Home Warranty Advantage

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Homeowners Insurance is great – it covers a lot of things like fire, theft and vandalism – and in case there is a storm that causes significant damage, the policy’s right there to protect the owner.  But what about a policy that looks after the interests of the property while it listed on the market and one that works to the advantage of both sides of the buying and selling fence?  A home warranty is a perfect supplement to a homeowner’s insurance policy and it broadens the overall coverage in a variety of ways.  Here is a rundown of the variances between the two and how a seller getting a warranty policy on their home for sale is a great tool!

The Benefits of a Home Warranty Policy

While home insurance largely covers catastrophic incidences and damage, a home warranty policy goes far beyond in that it address the home including wear and tear items.  Also, maintenance and repair is typically includes in a home warranty policy.  As a selling tool, this is fantastic, because during the process – or even after the home is sold – for up to 13 months, the areas of the home covered under the policy are warranted.  Oftentimes, a buyer will come across an issue with something in the home that could become a deal breaker but with the added peace of mind of a warranty, the seller can sit back and relax knowing that most things will likely be covered.  Examples of things that fall into range of coverage on a home warranty are flooring, plumbing systems, electrical systems, and wear and tear of these areas plus also the furnace and in come cases, the roofing or other major components of the home.

Home Insurance Policy Advantages

The single biggest difference between a home warranty versus a home owners insurance policy is that the latter covers the basic replacement value in general if there is a major catastrophe such as a storm that cause damage, fire, theft or vandalism or personal liability.  There is not personal liability coverage under the home warranty policy, rather it focuses on the “used” contents of the home.

How a Home Warranty Policy Helps in a Real Estate Transaction

First American Home Warranty is a company that provides very good coverage under their policy including 13-months of free seller coverage, with coverage beginning on the first of their home being listed for sale.  The free coverage period for the seller lasts for up to 180 days and the policy is only paid for upon sale of the home at closing.  The best part of a home warranty policy is that even after the buyer has taken possession of the property, the coverage continues.  That means that as a seller, you will not have to contend with any last minutes issues that can and do come up. When applying for the warranty, be sure to choose coverage that address all potential concerns you may have for the home so that if there were a need for repairs or coverage, you would have it provided as a benefit.

An industry association held a study in which it was determined that not only do homes sell up to 50% faster when there is a home warranty policy in place, but also the selling price typically comes within three percent of the list price.  In today’s real estate market – this is an advantage that any seller would want to avail!

Also remember this post from last year? It's still prevalent today!

Stuck in a Rut With People You Know Who Want to “Buy” Your Home?

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A lot of us have been through this scenario:  we think of selling our home, in fact we made the decision and before we have even listed it on the market our friends, family and coworkers are aware and someone or the other expresses interest in the home.  Sounds pretty harmless, right?  For the most part yes, except when you consider the fact that nine times out of ten when someone in our social or professional circle shows interest in our property, the sale does not pan out. 

So how can you deal with this?  There is a solution, believe it or not: listing your home with a named exclusion.  We explain how this works below, but first – it is a good idea to understand the types of issues you may encounter if you do not entertain this type of work-around to this potential problem.

“I Just Need Three More Weeks, I Promise!”

That is a common sentiment heard by sellers entertaining a sale to someone they know or even someone two or three degrees away from someone they know.  The buyers end up repeatedly asking for more time, without ever really putting a solid offer on the table.  They seem to think that because they know you, they can take weeks, even months, to make up their mind.  You, meanwhile, are anxious to sell the home before the value dips even further.  

“But I Thought You Would Give Me a Deal Since We Know Each Other”

The natural inclination of anyone thinking of buying from someone they know is to expect some concessions – extra things that may not have been part of a sale to strangers.  The biggest concession buyers are hoping for by going through someone they know is on price.  But you are selling your home and chances are you want the best price you can get out of it – especially in today’s market with continuously declining home prices.  

“Can’t You Put the House on Hold For Me?”

The idea that someone will hold off on a sale of something as large as a home is unbelievable but still, there are cases where buyers have actually expected that of sellers who they know.  As a seller, what are you supposed to do if another offer comes along that is serious, a good price and it seems like it will close with a very quick turn-around?  How can you skirt around the careful social stigma of not ruining the relationship with one person or party, without shooting yourself in the foot?  

A Solution Where Everyone Is Happy

So how do you handle these situations?  What do you say to your dad’s best friend who really wants to buy your home but can’t decide between your home and the one they were already looking at?  Listing your home with a named exclusion allows you to proceed with a sale as initially hoped with the people you know – with some concessions such as a sale with little or no commission.  The key is that the people you have been engaging with aside from outside offers will benefit if they buy it since it would be outside the listing agreement.  This maneuver forces the buyer to take some action, since the listing is also open to everyone else in the market to buy a new house.  

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Using this savvy selling technique, you can get in on offers potentially made by people you know, provide a concession of sorts in case it does sell to them and keep the listing open for others at the same time – all without shortchanging yourself during the process.  And there is no negative social stigma attached.