Tips on Selling Your Home - Provide a Home Warranty

selling your home with a home warranty

Tips on Selling Your Home – Provide a Home Warranty

This is the first in a series of posts that discuss tips from the professionals on how to sell your home.  All of the tips that we will discuss will fall into at least one category:

How fast you sell a home

For how much you sell your home for

How easy the transaction moves towards the closing table

In some instances, you may find that a particular tip may have an effect on more than one category.

Today, we will be discussing utilizing a Home Warranty to sell your home.  As a logical step, the first thing is we will discuss exactly what is a home warranty and why does it bring value. 

What is a Home Warranty?

A Home Warranty is a product sold  by a handful of national companies that provide security on the costs incurred if and when something inside of your home breaks.  Usually a home warranty is purchased for a set annual fee and can be renewed every year.  Once a home warranty is purchased, if something inside your home breaks, as opposed to calling your local repair man, you would then call the Home Warranty company.  The Home Warranty company has established relationships with a variety of credible contractors (usually at a discounted rate) so they then send out someone to repair or replace the broken “thing”. Home Warranties vary by providers and similar to an insurance policy, will have certain stipulations.  As an example, if you have a home warranty on your home and your dishwasher were to stop working – you would then call the Home Warranty Company and they would send out a repairman that they have a contract with.  In many instances, the repair contractor will be extremely responsive, as the Home Warranty company is usually one of their largest clients (even if they have negotiated a lower rate).  Most Home Warranty companies have some type of deductible for the service person – let’s say its $75.  You would pay the service man the $75 deductible and they would either repair or replace your dishwasher.  The Home Warranty Company pays the remainder of the bill for the service man and everyone is happy.

How Does That Help Me Sell My Home?

Using a Home Warranty Company to sell your home is a tool that many Real Estate Brokers have used for years.  The idea is that including a Home Warranty, with the sale of your home, ads another layer of security for the potential buyer. Think about it, if you were looking at two identical homes, and one included a 1 year home warranty (after the purchase) and the other didn’t, which one would you choose?  There are other benefits of leveraging a Home Warranty when you put your house up for sale.  There is a definitive benefit to the seller of a home by providing a Home Warranty.  One of the advantages to the seller is that when something breaks in a newly purchased home, they go to the Home Warranty Company as opposed to you---the seller!  Although there are laws that vary from state to state in the ability to “go back” to the seller (after the act of sale) with a newly found issue, providing a Home Warranty takes that anxiety out of the equation. 

Let’s use this example…you have just sold a home and been extremely honest of the condition of the property.  To the best of your knowledge, the hot water heater has worked fine for the last five years (which is when you had it installed).  Upon the new buyer of the property moving in, within a week of living there the hot water heater goes out.  Needless to say, the new homeowner feels taken advantage of and gets frustrated.  They feel that the seller (somehow) may have known about the possibility of the hot water heater going out, but didn’t mention anything about it.  The new homeowner calls their real estate agent to see what they can do.  If you have included a Home Warranty with the sale of the property, it’s an easy fix.  The buyer’s real estate agent would simply point out that you (the home seller) included a Home Warranty, and the path to getting a new hot water heater is easy and well laid out.  The buyer’s real estate agent would usually feel somehow responsible, but now they are the person providing the solution.   The buyer’s real estate agent then directs the buyer to the Home Warranty company, and with a small deductible, the new homeowner now has a brand new hot water heater --- and once again, everyone is happy.

Marketing Your Home For Sale With A Home Warranty

When you speak to your local Real Estate Broker on marketing strategies, make sure that you ask about offering a home warranty.  In many instances, they will include the fact that the home-seller is offering a home warranty in the MLS (Multiple Listing Service) so it may show up in a real estate search.  The real estate agent may put a “sign rider” on your For Sale yard sign that says “Home Warranty Included”.  It also helps the marketing of the property as when a potential buyer sees that a home is offered with a Home Warranty – the initial reaction is that the home is guaranteed in good condition.  The cost for the Home Warranty will simply be paid out of the closing and will almost be unnoticeable.  The cost for the new homeowner to have that one year warranty is simply deducted from the amount of money you will receive at the closing table. 

It has never been easier to sell a home and include a home warranty.  It offers protection not only to the new buyer but the seller of the property as well.  In addition to the protection offered, it helps with the negotiation and limits issues that may arise after the closing. 



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