Today’s market requires buyers to take on more risk than ever before. A home warranty plan is a powerful tool to protect home buyers and give them peace of mind. But buyers aren’t the only ones who benefit: AFC’s plans are helpful to sellers and real estate agents, too.
Let’s face it: the real estate market in 2021 is bonkers. Home prices are rising at incredible rates and homes for sale consistently attract multiple offers, all of which may be over the asking price. It’s an exasperating situation for many homebuyers and real estate agents.
“It’s the most extreme sellers market since I’ve started doing real estate,” says Michelle King, a veteran agent in Atlanta, Georgia. “It’s also super fast-paced. There’s no time for anything—two to three days tops to submit offers and get a listing under contract.”
With the supply of homes for sale at a record low, buyers are forced to compete and compromise like never before. Many of those compromises expose buyers to increased risk.
“As a buyer, you’re out on a limb right now,” states King. “When you put in an offer as a buyer it has to be so competitive. You’re offering over asking. I see a lot of offers that have zero due diligence.”
“It really goes against everything realtors would generally advise in the past,” states Shelley Bell, another Atlanta-based real estate agent. In years past, buyers would use their due diligence to get a home inspection, have professionals examine any potential issues, and ask for repairs.
In 2021, though, buyers have to pull out all the stops, according to Bell: “[buyers] are waiving an appraisal if they can, shortening the due diligence period. Seller paid closing costs are almost nonexistent these days.”
These factors put buyers at more financial risk and obligation. “It’s assumed that buyers aren’t going to ask the sellers for anything,” says King, adding, “A warranty could come in handy because you aren’t able to get the needed diligence or repairs, or even an allowance for repairs.”
In a time when home buyers face so many unknowns and must make decisions so quickly, a home warranty protects them from those high repair costs. You might be asking, “what is a home warranty in real estate?”
A real estate home warranty is a service contract that covers the cost of repairs to the systems and appliances in the home. It’s called real estate home warranty coverage because it’s purchased as part of a real estate transaction.
You’ve probably heard a story of someone who moved into a new home and experienced a major catastrophe a couple months later. Heating and cooling systems always go out at the most inconvenient times, just like washers or dryers. Homes that are left vacant, even for short periods, can develop plumbing leaks in walls, floors, and ceilings.
It’s hard to know what will go wrong with your new home. But during the first few years of home ownership, there are lots of unexpected expenses. Repairs shouldn’t be one of them.
Besides, if you’re buying a home in 2021, you’re paying record-high prices. Even the most responsible buyers are digging into other savings (or going further into debt). The last thing you need is an outrageous repair bill right when your bank account is at its lowest.
A warranty plan, like AFC offers, covers you when your appliances or major home systems fail. So instead of a large bill, you simply pay a small service fee. And if your warranty covers your repair, you don’t have to worry about which repair company charges more.
Instead of constantly worrying about what expenses are in store for you, homeowners with a home warranty have the peace of mind that allows them to enjoy their new home, and focus on other issues. For instance, unpacking.
Realtors and agents are feeling the effects of the market just like buyers are. Trying to get buyers across the finish line requires constant support and communication for realtors. The process can be emotionally draining for buyers, as they miss out on house after house.
A warranty can be part of that support.
King says that, while she doesn’t typically buy warranties for her clients, she is considering it this year. “Right now the buying process is such a whirlwind and happens so fast. There’s so much market pressure and you don’t want your clients to feel like they made a mistake.”
She adds, “It would be so disappointing to move in and have something break instantly… It would be a nice gesture in this moment of uncertainty.”
Regardless of who’s paying for it, signing up for a warranty takes just a few minutes, and could make a huge difference in how risk-averse clients feel about the purchase.
While sellers often receive multiple offers for their home, some of those offers fall through as buyers become uncomfortable with the increased risk they are asked to assume.
In such a situation, a warranty may help the seller snag a more attractive offer by overcoming buyer hesitancy. King explains: “a warranty would be an inexpensive way to show good faith to the buyer. It shows that you want to give the buyer peace of mind and prepare them if things need repairs later.”
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If you have questions on covered items or finding a plan that covers your home, visit our FAQ page or call 866-242-0629 to speak to one of our warranty experts.