If you’re selling your home For Sale By Owner (FSBO), offering a home warranty can be a smart strategy to make your property stand out in a competitive market. It adds value to your listing and provides potential FSBO buyers with peace of mind, knowing they’re covered if something goes wrong after the sale. But what exactly does it cover, and is it worth the investment for you as a seller?
Let’s take a closer look at understanding home warranty, how it works, and what it covers.
What is a Home Warranty?
A home warranty is a service contract that helps homeowners protect against the high cost of repairs or replacements of major systems and appliances that break down due to normal wear and tear. It’s important to note that homeowners insurance is not the same. While homeowners insurance protects against damage from disasters like fires or storms, a house warranty covers home systems and appliances that fail because of everyday use.
For FSBO sellers, offering a warranty can make your listing more attractive to buyers who may be worried about the condition of major systems or appliances in the home. It provides assurance that if something breaks after the sale, it will be repaired or replaced, saving the buyer from having to pay for expensive repairs.
How Do Home Warranties Work?
When a buyer purchases a home with a warranty, they pay an annual fee. In exchange, the home warranty company covers repair or replacement costs for certain systems and appliances that break down unexpectedly.
When a covered system or appliance fails, the buyer simply calls the warranty company, who will send a licensed contractor to assess the issue. If the issue is covered under the home warranty plan, the company will either repair or replace the item, usually for a small service fee.
TIP: Want a deeper understanding? Whether you’re selling or buying a home, if you have any doubts or need assistance at any stage, consider joining our FSBO courses at Something Different RE FSBO. Taking the wrong step could lead to complications later, so it’s always better to understand every detail before you buy or sell.
Additionally, we’ve now launched in-person homebuyer courses in Casper, WY. Book your spot today!
What Does a House Warranty Cover?
1. Major Home Systems
- HVAC (Heating, Ventilation, and Air Conditioning): Home heating and cooling systems are essential, and they can be costly to repair or replace. A house warranty typically covers breakdowns of the furnace, air conditioning units, and ductwork.
- Plumbing: This includes plumbing systems like pipes, faucets, toilets, and sewer lines. If there are issues with leaks, clogs, or broken pipes, the warranty covers the repair costs.
- Electrical Systems: Coverage includes wiring, electrical panels, and circuit breakers. If the electrical system malfunctions due to normal wear and tear, it will cover the costs of repairs or replacement.
- Water Heater: Water heaters are prone to wear and tear, and replacing one can be expensive. Home warranties cover the repair or replacement of malfunctioning water heaters.
2. Appliances
- Refrigerators: If your fridge stops working unexpectedly, a house warranty can cover the repair or replacement costs.
- Ovens, Ranges, and Dishwashers: Most home warranties cover essential kitchen appliances like the stove, oven, and dishwasher, which are vital to daily life.
- Washer and Dryer: Many plans also cover laundry appliances. If your washer or dryer breaks down, you can rest easy knowing the warranty will help cover the repair costs.
- Garbage Disposal: Most warranties cover garbage disposals, which are prone to damage from wear and tear.
- Microwave: If included in your home warranty plan, a microwave can also be repaired or replaced if it fails.
3. Optional Add-Ons
- Pool and Spa Equipment: If your home has a pool or hot tub, you can add coverage for the pump, heater, and other related systems.
- Septic System: If your home uses a septic system, you can purchase additional coverage for repairs or maintenance.
- Well Pump: For homes that rely on well water, adding coverage for the well pump can provide additional protection.
- Sump Pump: For homes in flood-prone areas, a sump pump add-on can be important for preventing water damage.
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Do You Need a Home Warranty for Your FSBO Sale?
As a seller, offering a home warranty can be a smart strategy to make your FSBO home more appealing to buyers. Here are a few reasons why:
- Increases Buyer Confidence: Buyers are often concerned about the potential costs of repairing or replacing major systems and appliances in a new home. By offering a house warranty, you reassure them that they won’t have to worry about unexpected repair costs for at least one year.
- Reduces Negotiation Hurdles: Buyers may try to negotiate for repairs or a lower price if they think something might break soon. A home warranty can help prevent these negotiations and give buyers confidence that they are protected.
- Attracts More Buyers: Offering home warranties can make your FSBO listing stand out. It’s an extra layer of protection that buyers don’t always see with other properties. Plus, many buyers specifically look for homes that come with a warranty, so it could attract a broader range of buyers.
- Makes Your Listing More Marketable: In a competitive market, any added benefit can make a difference. An FSBO home warranty could be the selling point that convinces a buyer to make an offer.
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What Buyers and Sellers Should Know About The Fair Housing Act?
Skills You Will Learn in an In-Person FSBO Course for Home Buying
Offering a home warranty as an FSBO seller can be a smart and strategic move to make your listing stand out in a competitive market. It provides buyers with peace of mind, knowing they’re protected against unexpected repair costs, and can help avoid post-sale disputes.
Ultimately, a house warranty can help facilitate a smoother transaction, build trust with buyers, and enhance the overall appeal of your home, making it an investment worth considering.
