Home Warranty Insurance

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Make the most of your home investment
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Making the House More Appealing
Home warranty insurance takes the fear out of buying
CTW Features hen shopping for a resale home – especially an older one – buyers are looking for more than a reasonable price,preferred location and quality construction.They also want some reassurance that the residence’s major systems and appliances won’t fall apart on them shortly after moving in. Which is why purchasing home warranty insurance can be a worthy investment for sellers. Unlike basic homeowner’s hazard insurance that provides coverage for extreme events like fires, storms, natural disasters, accidents or thefts, home warranty insurance safeguards a home’s mechanical guts and everyday equipment.This typically includes the electrical, plumbing, and heating and air conditioning systems and all corresponding ductwork, ceiling and exhaust fans, kitchen appliances like the refrigerator, dishwasher, stove and oven, the water heater, and the washing machine and clothes dryer – basically all the major hardware that stays with the house after the sellers move. Optional coverage also may be available on pool/spa equipment, roofs, well pumps and septic tanks. In most cases, structural items and items outside of the home’s main foundation are not covered. With a home warranty insurance policy in place, any of these covered items can be fixed or replaced for a fraction of the cost if they break down or outright die. The cost to the seller is minimal:Though coverage caries by state, a basic one-year policy,

My Agent Wants to Handle My Loan. Is There Anything I Should Be Concerned About?
Q: A real estate agent I was working with said she also can handle the loan. She said she did both and that this was an advantage to me. Is this right or is she trying to be a Jill of all trades?


A: Many real estate firms have mortgage subsidiaries.Like any other lender, those subsidiaries must earn their business in the marketplace. The test for your agent is this: Let her make the best possible offer -- and then see what other lenders are offering. Be aware that it isn't good enough to offer a low rate; you want a lender who can deliver financing as promised, who makes a credible loan proposal;who offers a loan that won't bankrupt you in five years,etc. One advantage to using a broker's loan subsidiary is that the lender has a huge incentive to assure that you get financing. No loan for you and there's no commission for the broker.

Q: We completed an offer to purchase a new
house from a builder. The house, although new, has been sitting for well over a year and the has been price reduced. We offered the latest asking price and asked the sellers to switch the appliances from black to white and accept contingency of our current home selling within 90 days. We offered a very large earnest money deposit and the balance of the cost of this house will be in cash when our home sells. The seller was happy with all aspects of our offer, however, he says he will continue to show the property and accept additional offers. If the seller receives another offer, we will have 24 hours to decide if we want to obtain financing to allow us to promptly close the sale, otherwise we lose the house and get back our deposit. Our real estate agent assures us this is completely normal and that we should go ahead and talk with our bank about a bridge loan in case that's needed. Why would a seller accept the contingency of our home selling first but continue to show the property? This does not seem fair.

Don’t boil over the broiler: Home warranty insurance takes the worry out of inheriting appliances – new or old. which is renewable annually, can run from $265 to $400, according to Martin Wool, CEO/President of First American Home Buyers Protection Corp., a home warranty provider based in Van Nuys, Calif.The price to the buyer after they move in is roughly a deductible $55 to $75 service fee for each repair/replacement. Consider that, without home warranty coverage, the cost “for the repair or replacement of a furnace or heating system can range anywhere from $1,250 to $3,500,” says Jeff Lyons, general manager of realestate.com.With this in perspective,“the coverage and peace of mind a home warranty can offer is priceless.” In today’s real estate environment,“investing in a home warranty as a seller could be a great way to attract buyers looking at your home,” says Lyons.“Based on a recent National Home Warranty Association Report, warranted homes sell up to 50 percent faster than unwarranted homes. They are perceived as a safer investment and, on average, offer a selling price of up to three percent more.” The seller benefits because he or she can walk away from the home knowing that if anything goes wrong with the major sys-


5 Things to Remember When Selling Your Home on Your Own
Editor’s note: This is the second of a two-part series on selling “For Sale by Owner.”

