Here’s some helpful information from our friends at 2-10 Home Warranty about converting home warranty coverage from Seller to Buyer.
Home warranty coverage can protect Sellers, Buyers and real estate agents throughout the home sales process. Once the sale closes, converting Seller coverage to Buyer coverage is an easy, efficient way for real estate agents to keep their clients protected. Today, we’ll look at why converting Seller home warranty coverage to Buyer home warranty coverage is important. We’ll also look at how real estate agents can convert it easily.
What is Seller coverage and how does it work?
Seller coverage from 2-10 Home Buyers Warranty (2-10 HBW) is simple for real estate agents to provide. Where allowed by law, it’s complimentary (except in Florida, where it’s $60). Seller coverage covers repair or replacement costs for the home’s major systems and appliances throughout the listing period.
Say a Seller has 2-10 HBW Seller coverage and their heat or A/C breaks during the listing. All they have to do is contact 2-10 HBW and pay a service fee to have a dispatched contractor assess and address it. This can prevent delays or markdowns throughout the sales process. It also protects the Seller’s budget as they try to sell their most valuable asset.
In short, Seller coverage can make agents look like heroes when their Sellers need protection most. We recommend that agents present this Service Agreement to both the Seller and the Buyer before closing.
How to convert Seller home warranty coverage to Buyer coverage
Once the home closes, there are 3 ways to convert Seller coverage to Buyer coverage.
1. Buyers agent buys home warranty coverage and presents it as a gift
The most common way to convert coverage is for Buyers agents to purchase it for their clients. Doing so solves a big problem for many Buyers, especially first-time Buyers.
Many Buyers spend most of the money they have on a down payment. If a major system, like their HVAC, or a major appliance, like their fridge, breaks down, they may not have the money to address the problem. This can make the initial stages of home ownership difficult, if not unaffordable. It can also lead to agents needing to field calls from their clients about what they should do about breakdowns.
Purchasing a home warranty and presenting it as a gift after closing can reduce this risk. A Buyers home warranty protects Buyers against major system and appliance breakdowns for 1 year, starting the day it’s enrolled (agents have 30 days after closing to enroll the home). This can make the first year of home ownership less expensive and less stressful for Buyers. It also leads to happier clients who are more willing to recommend the agent to other Buyers. And it saves agents time, because instead of fielding calls, they can focus on their sales goals.
2. Sellers can purchase and transfer coverage to Buyers
The second option is for the Seller to purchase Buyer coverage for the Buyer as an incentive at closing. This is especially useful in Buyers markets, as systems and appliances protection is valuable to new homeowners.
Beyond that, a home warranty can be the extra push that on-the-fence Buyers need in order to close the sale. Among all Sellers in 2019, a home warranty policy was the most-used incentive to attract Buyers, according to the National Association of Realtors. A home warranty is a useful negotiation tool for Sellers looking to speed up a stalled sales process.
3. The Buyer can purchase a home warranty themselves
If the Seller or real estate agent don’t convert coverage, the Buyer can purchase coverage for themselves. The last thing homeowners want right after purchasing a home is for a major system or appliance to break down. A 2-10 HBW home warranty can reduce the costs of ownership when Buyers need it most.
Converting Seller coverage to Buyer coverage is a great way to differentiate yourself in a competitive market. It protects the transaction, speeds up the sales process and improves the home ownership experience for clients. And when clients are happy, they’re more likely to refer their agents to others.