3 Sound Reasons Why You Should Offer a Home Warranty
When you’re selling a home, a home warranty is one of those options that’s worth understanding before deciding whether you need it. Depending on the plan, it may help protect certain systems and appliances while your home is listed, give the buyer added reassurance after closing, and provide another option during negotiations. It won’t make sense for every seller, but looking at how it could work in your particular sale can help you decide whether it offers worthwhile value.
A home warranty is an optional service contract that may help pay to repair or replace certain home systems and appliances when they fail from normal use. Depending on the plan, coverage may include heating and cooling equipment, plumbing and electrical systems, water heaters, and major appliances.
The important thing to remember is that home warranties aren’t all alike. Each contract has its own covered items, exclusions, limits, service fees, and requirements. So rather than starting with the question, “Should I offer one?” it helps to first understand what a particular warranty could accomplish for you.
There are three areas where it may be especially useful.
1. CONSIDER WHAT COULD HAPPEN WHILE YOUR HOME IS LISTED
Your systems and appliances don’t know your house is for sale. They can still break while you’re showing the property, waiting for an offer, or preparing for closing.
Some home warranty companies offer seller or listing-period coverage for certain systems and appliances while the property is on the market. Depending on the provider and plan, that coverage may be available at little or no upfront cost when buyer coverage is purchased at closing.
Think about what that could mean if an air conditioner stops cooling during showings or a water heater fails after you’ve accepted an offer. If the problem qualifies under the seller plan, the warranty may help with an eligible repair or replacement, subject to the contract’s service fees, limits, and exclusions.
Not every warranty company offers seller coverage, and the terms can vary. But if you’re already considering providing a buyer warranty at closing, it’s worth asking whether coverage could benefit you during the listing period too.
2. LOOK AT THE HOME THROUGH THE BUYER’S EYES
A buyer may love your home and still have reasonable questions about its major systems and appliances. That’s especially true when something is older but functioning properly. The buyer may simply be wondering what happens if it stops working after closing.
A home warranty can’t promise that nothing will break, and it should never replace a home inspection. What it may provide is another resource for the buyer if an eligible covered system or appliance fails after ownership changes hands.
That can be particularly meaningful for buyers who have already committed much of their available cash to the down payment, closing costs, moving expenses, and getting settled. Knowing that certain eligible repairs may have coverage can remove some uncertainty from those first months of homeownership.
And if a covered problem develops shortly after closing, the buyer has a warranty provider to contact for service. It won’t eliminate every possible expense or concern, but it can provide a clearer path for dealing with some unexpected repairs.
3. KEEP IT AVAILABLE AS A NEGOTIATING OPTION
You don’t necessarily have to decide at the beginning of the listing that you’ll provide a home warranty. Sometimes its value becomes clearer as the transaction develops.
You might choose to offer one when the home is listed, add one later if buyers express concerns about older systems or appliances, or agree to provide one as part of an offer or counteroffer. If something is functioning properly but its age concerns the buyer, a warranty may be one way to address that concern without automatically replacing an item that doesn’t currently need replacing.
If a buyer asks you to provide a warranty, look at that request alongside everything else in the offer—the price, concessions, contingencies, closing date, and other terms. The question isn’t simply whether the warranty costs money. It’s whether agreeing to provide it helps you reach an overall agreement that works for you.
BE SURE YOU KNOW WHAT THE WARRANTY PROVIDES
Home warranty prices and coverage vary by provider, location, property, coverage level, and optional add-ons. Many plans also charge a service fee when a technician is dispatched.
Before selecting one, look beyond the price. Compare the systems and appliances covered, coverage limits, exclusions, service fees, claim procedures, maintenance requirements, treatment of pre-existing conditions, and other contract terms.
If seller coverage is part of the reason you’re interested, find out exactly when it begins and ends, what is covered during the listing period, and whether buyer coverage must be purchased at closing.
THEN DECIDE WHETHER IT FITS YOUR SELLING STRATEGY
A home warranty is a tool, not a requirement. Its value depends on your home, your market, and the circumstances surrounding your sale.
An older but functioning system may make seller or buyer coverage more interesting. A buyer’s concerns may make a warranty useful during negotiations. Or after looking at everything, you may decide your money can accomplish more somewhere else in the sale.
That’s a decision I can help you work through. I’ll help you look at the home, the market, and the options in front of you so you can decide whether a warranty deserves a place in your selling strategy.
