Home Warranty - Should I have one?

Home warranties not only protect the buyers and sellers in a transaction; they also assist everyone in getting to the closing table more quickly and smoothly. Here's a look at some tips and advice for understanding the benefits of purchasing a home warranty:

Peace of mind for buyers

Most warranties provide coverage against mechanical failures for many major systems and appliances in a newly purchased home. Oftentimes, the coverage extends to items that most homeowners' insurance policies won't cover, leaving buyers in a sticky spot.

Buying a home with a warranty helps avoid closing delays when an appliance or water heater, for example, breaks down. Plus, buyers can opt to renew the warranty after the first year and extend the coverage – and their peace of mind – on one of their biggest investments.

Home warranty companies require only a standard deductible per service call on covered components. Plus, customers can reach someone 24 hours a day, 7 days a week to ensure that an appliance or system breakdown doesn't become a major catastrophe.

When representing buyers, I always ask for a home warranty in the initial offer and I have never had the experience of a seller saying no.

Sellers can list with confidence

Many sellers are facing negative equity, declining home values and fierce competition from distressed properties. Offering a home warranty on their listing helps set it apart from the competition and make it a more attractive option to homebuyers.

According to a recent study by on home warranty company, homes with a home warranty sold an average of 23 days faster and closer to the list price – an average of 4 percent higher at closing.

At least one home warranty company offers a plan to the seller which covers the home at no cost during the listing period and is only paid for at closing. The warranty then covers the buyer for 13 months. This is outstanding coverage for both parties and since I am going to ask for it on behalf of the buyer, it only makes sense that the seller should have it in place and also enjoy the benefits.

Home warranties crucial for distressed properties

Nearly half of the listings on the market today are distressed properties. That means many homes are left in less than presentable condition. Whether it is a bank-owned listing, a seller who's upside down in a short sale, or a buyer looking at REO properties, a home warranty protects everyone if an appliance or system in a vacant home fails.

In a majority of the areas throughout the U.S., basic plans from some companies cover unknown pre-existing conditions, lack of maintenance, sediment, rust and corrosion, and many other critical mechanicals that homeowners find themselves dishing out cash for these days."

So whether you are buying or selling, it makes good sense to have a home warranty.