Home Warranty Paid By Seller...Standard Practice? (system, prior, school)

[palmcoasting]

Originally Posted by riveree

Oh, I'll definitely consider it, but I want the realtor to pay for it from their commission. This is a modest home in a modest neighborhood (not worth$300k -closer to half of that).

We actually had a warranty on the home when we first bought it ourselves, it came with the house. Used it once. I actually can't stand them - you're placing a middleman between yourself and the electrician/plumber/etc. - not my style at all. So I let it expire and that was that.

I've redone most of the systems in the house (replumbed, new electric, AC has new motor, etc.), so I can't imagine what would come up during the sale of the house (small house....there's not much to it), but I know it can give peace of mind to a potential buyer, so it's worth that.

So, I'll have to see how it goes. A realtor that pays for the whole warranty out of their own commission, like you do Gretchen, will gain some points with me when I'm considering them .

I haven't even put it on the market yet and I'm already dreading the whole experience......ugh .

Unless it was a new home with a builders warranty, SOMEONE paid for it. It didn't just 'come with the house'. Either the seller paid for one or one of the agents involved did.
By the way...you can always use it in negotiations. When an offer comes in and you are countering you can offer a home warranty to sweeten the pot.

[VMH2507]

Since everyone is painting such a rosy picture of home warranties, I just wanted to add my very bad experience with a home warranty (American Home Shield) on a house that I sold approximately 9 years ago. I had purchased the extended warranty that was supposed to cover my house while it was listed. I had moved out of the house and was in my new home 500 miles away (a fact that I think played a major role in the outcome). When the home inspection prior to a sale turned up that the AC would not come on, the realtor suggested that I call the home warranty company. The AC company that AHS called said that the problem was that the system needed "cleaning" which was not covered by the warranty (because they said that I had not maintained the AC) and their charge would be over 2x what was normally charged in that area. Since I knew that the system had been maintained and even had the number of my regular AC tech, I paid the $65 service fee to AHS and called my regular tech. He diagnosed the problem as a faulty thermostat and said that no "cleaning" was necessary.
I called AHS thinking that they might be interested in knowing what kind of AC company they were using. WRONG! Not only did they refuse to refund my $65 service fee, but they said that they were going to add an addendum to my warranty saying that heating and ac were not covered because I had not used their "approved" company. Well, a HW in Houston that does not cover ac is worthless and would have been a major red flag/deal breaker. The realtor was able to get the addendum removed and the sale went through, but ever since then I have realized that a HW is a good sales tactic but I wouldn't count on being able to get it to pay off.

[riveree]

Originally Posted by palmcoasting

Unless it was a new home with a builders warranty, SOMEONE paid for it. It didn't just 'come with the house'. Either the seller paid for one or one of the agents involved did.
By the way...you can always use it in negotiations. When an offer comes in and you are countering you can offer a home warranty to sweeten the pot.

It's an old house - more than 50 years old. I'm not sure who paid for the warranty when we bought it (technically, my husband bought it alone, I came into the picture shortly after). It might have been paid by the selling agent or by the estate of the (deceased) owner.

Using it as a bargaining tool might work. One of the reasons I don't want to be the one paying for it all is past experience.

In the past, I offerred cash back at closing at a family member's urging, thinking it would make a house move faster. My experience was:

1) It had no effect on the house moving any faster than if I didn't offer it, in fact, not one person asked me a single question about it even though it was all over the ads (it was a FSBO, so I dealt with everyone myself).

2) People that could not afford the house or people that wanted to lowball me did just that regardless.

So I think people see something like a warranty or cash back and think 'well, that's a nice bonus/freebie', but they still look at the price of the house and bargain down from there.......just as they would have if there were no bonus/freebie.

So why go into the deal $300 or $400 shorter if there's no appreciation of that from the potential buyers? Maybe bringing the warranty in later will give it more value?

This will be the last house I sell for a while, so I want to maximize the profit as much as possible. I'm watching the bottom line, so it doesn't matter to me if I pay for something up front or it comes out at the closing table, it's still money out of my pocket either way. I'm prepared for things coming up and having to "give" to make a deal go through, but I don't want to waste money needlessly.

The reason I started this post is because I wondered how many sellers agreed to offering a warranty for the home and then were suprised to see it come out of THEIR profit at the closing table (and I'm sure there are some that it floats right past......they probably never know they paid for it, they assumed the realtor did ).

So, it's something to consider. Everyone seems to be advising to have the warranty one way or another, and I tend to agree with that. If the realtor I ultimately choose to list with doesn't want to pay for it all, maybe we can split it or something.

[Gretchen B]

Sorry for your bad experience, WMH2507. There are differences in the home warranty companies, and there are also lots of exclusions in most policies. I hope people don't think I'm touting HW's as a wonderful solution to any home repair item. However, they can be of benefit, and I do know of clients that have used them and loved them. . . . But, as you brought to our attention, not everybody does.

If somebody does decide to get one or offer one, make sure you read through their policies and pick one that's good. Unfortunately, sometimes you only know which ones are good because of what you personally hear about them or what you've personally experienced.

