With the national housing market showing signs of improved strength and stability, and inventory levels on the rise, sellers no longer have the advantage that they regained in 2012 after the Great Recession’s prolonged buyers-market. With buyers and sellers on a more even playing field, investors who renovate homes to resell need a competitive advantage in the market to ensure a quicker sale. In my recent post, “7 Keys to Selling Your Fix & Flip in 7 Days”, I listed seven things that I do on each and every investment that helps me consistently sell my renovation properties in less than a week. If there had been a number 8 on that list, or if I had an honorable mention, it would have been providing a home warranty.
Home warranties cover repairs on most of the major mechanical aspects of the home, including duct work, plumbing, electrical, appliances, roofing, and HVAC systems, just to name a few. Today’s buyers are looking for confidence in any purchase that they make, especially when that purchase includes the largest asset that they have ever owned. As an investor, if you include a home warranty for your renovation project, you provide the highly desirable “peace of mind” that many buyers need, especially those purchasing a home for the 1st time. When buyers know going in that they can avoid expensive service and repair bills that could disrupt their budgets, they are much more likely to choose your home over the competition.
Research studies from professionals in the housing industry have determined that when your property is covered by a home warranty protection plan it will sell faster (11 days quicker than your competition) and for more money ($2,300 more on average) than homes that don’t offer this incentive for a potential buyer. Having a home warranty in place will establish your property as a preferred home, and can be the catalyst for attracting more first-time buyers, and helping you avoid closing delays caused by equipment failure in the home. As an investor, you can also have your own peace of mind after the closing, since your buyer will most likely be contacting the home warranty coverage provider with repair issues, and not you.
In summary, to make your investments more attractive to consumers in a highly competitive market, you should use every tool available to make your property stand out above all the others in the marketplace. My “7 Keys to Selling Your Rehab in Less than 7 Days” is a MUST READ for any rehabbers (or home sellers) out there, but I neglected to include this very important “8th Key”, and that’s offering a home warranty to potential buyers. It’s an excellent strategy for making more money and getting a faster return on your investment.
Now, let me know your thoughts. Have you offered home warranties in the past, or do you plan on offering them in the future? Did you consider it a good investment? Share your comments below, and let’s learn together…