Looking to reduce out-of-pocket expenses and gain a marketing tool? Consider purchasing an after-market home warranty that will cover home repairs while the home is on the market for the seller, and after closing for the buyer.
Home warranties are annual service contracts that cover the repair or replacement of a home’s systems and appliances. A warranty policy can defray repair costs, reduce the impact of questionable inspection reports, and can keep a transaction from falling apart because of repair issues.
Home warranties are often used:
- To improve a home’s marketability
- To cover repairs during the listing period
- As a negotiating tool
- To reduce after-sale liability
According to a study of 158,197 transactions between 1/1/2007 and 3/31/2008 (as verified by Cannon & Company, a third party accounting firm), homes that had an American Home Shield Warranty sold on average 23 days faster than homes without an AHS warranty. They also sold at prices slightly closer to the asking prices.
Seller Coverage – Cost Control
As of late 2010, AHS offers a policy called “E. Core Coverage Plan” that includes many repair costs that a Seller may encounter. You would sign up at the time you list the home, but no payment is due until closing. If you do not purchase Buyer Coverage, then only $60 is due at closing. The Seller Package covers many common home repairs during the the listing period and can be used to remedy items revealed by inspections. If inspectors find issue with air conditioning, heating, ductwork, pluming, appliances, electrical components or the water heater, just call the 800 number and pay a $60 deductible. The warranty company dispatches a local service provider to diagnose and fix the problem. The plan has various caps including $1500 on air conditioning repairs and $500 on pluming repairs. See the AHS policy for additional coverage details or call 1-800-250-2025.
Buyer Coverage – Marketing Tool
Some homeowners may decide to offer a Home Warranty for the Buyer as a marketing tool. Warranty costs vary according to the size of the home, typically ranging from $300 to $600. Payment is not due until the home closes. Warranties can also limit liability in the event that maintenance issues arise just after closing.
Purchasing an inexpensive home warranty can offer a measure of certainty, cost control and peace of mind before, during and after a transaction. Contact Annette, Doug or Dale Bohannon of Coldwell banker Residential Real Estate in Tampa Florida for for information.
