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. The market is exposing you to unnecessary liabilities by forcing your Buyers to take bigger risks, offer over the asking price, and try to provide the “cleanest” offer possible to win the deal. 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.
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 in April 2021 in Myrtle Beach area is approximately $280,000 (That’s the highest it’s been since January 2016) while the median length of time a home spent on the market was around three weeks.
Buyers are spending more on 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.
A home warranty provides peace of mind knowing 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 the asking price, they can pay a smaller Service Fee to have a professional address breakdown.
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If the fridge looks old or the air conditioner looks outdated, it can make Buyers hesitate.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.
Should Buyer use a home warranty as a solution to skipping inspections?
No!
Although some Buyers are willing to skip inspections (I strongly discourage it), a home warranty isn’t the solution for them. Remember that a home warranty applies to systems and appliances in good working order before coverage starts.
Without an inspection, it’s practically impossible to determine whether everything functions well.
Instead, you should get an inspection whenever possible. Then, if everything is in working order, consider a home warranty to protect your home and budget in case of future breakdowns.