Home Warranties
A potential benefit for both buyers and sellers alike
By Jeff Hammerberg
The market for homes across the nation has never been more challenging for homeowners trying to sell, nor more mind-boggling for buyers shopping among the historically overwhelming inventory of discounted listings.
But beyond the initial sale of a home, legitimate buyer concerns arise regarding the condition of the home—and whether it will continue to provide a problem-free experience after the keys change hands.
One resource to add to your credibility toolbox is a home warranty. While these insurance policies are often overlooked or underrated, they can easily pay for themselves by boosting confidence, ensuring quality, and calming the emotions of nervous and cost-conscious buyers.
The way a home warranty works is that it covers basic components of a home such as appliances and furnaces for a period of time, allowing the homeowner to market property with an added security blanket. Buyers get the assurance that things will work as they are supposed to, which can often make or break a fragile sales transaction. Many also cover your home the entire time you have it listed, so that last-minute breakdowns don’t threaten to kill an otherwise flawless deal.
When moving into a new home, most consumers are cash poor, thanks to an inordinate amount of expenses such as new furniture, interior decorating, and moving van costs. That fact is only intensified and accelerated by today’s high gas prices and fears of an economic recession, so sellers who offer a home warranty generally get a solid return on their investment by giving buyers a reliable and predictable outlook. That’s because if items that are covered need to be repaired or replaced during the warranty period, it won’t add a financial burden.
The policies can be bought by the buyer or the seller, and sometimes are thrown in by real estate agents as an added bonus or housewarming present. Especially for sellers trying to market an older home in today’s highly competitive market, a home warranty can be an attractive yet affordable perk. Warranties are fairly inexpensive, typically ranging in price from $250 to $500, depending upon what is covered. It is also possible to find discounted policies when insurers offer specials, seasonal sales, or enhanced coverage for the “regular” price. Policy premiums are paid up front, and the period of coverage can run from a few months to more than a year, depending upon the specific terms and whether the holder decides to renew the policy or not. Homeowners making a claim may sometimes have to pay a service-call fee, but those are usually nominal.
Details of the coverage are critical, and differ from policy to policy, so it is important to read the fine print and understand any and all restrictions. Whether or not the policy is transferable depends on the company, and this can be an important feature if you plan to sell and don’t want to remain responsible for handling potential claims.
Policies generally cover items including:
• Air conditioning and heating systems
• Ductwork and ceiling fans
• Dishwashers and garbage disposals
• Doorbells and telephone wiring
• Water heaters and plumbing clogs inside the home
• Electrical systems
• Cooking ranges and ovens
But warranties normally will not cover repairs of items outside, such as outdoor lights, sprinkler systems, garage-door openers, hot tubs, and swimming pools. Individual policies may or may not cover washers, dryers, and refrigerators, so it is important to read the actual policy carefully, not just the colorful marketing brochures. Sometimes you can add items that are generally excluded by paying a little more and adding extended coverage to the generic policy. In any case, as with any kind of insurance, your claim could be denied if you fail to follow proper building codes, perform routine maintenance, or use certified professionals to do your equipment installations.
Insurance varies from state to state, so if you had a warranty in your former home but moved out of state, check your new policy to make sure it meets your needs. If you luck out, it may include coverage you didn’t have at your former address.
Jeff Hammerberg is the president of www.GayRealEstate.com, a network of agents and lenders committed to serving the GLBT community with fairness and professional excellence. He can be reached at 888/420-6683.
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The Color of Money
Green might be the key to getting your home sold
By Ven Griva
Copley News Service
While many segments of the real estate industry are feeling the negative effects of the ongoing subprime mortgage crisis, demand continues to grow for homes or condominiums built with the environment in mind. That’s a fact you might want to keep in mind if you are planning on selling your home.
A number of market forces are contributing to this eco-friendly trend: The aging baby boom population is turning toward smaller, easier-to-maintain homes; builders are purchasing more green materials; and manufacturers are producing more green building materials, which drives down prices.
That’s the assessment of Rhys Stucker, director of the VISION House Series, a sequence of showcase homes being built nationwide by the National Association of Home Builders to demonstrate the benefits of sustainable design, construction techniques, and products.
“The green market is the only one that’s up this year,” Stucker says, quoting a study by McGraw-Hill construction and the National Association of Home Builders. “This year could be the tipping point. More than half of home builders are going green.”
Stucker ticks off four things that make a green home:
• The use of sustainable products in construction.
• Efficient use of resources such as water and energy.
• A healthy indoor environment free of allergens and mold.
• Durable products that can, over time, pay for their additional cost.
If the home you wish to sell is built with any or all of these features, your next step is to market them aggressively.
