The prices of properties have improved significantly in past 2 years, so you may be looking to sell your property. With the improvement in real estate market, your agent may consider it unnecessary to offer a home warranty, where normally most would advocate to offer one. But, how does a warranty apply in an Arizona short sale? Let us find out some important benefits of a home warranty and examine both of these viewpoints in detail.
Why get a Home Warranty?
When it comes to home warranties, there are lots of advantages associated with it. A home repair warranty will cover any type of breakdowns in the major systems of the house. It is very lucrative to buyers who do not have enough money to address any major repairs after the purchasing a home through the Arizona short sale process. Moreover, buying home warranties will allow you to cover any breakdowns or damages that may happen while your home is marketed to the potential clients.
A home warranty works like any other insurance and the money that you have invested in the insurance will be recovered in case of any major failure. However, if your manufacturer warranty is still applicable to your house, a home warranty may even prove redundant.
Who pays for a Home Warranty on an Arizona Short Sale
Home warranties can be quite expensive in nature and you may be required to pay hundreds of dollars according to the coverage you buy. On top of that, you may even have to pay up to $100 as a service fee upon every call. In Arizona, an average home warranty may cost anywhere from $300-$500, and many Buyers will ask the Seller to pay for it.
But, if you’re doing an Arizona short sale, the bank may not allow that expense, since they’re the ones paying commissions, title fees, etc. Your agent may chip in for you to have a warranty though, if you so desire. But in the case of a short sale, it’s not up to the Sellers to negotiate if they will pay for one (for the buyer) or not.
What’s covered, what’s not
Always keep in mind that these warranties have some limitations too. None of the static elements of your house are covered under this warranty. A home warranty covers operating systems that often tend to breakdown including electric wiring, heating, air conditioning, garbage disposals, and even plumbing. You can also buy some additional top-ups for mechanical elements including hot tub and your pool.
If you are looking for a home warranty, keep in mind that cost, exclusions, and caps may differ from one company to another. There is a possibility that some companies may offer less coverage for appliances and operating systems that are nearing their end. It is quite similar to the health insurance where the company will consider the benefits offered for pre-existing conditions. The company will be making the call whether the system has to be patched up or replaced entirely.
In short, a home warranty provides numerous benefits but somehow, it offers an imperfect protection for you as well as the buyer. When in doubt, propose that the short-selling lender pay for a home warranty, by adding the request into the AAR contract. The bank can only decline to pay for it, whereas you may decide from there to purchase one yourself or see if your sales agent will help cover the cost.
Tracy (G+) is an Arizona Short Sale Realtor, Investor, Rehabber, and Foreclosure Expert.
She also is an avid blogger, vlogger, contributor to the Bigger Pockets Blog, and consultant on all things Arizona Foreclosures.