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Why You Should Include a Home Warranty in a Selling Offer

Why You Should Include a Home Warranty in a Selling Offer
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Buying a home has never been a stress-free experience. There’s a lot to worry about: financing the house, making sure you’re not buying a lemon, and legally documenting everything. Although there’s not much that can alleviate the stress that comes with buying a home, there are steps that can be taken to minimize that stress and provide peace of mind to buyers, sellers and real estate agents alike. One of those steps is providing a home warranty with a home’s sale. A home warranty protects the buyer of a home from unexpected repairs and replacements, but it may surprise you to learn that is also protects the seller and real estate agent.

A Home Warranty Protects the Buyer

As a buyer, buying a home is often the largest purchase they’ll make in their lifetime. They want to make sure they’re getting a great deal and aren’t stepping into a money trap. This is where a home warranty is often used to provide peace of mind to the buyer.

A home warranty plan covers systems and appliances in a home, like an A/C unit, furnace or oven, when they fail from normal wear and tear. Unfortunately, all systems and appliances within a home have a lifespan. After they’ve been used for a while, their mechanical and electrical parts may begin to fail because they are old. When those systems and appliances fail, it can be costly to have them repaired or replaced. For example, a new HVAC system can cost $5,230 on average. This is when having a home warranty can protect a buyer. If the home’s HVAC system fails from normal wear and tear, the home warranty will repair or replace the unit for a small service call fee. (This fee ranges between $50-$100 depending on the home warranty company.)

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Chad Holmes, Director of Sales at Landmark Home Warranty, said including a home warranty on a home’s sell can calm a buyer’s worries. “What the warranty does is provides them that additional peace of mind, going forward, if something fails, they do have that warranty in place,” Holmes said. “It lets them know if something breaks down from normal wear and tear that it will be repaired or replaced.”

One thing that buyers should be cautious about, however, is knowing what is and isn’t covered in a home warranty contract. Sometimes home inspections will bring up problems found in the home before closing, and the buyer’s agent may tell the buyer it will be all be covered under the home warranty. The problem with that is there’s a good chance the home warranty won’t cover the pre-existing problem. It is imperative to discuss the problems brought up in the home inspection, because the buyer could get the problems fixed with the seller, or get a discount on the house.

Why wouldn’t a home warranty cover a problem brought up in a home inspection? There are two reasons. First, most home warranty contracts begin on the date of closing. Like any warranty or insurance, a contract won’t cover something that was already broken before coverage started. If a buyer knowingly purchases a home with a broken furnace and then calls the home warranty company to repair it, there’s a good chance they won’t, since it was broken when they bought the home. This is just like if you totaled your car, and then tried to insure it and have the insurance pay for the repairs. It’s industry standard that these sorts of pre-existing conditions aren’t covered.

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Second, most home warranties don’t cover abuse or neglect brought on by a homeowner. If the seller has forgotten to change out his or her furnace filter for years and this is noted on the home inspection, the buyer should not expect this to be covered by a home warranty. They should ask the seller to provide some sort of compensation or repair the furnace before they purchase the home.

A home warranty’s main function is to repair or replace systems and appliances that fail from normal wear and tear. If a buyer understands what is and isn’t covered in a home warranty contract, they can better use it to help them offset expensive and unexpected repairs, Holmes said. “Although a home warranty isn’t a coverall, it gives homeowners the ability to take care of things that are unexpected expenses that come as a part of home ownership,” he said.

A Home Warranty Protects the Seller

At this point, it may seem like a home warranty is only beneficial for a home’s buyer. In fact, a home warranty can also protect the seller. Kimberly Cameron, Realtor and Associate Broker at Re/Max Properties West, said she includes a home warranty with every listing.

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When a seller includes a home warranty in a selling offer, most companies offer free listing coverage. This means the seller doesn’t have to pay for anything except service call fees up until the date of closing, Cameron said. At that time, if the buyer wants the home warranty, the seller will pay for their plan.

“If a buyer does not request a warranty, it is cancelled prior to closing with no charge to my client,” she said.

Shelly Walters, a Realtor for Re-Max Ability Plus, said this free listing helps the seller in two ways. Not only can it cover problems brought up by the inspection as long as they’re caused by age and normal wear and tear, but it can save the sellers money. “Since the home warranty covers a seller during the listing, I tell them it is a no lose situation,” she said. “If the sellers don’t choose the home warranty that they want to put with the listing, the buyer may request a much higher value of the home warranty. Therefore, they are also choosing the home warranty price.”

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Not only that, but according to a study done by American Home Shield, a home warranty sells a home faster and for more money. Holmes said this was most likely because a buyer feels more secure in buying a home with home warranty protection. “As the homeowner is looking at these homes, and comparing them, and they see that one home includes a home warranty they feel more comfortable buying it because they know breakdowns will be taken care of,” Holmes said. Bradley Asbury, Realtor/Agent for Century 21 Homestar, said he provides a home warranty on each of his listings for this reason. “There is more to it (psychologically) than just the warranty,” he said. “If you don’t offer it, buyers have almost a fear, that something is wrong, or being hidden. They associate the warranty as you putting your stamp of good faith on the property.”

A Home Warranty Protects the Real Estate Agent

Finally, including a home warranty on a home’s sale also protects a real estate agent. When selling a home, each Real Estate Brokerage must have Errors and Omissions Insurance, which will cover the brokerage and real estate agent if something has gone wrong while selling the home. Suzette Peoples, Broker for People’s Properties, said that most E and O insurance offers discounts for real estate brokerages who include home warranties with their sales.

