Thursday, October 23, 2008
Home Warranties have proven to be a great negotiating tool for both buyers and sellers. I put them on all of the homes I list for sale in Chapel Hill, Durham and the surrounding area. Most home warranties can be initiated at the time of listing the home and therefore provides coverage to the seller during the listing period. It is amazing how many things can go wrong when you put your home on the market. Invariably, a toilet will leak, the dishwasher or microwave will break or the air conditioning or heat will stop working. For a modest co-payment, typically $45, the home warranty company will send out a technician to fix the problem. In those cases where things are broken beyond repair, they may even replace the item.
Now, we all know home warranty companies are insurance companies and they like to fight claims. As the listing agent that uses home warranties all the time, this gives you leverage to work on your sales agent to get the job done. It is amazing how well this works!
In addition to the above, home warranties really do work as great negotiating tools. For example, when items are brought up on a home inspection, and there is a transferable warranty in place, the seller can often times negotiate fewer repairs. A few months ago, I had a transaction where the house had a septic system. When the repair request came in, my seller actually refused to make any repairs because they had given the buyer a good sum for closing costs and they threw furniture into the deal. It was now up to me to make this deal work!
Thankfully, there was a home warranty in place and I was paying for it to transfer to the buyer at closing. I learned that the most important thing to the buyers was ensuring that the septic system was ok. I increased the coverage on the home warranty to cover the septic (this cost an additional $75) and the buyers where happy. I was more than happy to spend less than $500 on the warranty to make the deal work and get paid for all of my hard work on listing and marketing the house as well as negotiating the deal.
I have seen time and time again where home warranties really help. I put them on all of my listings and I pay for it. This is a great listing tool as well as a win win for buyers and sellers throughout the transaction.