It has been customary for the seller to provide a credit for the buyer to purchase a one-year home warranty as a good faith gesture and piece of mind for the new homeowner. But what about when the seller is a bank? Many agents know that it’s difficult to get banks to cover the cost of home warranties on bank-owned properties, to the point that many have stopped asking. However, it’s especially important that distressed properties, and ones with deferred maintenance have a home warranty, as it provides important coverage for the buyer and piece of mind for the agent after the close. The good news is that there is a way to get the home warranty covered by the bank.
After speaking with several REO agents, one of my colleagues discovered that the secret to getting the warranty covered by the banks is to put specific language in the Terms and Conditions section of the contract that states “Bank to pay $500 toward closing costs.”
The escrow officer must also include this on the Settlement Statement. It’s critical to include the home warranty in the contract so there’s documentation that the intent was to purchase a home warranty. If the offer is coming in at, or close to the list price of the home, the bank may pay for the home warranty; it’s worth asking for because the warranty provides significant value.
For short sale listing agents, the same, specific language, “Bank to pay $500 toward closing costs” can be included. It’s also important to include the $500 on the seller’s side of the Settlement Statement at the time the paperwork is submitted. When a buyer is in place, the home warranty should be ordered to include seller’s coverage to cover the seller against any unforeseen issues. Rest assured that Old Republic Home Protection provides coverage for distressed properties. Now, more than ever, a home warranty is needed to protect the seller, buyer and agent from after-close headaches.
~This article is provided courtesy of Old Republic Home Protection, a leader in the home warranty industry, providing superior service, comprehensive coverage and competitive pricing.
For more information on the value and benefits of home warranty coverage or to order a home warranty (also available for investment/rental properties and homes not going through a resale transaction), please contact local area representative Amanda Wood, serving Santa Barbara, San Luis Obispo and Kern Counties:
Old Republic Home Protection
(800) 282-7131 ext. 1210