Holmes said that this is because a home warranty provides an extra layer of protection for the buyer, and the insurance company recognizes that fact. “I think what that does is it shows that there’s something in place that will take care of the homeowner if something does go wrong. And then if the homeowner didn’t have that in place, they may be more likely to talk to the real estate agent,” Holmes said.

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Have you used a home warranty? What has your experience been?

Featured photo credit: couple looking on house/luxorphoto via shutterstock.com

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Last Updated on July 12, 2021

100 Incredible Life Hacks That Make Life So Much Easier

100 Incredible Life Hacks That Make Life So Much Easier
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Want to learn some quick and easy life hacks that are easy to do, low cost and saves you time?

By tweaking little things in your daily life, it can make your life much more convenient!

Here’re 100 of the most practical life hacks so you can just pick up any of them right away!

83 tie a small piece of bright colored fabric

    84 write random letter

      85 use a rubberband

        86 dorm smell bad

          87 lean your phone on your sunglassess

            89 how to waterproof your shoes

              90 take a picture of the name card

                91 iron inside out

                  92 old newspaper

                    93 tumble try shoes

                      keep a card like this

                        SONY DSC

                          94 soap bar

                            95 make a hole

                              96 drop the battery

                                97 use a coozie

                                  98 when taking a picture

                                    use a clean dust pan

                                      try a pants hanger

                                        use your cellphone light

                                          use a spring from an old pen

                                            quick and easy iphone speaker

                                              user binder clips

                                                wrap a wet paper towel around your beverage

                                                  put pancake mix in a ketchup bottle

                                                    clean out an old lotion bottle for your beach

                                                      use a muffin tin to serve condiments at a bbq

                                                        doritos are great for kindling

                                                          use nail polish to identify different keys

                                                            use a hanging shoe rack to store cleaning supplies

                                                              freeze grapes to chill white wine without

                                                                use paper clips to organize your cables

                                                                  almost finished your jar of nutella

                                                                    sick of having a box full of tangled

                                                                      unroll the rim to increase the capacity

                                                                        cut open toilet paper rolls and use as a cuff

                                                                          remove the stem from strawberries

                                                                            turn an old bottle into a simple little cord holder

                                                                              for iced coffee and iced cappuccino, use frozen coffee cubes

                                                                                how to fold a fitted bed sheet

                                                                                  tired of snoozing past your alarm

                                                                                    place a rubber band around an open paint can to wipe your brush on

                                                                                      ut a wooden spoon across a boiling pot

                                                                                        use bread clips to save flip-flops

                                                                                          take pictures of friends holding items

                                                                                            how i always know which headphone is the left one

                                                                                              put a stocking over the end of a vacuum

                                                                                                How to make sure you drink enough water

                                                                                                  user a can opener to open blister

                                                                                                    good sandwich guide

                                                                                                      turn your muffin pans upside down

                                                                                                        50 pounds of groceries and living on the 5th floor

                                                                                                          the right way to make a blt

                                                                                                            add one teaspoon of baking soda

                                                                                                              38

                                                                                                                hair straighteners equals to collar irons

                                                                                                                  stack your clothes vertically to see them all

                                                                                                                    the right way to make cookies in the summer

                                                                                                                      how to clean a blender

                                                                                                                        the right way to eat a popsicle

                                                                                                                          use bread clips to label and organize power cords

                                                                                                                            to get the built up residue off of your shower head

                                                                                                                              user a hair clip to orgainize long wires

                                                                                                                                a frozen saturated sponge in a bag

                                                                                                                                  rub stuck zipper teeth with a graphite pencil

                                                                                                                                    use a soda pop tab

                                                                                                                                      50

                                                                                                                                        51 How to multiply large numbers in your head.

                                                                                                                                          52 How to open a bottle if you dont have a corkscrew.

                                                                                                                                            rub a walnut on damaged wooden furniture

                                                                                                                                              kids fall out of bed

                                                                                                                                                use toothpaste to clear up hazy car

                                                                                                                                                  58

                                                                                                                                                    59 keep pizza out while driving home

                                                                                                                                                      60 put your straw through the tab to keep it from rising

                                                                                                                                                        hold oreos with a fork so your fingers

                                                                                                                                                          Never lose your remotes again

                                                                                                                                                            hiding your emergency money

                                                                                                                                                              use a bread tab to hold your spot on a roll

                                                                                                                                                                if you are at a hotel and run out of chargers

                                                                                                                                                                  keep a square of cardboard in a ziplock bag

                                                                                                                                                                    If you need to pee or smoke at a bar

                                                                                                                                                                      drill holes in the bottom of your garbage

                                                                                                                                                                        use an accented letter as your passcode

                                                                                                                                                                          use a squeeze ketchup bottle top with your shopvac

                                                                                                                                                                            do something unusual when locking the door

                                                                                                                                                                              when heating leftovers space out a circle in the middle

                                                                                                                                                                                dont burn yourself in those hard to reach candles

                                                                                                                                                                                  put a small amount of water in a glass when you microwave your pizza

                                                                                                                                                                                    75 use a piece of paper to organize

                                                                                                                                                                                      use half a pool noodle

                                                                                                                                                                                        pencil case to store cables

                                                                                                                                                                                          78 clothespin to hold nail

                                                                                                                                                                                            79 make blts

                                                                                                                                                                                              80 take a picture of your fridge

                                                                                                                                                                                                81 fill plastic water bottles

                                                                                                                                                                                                  82 right ways to eat chips

                                                                                                                                                                                                    99 if your plug keeps failing

                                                                                                                                                                                                      100 put the banana on the wire

                                                                                                                                                                                                        88 before you throw away a post it

                                                                                                                                                                                                          Source: Reddit LifeProTips

                                                                                                                                                                                                          There you go, 100 awesome life hacks that you can try right now to make your life a lot easier!

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