But be careful, real estate marketing experts say. The people looking for green homes aren’t necessarily worried so much about Mother Nature as they are about their pocketbooks and quality of life.
Brooke Warrick, president of market research and consulting firm American Lives in Carmel Valley, Calif., says that’s a good approach.
“Selling green features is like telling a child to eat his vegetables,” quips Warrick. “If you try to sell it based on the virtue of green, you’ve lost the battle to begin with.”
The best way to market your home is to tell potential buyers they’ll save a bundle if they buy an energy-efficient home and that their green home will reap higher resale prices.
If you are working with a real estate agent, make sure he or she is aware of the green features your home may have. Emphasize that green doesn’t necessarily cost more and generally saves money in the long run.
It doesn’t matter how well-built, or how green your home is, if you or your agent fail to communicate the value of green to your potential buyers. Include the information in your home listings, brokerage websites, or brochures put together to market your home.
Most green building products were developed to do something better than their conventional counterparts—they may be stronger, last longer, use resources more efficiently, or manufactured in an environmentally sound manner.
The high cost of energy is one concern for home buyers, and comfort drives high energy use. When it gets hot or cold, people turn on the air conditioning or furnace. By emphasizing the systems your home features from the start, you can offer potential buyers greater comfort while reducing their utility bills.
The same can be said of appliances. If your home comes with a new, efficient water heater or refrigerator, those are things you want to emphasize to potential buyers.
Finally, the public health community has identified homes as one of the most significant threats to child health. When preparing your home for market, you might want to take a long look at the products you put to use.
Consider using the following when sprucing up your home:
• Paints and adhesives that are low in or exclude volatile organic compounds (VOCs).
• Building products with low or no formaldehyde emissions.
• Water-based, low-VOC wood finishes.
• High-quality air filters on heating/cooling unit.
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Under Pressure
How to move your house from “For Sale” to “Sold”
By Diane Schlindwein
Copley News Service
Sellers who want or need to sell their homes quickly should take serious action. It’s a buyer’s market, so homeowners have to work even harder to get their house noticed and sold.
In Springfield, Ill., where the Capital Area Association of Realtors reports 2007 was the third most successful home sales year in history, Realtor Barb Krueger offers some insight. “People need to sell quickly for a variety of reasons,” she says. “Sometimes they are in distress and don’t want to hurt their credit rating by not being able to make payments. “Sometimes it is due to a job relocation or a divorce,” says Krueger, who is associated with Re/Max Professionals. “Sometimes it is a health crisis. Sometimes it is simply due to an expanding family.”
Krueger believes friends and family members mean well, but usually can’t offer the best advice. “Avoid listening to everyone at the office, relatives, and friends who are very well-intentioned but often confuse the seller,” she says. “Take the advice of your Realtor, your attorney, or your banker—those who are knowledgeable and deal with this every day.”
Homeowners who are in financial trouble really need to act quickly, Krueger says. “My best advice is to call a Realtor immediately, especially one who is experienced, so they get the best help possible. Many people hide their head in the sand until it is too late to help them.
“In Illinois, for example, it takes approximately one year for foreclosure to be done. If they call their banker and their Realtor immediately, we can usually help them sell their home instead of ending up in foreclosure.”
Krueger instructs sellers to have a Realtor prepare a comprehensive market analysis on their home—or to pay for a licensed appraisal. “Second, have a Realtor or a professional home stager walk through the house to get it in the best showable condition without spending too much money.”
Finally, ask your Realtor for a list of ways to improve your home and prepare it for selling.
“Go over the list and then do it,” Krueger says. “Get family and friends to help, hire teenagers, hire professionals. Just do whatever it takes to get it ready to show. Above all, price it right since it is not ‘location, location, location’ anymore, but now ‘price, price, price.’”
Sellers aren’t obligated to accept any offer, but they should never ignore one that is placed through a real estate agent. “Do not be insulted at a low offer,” says Krueger. “Always make a counter offer, even if it is just to show them to get serious and you will respond better.”
Indianapolis Realtor Mary Hession agrees. “Even if an offer is low, it is certainly worth looking at,” says Hession, who is an agent with Century 21 1st Choice. “I don’t think you should write off any offer. The people may be testing the waters.”
No matter what reason a seller has for selling, it is best not to have any house on the market for months on end. “If a house is on the market for too long, buyers begin to get nervous,” says Aspen Real Estate Realtor Linda Green, who is also based in Springfield. “Usually they begin to wonder why the house hasn’t sold.”
Krueger says a seller’s best move is to take a professional’s advice and then take action.
“I give advice to sellers all the time. If they take the advice, in our market they move,” Krueger concludes. “In the end, it is still price, condition, location, and marketing that must be in alignment for the sale to happen quickly.”
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