What is the value of offering a home warranty?

Home warranties are basically insurance policies that can be purchased upon a closing of a home that will protect the buyer for the first year after they buy a house. They cover various different things depending on the warranty, but basically they cover the buyer for any unexpected repairs that could crop up after closing on a property. The buyer merely pays a small payment (sometimes called a "trade fee") for the entire repair or replacement of the problem. There have been many occasions that both sellers and buyers that I have worked with have benefited from the purchase of these warranties. They are a terrific selling feature and offer peace of mind to the buyer while at the same time are available to the seller to cover their home during the listing period.

There have been many times that these policies have paid off, both monetarily and otherwise. One client had scheduled the utilities to shut off the day of closing, but closing was postponed by a couple of business days. The buyers had the insight to call the utility companies to change the date, but the seller did not think of it. When the buyers went for the walk-through, they had no utilities to re-check the appliances or anything else in the home. Since they had just been in the house a few days prior, and the seller had purchased the warranty, the buyers were comfortable that if there were any problems the warranty company would take care of it, and the seller was not required to escrow any of his proceeds.

Another time a seller had purchased a warranty. When their heater was found to have a major crack in it, it was condemned during the home inspection and the warranty company stepped in and helped this seller to replace the heater prior to closing. This was a relief to all parties involved!

These stories happen both before and after closing, and in these instances the fee for the warranty (typically runs between $400 and $500 deducted from the seller's proceeds at closing), proves to be well worth the investment.