Home warranties are a safety net when buying a new build and a wild card when it comes to buying an older home. How can you (the realtor) know when to push for that warranty when your client is buying a home or if offering one will help sell the home? This article is going to help you make the right decision together with your client whether to offer a home warranty when selling a home—or negotiating for a home warranty on behalf of your buyer.

Your first step to deciding if a home warranty is worth it for your client is taking a look at the condition of the home they are purchasing (or selling). New homes make buying a warranty essential—the last thing a home buyer will want to deal with in a new home is a broken-down appliance or other issues. Older homes are more likely to have issues (“wear and tear”), which are often seen as a responsibility of homeownership, but offering a home warranty as a part of the sale can make the purchase more enticing or a great negotiating tool for your buyer.

A survey done by American Home Shield relayed that the majority of homes sold that came with a home warranty were sold at a higher and faster rate compared to the national average of homes sold.

Also, if a house is sold with a warranty, it can justify an increase in the asking price, reduce its time on the market, and potentially increase the final sale price compared to the original listing price and comparable homes. Depending on how hot the market is, a home warranty also can sway the home buyer of whether they want to buy the home.

New Builds and Home Warranties

A home that has just been built almost always comes with a warranty by the housing developer or contractor for that property. They do this to ensure the home’s major mechanical systems are covered, like plumbing, electrical, air conditioning, and heating. This warranty usually lasts for the first year. Depending on the warranty, it can also cover major home appliances as well—the buyer usually having to only pay a deductible if something stops working within that limited term.

If your client is looking at new construction homes, but is on the fence about buying, then explaining home warranties and the benefits they entail can help your buyer to make a more educated home purchasing decision. Also, advising of Home Warranty Inspections—inspections that take place prior to the expiration of a home warranty that is intended to inspect areas covered by a home warranty and locate any concerns that should be address before the warranty is no longer effective—can also aid in their home buying education and options.

The most important aspect of a home warranty to make clear to your buyer is that a home warranty is NOT the same as home insurance. With home insurance, house fires, natural disaster damage, crime, or other accidents that damage the home are covered (up to and including per the insurance terms). Warranties only cover major electrical systems and/ or major appliances—and only for the term of the warranty.

Old Homes/ Previously Owned Homes and Home Warranties

In an older home or a home with one or more prior owners, the character of the house can make a buyer interested, but a home warranty can help them seal the deal! Unlike new builds, older home sellers typically do not list their home with a warranty.

Encouraging your seller to offer one can usually help entice more buyers, especially if the market conditions dictate more favorable terms or housing options for a buyer. Home warranties aren’t just for when the real estate market is favoring buyers—offering a home warranty when the real estate market is more favorable to sellers can enable the seller to list their home for more than what other comparable homes without a warranty are being listed for.

If you are a buyer’s agent, requesting a home warranty may be favorable for your buyer and can be used as a negotiating tool—especially if a home inspection shows some aspects of the home (like the AC unit) is aging but not quite ready for replacement. A home warranty may be a more favorable concession for the seller than replacing or upgrading major appliances and systems. As a listing agent, when the condition of the home shows wear, your seller can get ahead of the negotiations by offering a home warranty with an “as is” claim.

How can you convince the seller of an older home to add in that warranty?

When selling a home, the previous homeowner is legally supposed to let the buyer know of all, if any, mishaps with the property they are aware of. From a seller’s point of view, a home warranty can serve as a sort of insurance should anything happen with major systems of home after the sale is closed. A home warranty can provide peace of mind when selling an older home for all parties involved.

If the market is cool, a seller offering a home warranty with the sale can influence the prospective buyer to close the deal. As the listing agent, your seller will look to you for tips to sell the home quickly and entice buyers without having to lower their asking price. A home warranty is a negotiating tool for you and your client is as it can be for a buyer.

As a realtor, your clients will value the idea that you are looking out for them not just in the current moment but in the long run if that warranty is suggested. Sit them down and look over all aspects of the home and the current market to make the best decision with them!

Tampa Home Inspection Company and Home Warranty

Here at AcuSystem Inspections, we offer a 90-Day Guarantee/Home Warranty. All residential clients who hire us to perform a home inspection receive this deal. This is just one more guarantee aside from the exceptional service that we provide for our customers to feel confident in our company!

Note: Our 90-Day Guarantee/Home Warranty is separate from a home warranty offered directly by a seller, home builder, or other party.