A home warranty pays repair or replacement costs for the mechanical systems and built-in appliances that break down in a home. Warranties can be purchased by either the buyer or seller in a real estate transaction. When the seller is paying for the warranty, it is usually paid for and goes into effect at closing. The coverage period is normally one year. Usually, central heating and air conditioning systems, electrical, plumbing and major appliances are covered. It's important that you read the policy closely and understand what is and is not covered. The cost for a one year home warranty typically runs between $300 and $450, depending on the size of the home and the specific types of coverage. In addition to the policy premium, there is normally a deductible of $50 - $75 to pay when making a repair claim. One of the more commonly used warranty companies in the Portland Metro area is Fidelity Home Warranty (www.homewarranty.com)
There are some very good reasons to pay for a home warranty when selling your home. Providing a warranty can help set your home apart from the competition. Buyers will appreciate having a warranty and will feel more comfortable about buying your home without worrying about hidden problems. Providing a warranty can even result in a higher price, offsetting the cost. Certainly it can make it easier for a buyer to make an offer. These assets make the home warranty an excellent marketing tool.
In addition to marketing advantages, you could also avoid getting sued down the road. When a major appliance, heating or air conditioning system goes bad shortly after a home is sold, it's not uncommon for the buyer to blame the seller. Unfortunately, this can and does lead to lawsuits. Providing a home warranty with the sale of your home can go a long way towards preventing these types of suits.
If you are buying a home and it doesn't come with a warranty, you may want to consider paying for one yourself. The first year after buying a home is a time when most people don't have a lot of cash on hand to cover problems that might arise. Having a one year home warranty in place can provide peace of mind during this time, and if something does break down, could really save your budget.
If you’re thinking about remodeling your kitchen, or finishing your basement, you probably want to get your investment back when you sell your home. But when it comes to payback value of home improvements, some are definitely more profitable than others. As a general rule, kitchen and bathroom projects usually get a nice return on investment, typically 90% or more. Things like adding rooms or finishing basements tend to pay back the least. Finishing a basement usually returns less than 50%, so it’s not a project likely to show profit at selling time.
There are a number of factors that go into determining how well a project will pay back. Payback value depends a lot on the current market conditions in your neighborhood. If the market is hot and homes are selling fast, you can expect a higher payback value than you would get in a slow market.
The type of project you do and how it fits in with other homes in the area can have a big influence on payback too. If you put your money into the wrong type of improvement, you won’t get your money back. But if you're smart about what you do, you can add value to your home which will make marketing it in the future even easier. The payback will be better on improvements that are in demand and conform to your neighborhood’s standards. Adding a second bathroom in a neighborhood where most homes have two bathrooms will give a high return on investment. Building a large addition that makes your home twice as big as the other homes on the block probably won’t pay back very well. Likewise, the popularity of a project will factor into how much it pays back. An improvement heavily customized to your wants and needs won’t pay back as well as something more common to other homes in the neighborhood.
Another factor to consider is the cost of the improvements. If you can do the work yourself, you can save significantly on the cost of the project and greatly improve the chances of getting a good return on the investment.
The list below is compiled from several published surveys and shows typical payback for some popular remodeling projects:
If you are considering selling your home sometime in the next 24 months, contact us to discuss your improvements and whether they make sense for your needs and how they will impact the marketing of your home.
If you have had your home on the market for several months and haven’t seen much activity or any offers, chances are that one or more of the reasons below are to blame.
Your price is too high
No doubt about it, the most common reason for a home not selling is that the asking price has been set too high. The reasons for setting your price too high to begin with are many. Regardless of the reason though, if you’ve priced your home too high, you’ve set yourself up for a number of obstacles to selling your home. Even if you do get an offer for the overly high asking price, the deal may fall apart before closing because the buyer may have problems financing at too high a price when the appraisal report is sent back to their lender. Look at other homes for sale, ones as similar and as close to yours as possible. If they are going for less than you are asking, you may be priced too high. The fact is, your home is competing against those other homes, and what buyers are willing to pay is what will determine final sales price.
The condition of your home
Your home has to compete against other similar homes on the market, as well as competing against shiny brand new homes. The more you can do to make your home look appealing to a buyer, the better your chances for a quick sale. Look at your home with a critical eye – put yourself in the buyers position. A buyer doesn’t want to have to do anything except move in. Your best “bang for the buck” in improving the condition of your home are paint and flooring. Make sure that all of the paint is in great condition, both inside and out. Repainting doesn’t cost too much, and will usually make the biggest impact on buyers. Make sure all of the flooring looks good too. You may want to consider putting in new carpet. Again, it’s not that expensive but it sure does make an impact on buyers coming to look at your home.
Location, location, location
It’s the oldest cliché in the world, but it’s true. When it comes to real estate, it’s all about location! When it comes to homes, things like how good the schools are, crime rates, visual appeal of the neighborhood and noise or the smell of pollution can all effect how desirable the location is. If you’re in a bad location, we can help to minimize some of the impact by suggesting improvements to the house. But the only really reliable way to overcome a bad location is with a lower price.
The market is slow
You’ll hear it described as a slow market, or a buyer’s market, or maybe a cold market. But it all means the same thing- home sales in the local area are slow. There are too many homes for sale and not enough active buyers. There are several things you can do to combat a slow market. The most effective strategy is to sell at a lower price. Buyers expect to find bargains during a slow market. You can also offer to pay some concessions to help a buyer that might not have a lot of cash.
Your home isn’t easily accessible
To get your home sold quickly, it’s important that other agents in the area show it to as many potential buyers as possible. When a busy agent is compiling a list of homes to show a buyer, the agent will naturally tend to show those houses that are easiest to gain access to first. If you have several days and times during the week, especially weekends, which you do not allow showings then the likelihood of agents wanting to show your home will not be very good. The easier it is for an agent to show your home the more likely it will be to have a lot of buyers come and take a look.