Part 2:How Home Warranties Benefit Real Estate Professionals

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The 2-10 Home Buyers Warranty (2-10 HBW) Definitive Guide to Home Warranty Service Agreements Part 2: How Home Warranties Benefit Real Estate Professionals 2.1 Why a Home Warranty Service Agreement Makes Sense...... 2 2.2 The Value of a Home Warranty in Real Estate Transactions...... 3 2.3 Why Real Estate Professionals Need to Understand Coverage...... 4

1 The 2-10 HBW Definitive Guide to Home Warranty Service Agreements | Part 2: How Home Warranties Benefit Real Estate Professionals

2.0 How Home Warranties Benefit Real Estate Professionals 2.1 Why a Home Warranty Service Agreement Makes Sense

Homeownership is expensive. In fact, experts suggest an THE NEED FOR BUDGET PROTECTION IS REAL annual upkeep and maintenance budget of 1%-3% of the An estimated 59 percent of all U.S. citizens live paycheck to purchase price of the home.1 And the cost of maintaining a paycheck, and 44 percent often struggle to make ends meet.2 home is only growing. In addition, nearly 40 percent of all Americans can’t pay a $400 bill without going into debt or selling something of value.3 As new efficiency regulations are enacted and more technology is incorporated into systems and appliances, REPAIRS ARE COSTLY maintaining a working unit becomes more complex. With this With an average repair cost of $340 per incident, and an increased complexity comes increased costs. An unexpected average replacement cost over $1,500 for major systems and failure can push an already stretched budget over the edge. appliances, it’s easy to understand why most homeowners can’t easily bear the burden of a major failure.4 A home warranty can help homeowners manage unanticipated expenses and provide a plan for when a failure occurs. WORK WITH AN ESTABLISHED NETWORK OF SERVICE CONTRACTORS FAILURES WILL OCCUR Finding a qualified Contractor can be a difficult process. Most System and appliance breakdowns occur often. In fact, 7 out home warranties make it easy for homeowners by providing of 10 homes experience a major system or appliance access to a network of trusted, pre-screened Contractors. breakdown each year. The Provider works to ensure that each Contractor is qualified per their standards and monitors them based on customer feedback.

Replacements are Expensive Average Retail Replacement Costs for Common Systems & Appliances4

Water Heater: Refrigerator: Gas Oven/Cooktop: Dishwasher: Furnace: Full HVAC System: $1,790 $1,250 $1,400 $660 $2,030 $5,100

1 US Census Bureau 2 Charles Schwab Modern Wealth Survey, May 2019 3 US Federal Reserve, Report on the Economic Well-Being of US Households, May 2019 4 Estimated average retail cost of replacement and observed claims experiences of 2-10 HBW customers.

2 The 2-10 HBW Definitive Guide to Home Warranty Service Agreements | Part 2: How Home Warranties Benefit Real Estate Professionals

Further, the Provider helps ensure work is completed to the THE HOME WARRANTY STAYS WITH THE HOME terms of the agreement, which can help save time, money and The home warranty protects the property, therefore, coverage frustration. stays with the home if ownership of that home changes during the service period. This transferability is extremely helpful Qualified and experienced Contractors are key to getting a when the homeowner switches roles and becomes the Seller, repair or replacement resolved quickly and efficiently; working plus it provides an additional benefit and differentiator to the with a reputable Provider can help ensure the process goes as home while it is on the market. smoothly as possible.

2.2 The Value of a Home Warranty in Real Estate Transactions A home warranty is a smart and useful risk mitigation tool for pocket expenses or diminish the perceived value of the home real estate professionals and homeowners, providing added being sold. Listing coverage may also help address certain protection for all parties involved in a real estate transaction. issues that arise at inspection and limit concessions during the negotiation period. PROTECTION FOR BUYERS For clients purchasing a home, the coverage provided by a A home warranty not only protects Sellers from unexpected home warranty can help with unexpected expenses, provide failures, it also helps the home stand out to potential Buyers. budget protection and enhance the overall experience of home According to Gallup, 8 out of 10 Buyers prefer to purchase ownership. a home with an existing home warranty. This feature is especially attractive to first-time home buyers who might be Buyers can save money on covered repairs and replacements, concerned about tackling potential repairs. In addition, homes get access to trusted Contractors and gain a partner that will covered by a home warranty sell approximately 11 days faster help manage the service process to ensure work is completed and for $2,300 more than homes that aren’t protected from the correctly and in a timely manner. unexpected.

PROTECTION FOR SELLERS PROTECTION FOR REAL ESTATE PROFESSIONALS A home warranty is an extremely valuable tool for homeowners Real estate professionals may be the group that benefits most looking to sell their home. Listing coverage is often from a home warranty. Providing coverage for clients can complimentary or nominally priced for Sellers, and offers help reduce risk across the board. Lower errors and omissions protection for the home’s major systems and appliances (E&O) insurance premiums , coverage for unexpected failures throughout the listing period. that could prevent or delay closings and fewer post-closing disputes are just a few of the benefits that home warranties Listing coverage protects Sellers from unexpected failures afford real estate professionals. Not to mention, homes with a that could potentially affect a closing, require large out-of- home warranty sell faster and for more money.

SOLD Buyers prefer to purchase a home Homes with a home warranty sell approximately 8 out FOR of 10 with an existing home warranty SALE 11 days faster and for $2,300 more.

3 The 2-10 HBW Definitive Guide to Home Warranty Service Agreements | Part 2: How Home Warranties Benefit Real Estate Professionals

2.3 Why Real Estate Professionals Need to Understand Coverage

Home warranties differ from one Provider to the next, so it’s Real estate professionals can make sure that clients have a vital that real estate professionals have an understanding of solid grasp on how service fees will be collected, whether the coverage they’re suggesting to their clients, especially their coverage adapts to changing codes, how to file a service when inevitable coverage questions arise. request and the other important details behind a home warranty. Some Buyers and Sellers don’t fully understand what a home warranty covers, how it works and other important details. Many customer questions stem from a misunderstanding of They will turn to their dependable real estate professional for what is eligible for coverage and what isn’t. Knowing the terms answers to their questions. and conditions is the first step toward getting the most out of the home warranty. As long as each party is educated on what Some Providers offer training on their coverage and on how a home warranty does and does not deem eligible for coverage, to answer frequently asked homeowner questions. When these contracts are excellent tools for everyone involved. searching for a Provider, real estate professionals should inquire about the company’s training on what is and isn’t UTILIZE YOUR HOME WARRANTY PROVIDER’S eligible for coverage. LOCAL REPRESENTATIVE Another great resource for understanding the ins and outs of ENCOURAGE CLIENTS TO READ THE HOME WARRANTY a home warranty is the local representative for your Provider. SERVICE AGREEMENT Leading Providers have experts in your market that can Beyond understanding the details of a home warranty, real help answer questions, provide training sessions, deliver estate professionals can also teach homeowners about the educational materials and explain the value of coverage to importance of knowing how their specific coverage works, agents and homeowners alike. including suggesting that their clients read through their home warranty documents in detail.

4 Work with the only home warranty company providing Real Protection for Real Estate Pros.

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