How a home warranty helps agents in a Seller’s market
In the midst of a Seller’s market, you may have noticed several patterns. Sellers are selling their homes well above list price and sometimes above appraisal price. Buyers agents have very little wiggle room to negotiate. Many Buyers are buying homes as-is, and some even take the risk of skipping an inspection. Agents can turn these challenges into opportunities with the right tool. Let’s look at how a home warranty from 2-10 Home Buyers Warranty (2-10 HBW) can help agents in a Seller’s market.
A home warranty can be a cost-mitigation tool
Record-low inventory and high demand have put the ball in the Seller’s court. According to the National Association of REALTORS© (NAR), the typical home purchase price from April 2020 onward was nearly $340,000, while the median length of time a home spent on the market was a mere three weeks.
Buyers are spending more for a home. And with demand so high, Sellers often don’t expect to have to do much to close a sale. One of the areas where this clash is most obvious is with the Seller’s appliances.
In pre-owned homes, Buyers might expect Sellers to replace older appliances that still work. But because of the competitive market, most Sellers simply won’t buy new appliances that they’ll never get to use, mostly because they don’t have to. A strong middle-ground solution is a home warranty.
When you recommend a home warranty, you’re providing a cost-mitigation tool for both Buyers and Sellers.
For Buyers, they get peace of mind that they’re covered if a system or appliance breaks down. Rather than having to shell out money to solve a breakdown so soon after they’ve paid over asking price, they can pay a smaller Service Fee to have a professional address breakdowns. It also helps you build trust with your clients, as you’re showing them that you’re supporting them beyond closing.
For Sellers, recommending that they provide a home warranty is a much less expensive option than replacing older appliances. It’s a way to provide value to a Buyer without spending bigger money to replace older but still-working appliances. Because even though it is a Seller’s market, speedy sales to preferred Buyers still matter to Sellers.
A home warranty can help bridge the gap and provide everyone with something they want.
Coverage builds Buyer confidence, which may lead to successful closings
Even in a Seller’s market, Buyers need to feel confident in the gigantic purchase they’re about to make.
If the fridge looks old or the air conditioner looks outdated, it can make Buyers hesitate. They may think, “Yeah, it works now, but how much is it going to cost me to fix this when it stops working?” A home warranty can reduce those fears by providing coverage on major systems and appliances. That lets Buyers focus on the bigger picture with confidence.
For Sellers, a home warranty can drive more competitive bids and lead to a quicker sale. Including a home warranty shows that they’re confident in the home as-is. With many Buyers desperate for move-in-ready homes, a home warranty can give Sellers even more leverage to find the Buyer they want.
And as a little bonus for agents, when you gift a home warranty to your clients, the cost is tax deductible.
A home warranty can bolster your reputation after closing in a Seller’s market
It’s clear how a home warranty protects Buyers after the sale. If a covered item breaks down, they spend less time and money addressing it, thanks to you. When you provide Buyers with solutions that extend past the sale, it may increase the likelihood that they’ll refer you to others.
In addition, because a home warranty can provide peace of mind for Buyers, it can help Sellers close on their terms. Additionally, with complimentary Seller coverage (where allowed by law), you can reduce Seller stress that a breakdown will stall their sale in a Seller’s market.
In short, a home warranty shows that you care about how your clients feel throughout the sales process. As the saying goes, people may not always remember what you did for them, but they’ll always remember how you made them feel. When you make them feel comfortable and confident throughout the process, they’re likely to share those feelings with others in the form of a referral.
Should Buyers agents use a home warranty as a solution to skipping inspections?
No. Although some Buyers are willing to skip inspections (we strongly discourage it), a home warranty simply isn’t the solution for those Buyers. Remember that a home warranty applies to systems and appliances that are in good working order before coverage starts.
Without an inspection, it’s practically impossible to determine whether everything functions well. If you were to encourage Buyers to skip the inspection because “You have a home warranty,” you could set yourself up for failure. The same goes regarding foreclosed homes.
Instead, you should encourage inspections whenever possible. Then, if everything is in working order, provide or recommend a home warranty to protect the Buyer’s home and budget in case of future breakdowns.
2-10 HBW offers comprehensive systems and appliances home warranties to help protect your clients from unexpected repair and replacement costs. Contact us to learn more.