First let me say that I am a born skeptic, and I am frugal. I NEVER buy the extended warranty when I buy a new appliance or other major purchase. In my mind I think that extended warranties are a scam and I would like to assume that the product that I am buying is well enough made that it should last for 3 years or so without me needing an expensive service call or a warranty to pay for the service call. Heck, I have a refrigerator in my basement that I think is about 15 years old and it runs just fine.So, for me to state that sellers should have a home warranty seems a bit hypocritical. Yet I always offer them to my seller clients and I suggest that I place an order right when I take the listing. In my opinion, there really is no reason for a seller not to have a warranty. First of all, the warranty is free until closing. If its not negotiated in to the contract, you never pay for it. Second, the seller is covered for lots of things during the listing period, even without purchasing the warranty, and the all the seller pays is the deductible for the service call. Not bad, huh?
And just so nobody thinks I am trying to scam the warranty company, our sales rep from the company is the one who sold me on this whole concept.
Last month we had a seller of a newer condo in Birmingham, Michigan whose stove stopped working the week that her condo went under contract. She was faced with getting the stove fixed or replacing it before close. Fortunately for her, we had ordered the warranty so she paid about $60 to have her stove fixed. Not bad. And if the problem had been worse, that would have been covered too.
On the other hand, I had a seller a year ago who told me he didn’t want me to order the warranty because his home was in pristine shape. The hot water heater died shortly in to the listing period. He got to pay for a new one on his own. Oh well. I tried.
The warranty can also help if there are negotiations after a home inspection. We sold a home last winter with some older appliances in it, and the buyers were comforted by knowing that a home warranty would take care of any breakdowns in their first year.
The verdict: a warranty warrants serious consideration.
Written by Maureen Francis
SKBK Sotheby's International Realty, 248.430.4450
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Derek Burress 01.18.07 at 7:02 pm
Nice new look to your blog. Needless to say, I think all of the real estate bloggers are using the 3K theme now - except me and I did use it for a while.
If everyone starts using the same theme, it’s gonna get hard eventually for us to remember whose site we’re on!
Dave Smith 01.18.07 at 10:46 pm
Maureen,
I agree with everything you said. Here in Tucson we have the same arrangement with our Home Warranty Company. The sellers love it. Many don’t understand it because there are so few things that one can get free. Of Course there is the fee if they need to use it, but no up front cost as you mentioned.
We even have a page on our website stating list your home with us and we put on a free home warranty for the life of the listing.
We also use that in our listing presentation to potential sellers.
We love it, and it has paid off on several times. Many times it is extended to the buyer adding that degree of security that if anything breaks during that first year it is a service fee, fix or replace.
Linda Davis 01.22.07 at 11:54 am
I also agree! In Connecticut, Home Warranties are not used that often because the insurance industry blogged their sale for many many years. As a result, we are very late to the party. But it is something I really need to consider. Thanks for the reminder.
Hey, look at the typo I made. Blogged instead of blocked. Guess you know where my mind is!