How to Convert Home Warranty Coverage from Seller to Buyer

Moving is one of the most high-stress events we experience. Fortunately, a home warranty can make the process of selling your home a little bit easier.

There are of course the standard benefits of home warranties. If the water heater suddenly starts acting up, or the garage door is on the fritz, your home warranty provider can send a technician to resolve the issue at minimal cost to you. But there are less obvious advantages of having an active home warranty contract while your home is on the market. For one thing, warranties have been shown to increase home values. For another, homes with active home warranties sell more quickly than homes without them.

So you’ve found a buyer, sold your home, and moved out. What happens to that home warranty? In this post, we’ll review how to convert seller home warranty coverage for the new buyers of a home.

Why Are Home Warranties Important?

Home warranties provide several benefits for both buyers and sellers:

·  Peace of Mind: Buyers feel more confident knowing they have protection against unexpected repair costs.

·  Cost Savings: Sellers can use home warranties as selling points and may not have to cover expensive repairs before selling.

·  Convenience: Both parties can avoid disputes over post-sale repairs by having warranty coverage in place.

The Importance of Home Warranty in Real Estate Transactions

Seller's Perspective

For sellers, offering a home warranty as part of the real estate transaction can be a strategic move. It can make their property more appealing to potential buyers, which can lead to quicker sales and potentially higher sale prices. Additionally, sellers can avoid the stress of unexpected repair requests during the negotiation process.

Buyer's Perspective

From the buyer's perspective, having a home warranty included in the purchase can provide a sense of security and peace of mind. It means that they won't be burdened with the cost of repairing or replacing covered items immediately after moving in. Instead, they can focus on settling into their new home without the worry of unexpected expenses.

Are Home Warranties Transferable?

Policies may differ from plan to plan, but generally yes, home warranties are transferable service agreements. It is incredibly common for a real estate agent or home seller to purchase a home warranty policy with the intent of later transferring it to the new buyers of the home.

The process of transferring your home warranty contract is actually quite simple, but it can work out in a few different ways.

•          The buyer’s real estate agent can purchase the policy as a gift for their client. This is a very common scenario. Realtors often front the cost of a one-year home warranty policy as a gesture of thanks and goodwill. New buyers, especially first-time buyers, may be strapped for cash after spending money on their home’s down payment. A home warranty can put the buyers’ minds at ease, reassuring them that they won’t have to foot an expensive bill if an appliance or system fails shortly after moving in. In this scenario, the home seller can work with the buyer’s realtor to transfer the home warranty policy.
•          The home sellers can gift the policy to the new home buyers. This is a common tactic to incentivize buyers to purchase a home. It’s a way of assuring the buyer that the home is in good shape and all is working as it should. This scenario may be a little less common in a seller’s market, however.
•          The buyer can pay for the home warranty for themselves. In some cases, the home seller may want to convert home warranty coverage to a buyer’s policy, but the buyer offers to take on the cost of the policy. This may be more common in a seller’s market when buyers are competing with others who are interested in the home.

How to Transfer Home Warranty Coverage

Often, the process of transferring home warranty coverage requires only a phone call. Let’s review step by step.

1.        Work out the details of who will pay for the policy. Will you cover the cost? Will the buyer? A realtor?
2.        Get all the information you need about who the policy will be transferred to. You’ll want the new homeowner’s name, address, phone number, and email address.
3.        Contact your home warranty provider. They will explain the process and prompt you to provide all necessary information.
4.        Some providers may charge a small transfer fee. Once that is paid, you’re good to go.

Tips for a Smooth Transition

Transferring home warranty coverage from the seller to the buyer can be a straightforward process if you follow these essential tips:

1. Review Warranty Terms and Coverage

Thoroughly review the existing home warranty contract to understand what is covered, what is not, and any specific terms or conditions. This knowledge will help you make informed decisions and avoid unexpected surprises.

2. Clarify What's Covered and What's Not

Contact the home warranty provider and ask specific questions about coverage. Clarify any doubts you may have about the extent of protection for various home systems and appliances.

3. Keep Records and Documentation

Maintain records of all communications and documentation related to the home warranty transfer. This includes emails, application forms, receipts, and any other relevant paperwork. Having a well-organized record can be invaluable if issues arise.

4. Stay Informed About Expiration Dates

Keep track of the expiration date of your home warranty coverage. Knowing when your coverage ends allows you to plan for renewals or explore other options for extended protection.

If you have a policy with Liberty Home Guard that you would like to convert, reach out to us today at (833)-544-8273. We’re happy to talk you through the process.