CTW Features SO YOU’VE DECIDED TO SELL your home on your own.The For-Saleby-Owner – FSBO – route to home sales offers some significant monetary advantages over contracting with a realtor, but to

help ensure you don’t end up on the phone with Century 21 – desperate to sell – a month later, experts advise following a few basic principles of FSBO sales.

A: The builder does not know that your home will
sell.Your home -- like his -- could sit on the market for See ASK OUR BROKER, Page 2

“The key [to making a FSBO sales a success] is pricing the home right the first time,” says Ann Telthorst, marketing director at owners.com, a San Franciscobased online resource that pro-

vides the tools for homeowners to market their homes on their own.“A lot of sellers think they can overprice the home to see if they get offers, and then if they don’t, they reduce the price. But that often taints a home … buyers wonder if something is wrong with it.” Homeowners have numerous options to determine a selling price:A variety of Web sites offer general price parameters of

homes in any neighborhood. Realtors can give you comparables in your area even if you don’t sign a contract for their services. For a fee, an appraiser can give you a comprehensive analysis of the value of a home. And to get appraiser-like accuracy at no cost, do the homework yourself; visit homes for sale in the area and see how yours stacks up in price and amenities.

See FSBO Page 2


CONTINUED FROM PAGE 1 tems and appliances, the buyer will not seek to hold the seller liable, says Wool. “The upsides for buyers are immediate coverage from the moment you close and protection for covered systems – no matter the age of the item,” Lyons says.“And, should there be a problem, you will only be responsible for a standard deductible, no mater the cost of the repair or replacement.” What’s more, buyers appreciate the convenience of home warranty coverage. Instead of hunting through the yellow pages for a reputable repair company, one call to the warranty provider is all that’s necessary. Your real estate professional or even your home hazard insurance provider can recommend one or more reputable home warranty companies. It’s a good idea to compare different types of available coverage to ensure that you’re getting the right coverage for your home’s particular needs, says Wool. Read all the fine print carefully, and review any exclusions that may lessen the policy’s value. Be aware that home warranties usually cover devices and systems that are in accept-

able working order prior to the start of coverage.Additionally, whatever insurer you choose, be sure the company is licensed by the appropriate licensing agency in your state. “For buyers, coverage is effective on the day of closing, provided application and funds have been received within seven days of closing,” Lyons says.“For sellers, coverage is effective upon receipt of the application, corresponding to the listing agreement for the sale of the home.When the property is listed and the seller agrees to provide a home warranty plan paid at closing, the seller receives coverage for the duration of the listing period – not to exceed 180 days.” Wool says that, if a seller doesn’t provide home warranty coverage as part of the sale, buyers should consider purchasing their own policy “if there is a concern that the systems and appliances are older and may fail after the closing.” A home warranty “is an exceptional value for the price, when you consider all the coverage you receive,” says Wool. “Many homeowners make over two service calls per year, so it is a product that consumers really do use.”

Ask Our Broker

© CTW Features

more than a year. Your agent made a good suggestion regarding a bridge loan, just in case you need to quickly close the sale.That said, I would have argued for a 72-hour kick-out clause, or longer, just in case your favorite lender is not available on short notice.

Q: I have a one-year listing agreement with a real estate broker. It says if I cancel before the termination date I will have to pay $500 toward advertising expenses. Can I cancel this contract at no expense to me? A: No. On the basis of that contract you expect the broker to do certain things. However, a contract is a mutual exchange of promises and the broker also has some expectations. The agreement provides that the broker may offer the property for sale at a certain price and with particular terms. One of those terms is that the agreement will last for a year. If you wish to cancel early it means the broker has less opportunity to sell the property and earn a fee. The broker is really saying that listing your home involves certain costs. If you want to cancel early that's fine, but in fairness you should pay some of his expenses. Rather than debate how much the broker has spent for advertising,insertion into the multiple listing service,professional time, etc., the listing agreement caps your costs at $500. I think the broker has provided a reasonable solution. If you cancel early pay the man $500, as you agreed. Q: I'm a seller. With an inspection clause, how many times can the home be inspected? A: At least once, but the real point is different:You
want to sell the house.You also want to assure that after the property is sold the buyer does not come back and claim you hid damage. You should welcome every inspector the buyer can find.Throw them a party. It's vastly better to resolve questions of condition before closing than after. Just keep a record of which inspectors came, as well as when and how long they stayed.This way if complaints later arise you're in the position of saying, "But your honor, the buyers had every opportunity to look at the house.Here's a list of the 14 experts they sent over...."
© CTW Features

