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Thursday, August 20, 2015

Home Seller Tips: Why Should A Seller Not Offer a Home Warranty?

There was a time when it seemed every home purchase offer had a home warranty in the offer.  This could have been because the seller already was offering or the buyer was asking for the warranty.  Lately I have seen fewer home warranties requested or offered.

Why should a seller not offer a home warranty? 

Sellers should always prepare their home for the market in such a way to best meet their goals.   If the goal is to get the most money possible this preparation could include a pre-listing home inspection with disclosure of the results.   If there are any major issues discovered the choice is simple - repair or disclose the issues.

In other words, a home warranty is not meant to compensate for a poorly prepared homeThat will be reflected in the offer price.

Why should a seller offer a home warranty?     

There are some think a home warranty will "seal the deal."   I do not subscribe to this philosophy 100% of the time.  If a house is in relatively good condition with no major issues it may be the deal clincher.  In this case a home warranty can allay some concerns of prospective buyers for the short term (warranties usually last for one year with renewal options). 

In cases where the home includes older appliances this can be offered as an incentive. After all many buyers have already spent a lot of available cash to close the deal and move.  Not having to worry about repairing an old refrigerator or an air conditioner (especially in Florida) can offer some comfort.

As a seller of an older home I recommend offering a home warranty to help get your home sold!

What do home warranties normally cover?  

Although warranties vary from company to company they typically cover appliances, water heaters, garage door openers, some heating and air conditioning equipment and electrical components.

Home warranties typically cost about $350-$500 range with additional costs for coverage for pools, spa, etc. that are not typically included with basic home warranty coverage.

What approach should a buyer take to a home warranty?

First of all,  if a seller or real estate agent is purchasing one for you, it makes sense to accept it!  If it is not already provided it does not hurt to ask for the warranty. 

The seller may not provide the warranty but the seller's real estate agent may do it to get the deal done.   I prefer the request for a warranty be presented in the offer as having a seller contribute up to $XXX for a home warranty of the buyer's choosing.   This allows a buyer to review the coverages and the price.  Some may elect to add a little out of pocket for a more favorable policy.

Of course if the offer involves a multiple offer situation then the cleaner offer (minus warranty) with the best price is stronger.

Finally not all homes should be considered for a home warranty.  This is especially true of newer homes which may already have builder warranties as well as separate warranties on major appliances and systems.

If a home is newer a home warranty may be unneeded.  Some newer homes come with two year (or more) warranties as well as manufacturer coverage for appliances and air conditioning systems.

Whether buyer or seller the subject of a home warranty should be discussed with your real estate agent.  Every market and every offer is different.

If you are ready to sell your Viera or Melbourne, Florida home I want to help!

Warranty Image courtesy of vectorolie at

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