[VMH2507]

In my case it was not because of any exclusion, but because of a crooked (or incompetent) AC repair person that the hw company refused to investigate because it was to their benefit. I have learned over the years that there are a lot of unscrupulous people in the ac repair business. I guess I was just surprised that the hw company would not be anxious to know that they had such a person on their "approved list". As I said I would still buy a hw on a house I was selling for the "comfort factor", but I no longer have faith that it would pay off -- to me it is just a marketing plow.

[palmcoasting]

And I can see your point...there are two ways to handle it... when listing the house ask the Realtor if they will pay for a home warranty if the house sells, have that put in to the listing contract, and then have it listed with a home warranty. If it's not on the listing agreement, and an offer comes in and you are negotiating, you can offer the home warranty as part of your concession. You can also ask your Realtor at that point to pay for it and put it in the sales contract. If they won't, don't let it stand in the way of making a deal...what the heck, it's only a couple of hundred dollars. Look at the bigger picture.

[riveree]

Originally Posted by palmcoasting

And I can see your point...there are two ways to handle it... when listing the house ask the Realtor if they will pay for a home warranty if the house sells, have that put in to the listing contract, and then have it listed with a home warranty. If it's not on the listing agreement, and an offer comes in and you are negotiating, you can offer the home warranty as part of your concession. You can also ask your Realtor at that point to pay for it and put it in the sales contract. If they won't, don't let it stand in the way of making a deal...what the heck, it's only a couple of hundred dollars. Look at the bigger picture.

Thanks PalmCoasting, I think that's just what I'm going to do .

[shellytc]

Originally Posted by riveree

I was just suprised that the cost of the warranty came out of the seller's side.

This was a modestly priced older home (50+ year old home), so I know the warranty is a nice bonus, but I just assumed the listing realtor was the one who paid for it......I guess that's not always the case.

I'm curious because I will be putting a similar home on the market soon (not my primary), and a warranty might help with the marketing, but I'm not so sure I want to spend $300+ for it. I just don't think the potential buyers will value it as such - it will probably be viewed as another "freebie" and they won't consider it when they make their offer.

Unless the listing realtor will pay for it entirely, I don't think I want one after learning this .

Riveree, I disagree. it is a small amount of money that can help take away the fears of an older HVAC, Older h20 heater, older plumbing and lets you compete against a newer home. It is a small price to pay as a homeowner. And the cost is paid out at settlement.

Shelly

[riveree]

Originally Posted by shellytc

Riveree, I disagree. it is a small amount of money that can help take away the fears of an older HVAC, Older h20 heater, older plumbing and lets you compete against a newer home. It is a small price to pay as a homeowner. And the cost is paid out at settlement.

Shelly

Thanks for the feedback Shelly .

Much of the work I've done is obviously new - they can see the brand new plumbing (water heater, all pipes, indoor and outdoor fixtures - I did it all and it's not even a year old yet). I had planned to move back to this house, so I went above and beyond with the plumbing since I had planned to add on to the house eventually.

The AC could look scary to someone who's unfamiliar (a first time buyer, for instance), but I have all my paperwork showing what's been replaced (most of the guts are new - the motor, the wiring). Plus a home inspector or a 4-point inspector will see all the new stuff. But the AC is far from "pretty", that's for sure .

All the appliances are either brand new or newish - the oldest item is an 8-year old dishwasher that have never given me a minute of trouble. Everything else - fridge, stove, washer & dryer - are about a year old (and obviously so by sight).

So, I see the point of having a warranty for the buyer's peace of mind, though it probably won't be of much use for me otherwise.

I'm just getting nervous that the market perception is that the sky is falling and I'm going to have a hard time getting my price as it is, so I don't want to get nickel and dimed on top of it with a lot of extra expenses. Still, like I said, I'll probably do it. Hopefully, the realtor will pay for it, if not, maybe we'll split it.....we'll have to see.

As far as the cost paid out at setttlement, yeah, but it's still my money either way !

[olecapt]

All of the home warrantee companies will reject a claim if the condenser is dirty and filled with junk. It is virtually automatic. Easy to avoid. Whenever you make a service call turn a house on the condenser and wash it out. Proof of a service call within 6 montyhs also works. It is not a bad idea to have a spring cleanup in the warm belts.

I think Home Warantee an excellent deal for the seller and listing agent. It simply gets rid of a major potential problem in the time immediately after close. The ability of some piece of equipment to die the week after escrow closes is notorious.

I have had my seller pay at least the last 30 or 40 in a row. I would however pay it if the seller would not.

I maintain an AHS policy for my home. But for only one reason. I have two large and ancient AC units. The probability they will both make it another season is less than 50%. And they are a couple of grand a pop. It will also cost me some money but they will pay most of the cost.

With fresh AC units I would not do it. The level of service is simply unsatisfactory. I have gone around months on simple repairs. They tend to get embarassed in the end and pay the bill and refund my deductible...but it is still six weeks with the microwave down.

In one case I took them to small claims court. They paid up the day before and threw in 50 for my trouble.

I have had heavy discussions with my brokerage about setting up a system to track their performance. Basically make them do it. Everyone seems willing but it still has not happened.

There is at least some minor ties between us and AHS. However we do a pretty good job of policiing other such "recommended" suppliers. This one may be a bigger deal.