CONTINUED FROM PAGE 1 One caveat:“You have to be realistic about today’s market, not what prices were six months ago or last year,”Telthorst says.

This goes for any home sale – FSBO or realtor – but it’s so important it bears repeating. Just because you are selling a home yourself, doesn’t mean you don’t have to clean it. “In most of the FSBOs I have been in, there is little urgency to sell the home, so the home shows just like people are living there – some dishes in the sink, you can smell what they made for dinner the night before, some clutter – nothing disgusting, just normal living,” says Bill Barna, a realtor with Prudential Northwest, Seattle. “De-clutter the house so it looks bigger. Clean it so it’s spic and span,” says Telthorst.“Make any repairs that are needed. Put a fresh coat of paint on, particularly the outside of the house.” A quick scan of testimonials at FSBO Web sites reveals that people who have sold on their own view cleaning as much a key to their FSBO success as asking price and location.

owners.com abound, some national, some targeted specifically to a city or region. These sites not only offer a means to disseminate information on a house, they may provide signs, advice, forms, links to contacts you will need in your sale (like appraisers, title companies, attorneys) and sources to answer questions you might have about your sale. To lure potential buyers, post flyers in the neighborhood, and include them on the sign out front so passersby can get more information on the place immediately. Contact friends and ask them to spread the availability of your place by word of mouth. Place a classified ad in the local paper. Include photos wherever possible. Many FSBO Web sites also allow you to list your home on the MLS for a flat fee so realtors – buyers’ agents – know about it and bring their clients. Do everything you can to let potential buyers know your home is for sale.

bered that the earnest money is not automatically yours – the contract spells out if and when it becomes yours should the deal fall through.) Although a number of general contracts to buy can be downloaded online, find the proper one required by your state.

Closing procedures, disclosures, whether or not an attorney is required to be present and other home sales details vary from state to state. In states that do not mandate attorney assistance, title companies can explain the necessary legal paperwork, as can the buyer’s agent, if there is one – although in the latter case, buyers’ agents primary loyalty is to their clients, not you. To make sure you have someone looking after your interests, contact a real estate attorney. They are trained experts in home sales, fees are usually quite reasonable compared to the value of the house, and they can ensure the proper disclosures are made, review the contracts and see that you follow fair-housing laws. “Paying an attorney several hundred dollars is more worthwhile than paying thousands of dollars in commissions,”Telthorst says. The FSBO route may sound intimidating at first, particularly to people with little to no real estate experience. It does take time, hard work and a commitment, but if you have the energy and drive, it can put some welcome cash in your pocket – or into the new house you’re buying.

Need real estate advice? Peter G. Miller, author of “The Common-Sense Mortgage,” would love to hear from you. Send your questions to [email protected].

For any home sale, mortgages fall through, closings get delayed or canceled altogether.To minimize the chances of a deal falling apart, ask for a pre-approval letter and find out whether that letter is contingent on the buyers selling their home.

The biggest drawback to FSBO sales is the fact that the homeowner is forced to do all the marketing solo.The good news is that there are many more ways to market a home these days than in the past – particularly the Internet. Eighty percent of homeowners begin their home purchase research online, according to Telthorst.And FSBO sites like


It’s nice to think a handshake is enough to close a deal, but no transaction will be covered and your interests will not be seen to until you get a contract to buy. Earnest money shows the buyer is serious and helps mitigate your losses should the deal get snagged. (It should be remem-

© CTW Features

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