the water heater etc. It brings peace of mind to a buyer.
Working with a lot of first time buyers, they have very little cash and even less time and vision to do a project. I would put in the new neutral carpet with decent padding. It will help the home show better than your competition. As the others stated they are going to ask for an assist and they mortgage company will be setting that limit.
0 votes
Vicky Davis, , Exton, PA
Mon Jan 23, 2012
Gluchus1,
I love your thinking! Your agent must be coaching you very well! But I am confused; are you the buyer or the seller??

#1, to advertise a home warranty to a potential buyer is not a signal to a homebuyer that anything in particular is wrong.....its an assurance to them that during their first year of home ownership, should something go wrong, they can rely on the home warranty to assist with the issue. It's an added insurance policy to set the buyers' mind at ease. The buyer's agent should be able to explain that to them.

As far as the flooring goes, in my experience it is just better to reduce price than to give an allowance. But make sure your listing agent knows that and conveys to the potiential buyers/agents that your pricing is reflecting the need for flooring allowance. Do you have a potential buyer? (if you are the seller) You may not want to advertise a flooring allowance.....that may signal that the house is not in move in condition. If you know the replacement is needed, then just reduce your price accordingly.Just make sure it is in the comments that the price has been reduced to reflect the need for new flooring, which is at the buyers choice. In addition, by leaving an allowance out of the contract, you reduce the risk that an allowance may alert the buyers mortgage company that something may be wrong and worth further investigation. Mortgage companies today are soooo finicky; sometimes beyond what is necessary! So it is best to deal with it outside of the contract.

You should to determine the square footage in question, and then the price of a medium grade of flooring, and then use that number! You will get added interest at the price being lower than your competition....but need to hold firm in negotiations with the knowledge that your price is reflecting the need for new flooring.

Best of luck to you. Feel free to ask me any further questions!!!!!!!!

I miss Downingtown! That is my hometown!!!!! I have just recently relocated to Seattle Washington and miss my hometown!!!!!!!!!!
0 votes
Jennifer Day…, Agent, Phoenixville, PA
Mon Jan 23, 2012
Providing a home warranty can head off issues with a home inspection. First you should have the home warranty cover yourself as the Seller and the Buyer once the home changes hand. If the home inspection shows issues with the heater, central air, plumbing, or electrical you can call the home warranty to do the repairs. It also helps when your heating system is older. Many times a buyer, especially a first time homebuyer, will shy away from older mechanics. However when the Realtor can tell them that there is a warranty and assure them that if any issues occur the warranty company will repair or replace the unit, they tend to have better peace of mind. It's a good tool when selling a home and does not imply that there are any issues with the house.

However offering a credit for flooring does imply that there are issues immediately, before a potential buyer even sees your home. It is very important that all information regarding your home is shown in a positive light. Many times Sellers feel as you do, the buyers will want to pick their own flooring, however what the Seller fails to realize is that not all buyers have insight to what something will look like and therefore simply look at what is. Here are a couple of suggestions:

If you are selling your home with the flooring as is do not mention anything in advertising regarding a flooring credit or a seller's assist. Most buyers are going to ask for it anyway so keep the negative thought that something is wrong with the house out of marketing. Price your home with the thought the flooring will have to be replaced;

Replace the flooring with something neutral. Hardwood floors are very popular right now. If you are able you should consider those as a first choice. If you financially need to install carpet just be sure that it is a neutral color. It doesn't have to be the best carpeting but be sure you get the best padding. It will make a difference.

I hope this helps.
0 votes
Sharon Sapp, Agent, Reading, PA
Mon Jan 23, 2012
I agree with Eric that the home warranty is a marketing tool that helps to put buyers at ease when purchasing an older home (meaning not a newly constructed home). My sister bought a high end home with high end appliances - 2 of which, while they passed inspection, failed the first night in the home. The warranty took care of it. I tell all my buyers that. I think it's really a good idea and many other Realtors feel the same way.

Yes, you're right that each buyer has their own taste when it comes to flooring. They may eventually change it out no matter how it looks, but usually, the buyers offer less than the asking price. Even if you tell them the price is discounted for the flooring, they will still take more off. Since most buyers are FHA buyers today, they will probably ask for up to 6% seller assist and the lender will not let them have any more credit, so offering any credit for flooring would be out of the question. If you are considering redoing the floor anyway, I'd just advertise that you will put down whatever flooring they choose up to a certain amount. That avoids the possibility of really undercutting your already discounted price (they will always discount or ask for more than it would actually cost) and avoids the problem of additional credit. The buyers get to choose what they want and you can put a cap on how much you are willing to invest in a house you are selling.
0 votes
Todd Reed, Agent, Exton, PA
Mon Jan 23, 2012
Nothing negative is implied by offering a home warranty. The flooring must look good, the average buyer does not have the vision to appreciate how the home could look. Call me to discuss, thanks.
0 votes
R. Eric Axel…, Agent, Cherry Hill, NJ
Mon Jan 23, 2012
Hi Gluchus, your real estate professional should be able to answer these questions for you, but in my experience, a home warranty is simply a marketing tool to draw buyers in that may be concerned about an older house. In my experience, it does not imply your house has issues.

I agree to let the new buyers choose their own flooring. The problem with reducing the cost is the new owners may not have the cash to complete the flooring immediately upon moving in. I would be as flexible as possible. Advertise as flooring package or 3% seller's assiy toward closing costs, whichever they choose.

Email with any follow up questions.

Eric Axelson, Associate Broker
Kurfiss Sotheby's International Realty
856.617.1212
axelson@kurfiss.com
Web Reference:  http://kurfiss.com
0 votes
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