Why Should Sellers Buy a Home Warranty?
It’s very common for a buyer to get a home warranty with the purchase of an existing home. What most people don’t know is that home warranties are also available to sellers. Not only does a home warranty help reduce a seller’s exposure to risk but it also adds to the attractiveness of a home sale.
Home warranties are available to sellers of single family homes, townhomes, condominiums, and mobile homes. Coverage becomes effective the day of application and continues until the expiration of the initial listing period (up to 180 days), close of sale, or listing termination; whichever occurs first. A buyer’s home warranty can cost up to $400, whereas a seller’s policy is less than $70.
The sellers warranty is actually packaged with the buyers warranty. The seller agrees to purchase the buyers home warranty at closing and the insurance company issues coverage to the seller while they sell their home. If the home doesn’t sell, the owner only pays the sellers home warranty premium. If the home does sell, the cost for both sellers and buyers home warranty is paid for at closing. Keep in mind that a sellers warranty will likely have more restrictions than a buyers warranty (i.e. certain appliances excluded, limit on HVAC expenses). The seller will also pay for each trip a technician makes to the home for repairs (“trade call”), and it will correspond with the cost set in the buyers warranty.
Homes that come with home warranties spend significantly fewer days on market than those without and sell at a premium to non-insured homes. Considering most buyers are now insisting that warranties be included with their home purchase, it only makes sense to purchase the sellers warranty at the start of your listing.