Our house was on the market for just three days and we received seven offers -- five above the asking price.
Although this was not surprising in a market with low inventory, what did take me aback somewhat was that the party with the best offer -- $50,000 above asking -- also was declining a home inspection.
Since I had disclosed the house's known faults with a state-mandated form, I now felt duty-bound to take care of the problems in the 60 days until settlement.
My real estate agent also suggested buying a home warranty policy for the buyers, at a cost of $327 for a year's coverage. I agreed, but decided to look into warranties to make sure that such a reasonable amount would provide proper coverage.
Home warranties for re-sale properties are often used as a negotiating tool in competitive real estate situations. They are not a substitute for a professional home inspection, but sellers find them helpful in attracting buyers. Buyers find that such a warranty, which they can renew after the first year by paying the premium themselves, can save them money in the cash-tight early days of owning a home.
One home-warranty company -- HMS -- contends that 80 percent of home buyers prefer to buy houses offering such warranties, and that such houses sell 50 percent faster than ones without such policies.
In addition, the warranty increases sales prices by 3 percent, HMS says.
Home warranty policies also are available for new construction. In states such as New Jersey, builders are required to provide a 10-year home warranty, for example.
Typical problems, such as foundation wall cracks, basement leaks, bad wiring or faulty plumbing fixtures, are covered in the first year of new-home warranties in many cases. After that, coverage is usually limited to major structural defects that make the home unsafe, unsanitary or otherwise unlivable.
In the case of my house sale, my concern was that by offering such a policy after the agreement of sale had been signed, the buyers might become needlessly suspicious. Fortunately, they were grateful for my concern.
Many buyers, however, don't understand the coverage limits created with such policies. They also tend not to be aware of deductibles, which can be small on some items and large on heating and cooling equipment.
Most of these problems can be easily solved by carefully reading the home warranty policy and calling the company providing the warranty for detailed explanations. If the company doesn't respond quickly or tries to give you the brush-off, this is a good indication of the kind of service they'll provide.
Some companies offer a risk-free trial period running 20 to 30 days. This sounds good (and in many states is required by law) but appliances tend to break down when they want rather than on your schedule, so this may not be useful.
I haven't done a scientific survey, but it would be my guess that most home warranties purchased by seller for buyer offer basic coverage. Most policies cost between $300 and $395. However, you may find that some of the lower-priced policies charge extra for coverage of water wells and some appliances, such as washing machines and dryers.
Basic coverage typically includes repairs for plumbing, heating, many appliances and electrical systems, while preferred adds central air conditioning, refrigerator, washer and dryer. Specialty coverage on items such as swimming pools also is available.
Although my buyers didn't do it, anyone buying a house should have a proper inspection performed before purchase to determine potential problems and what kind of coverage you'll want from a home warranty. Many defects uncovered in an inspection might not be covered by the warranty, but at least you should know what they are and plan accordingly.
Just as with a home insurance policy, you should consider the deductible, which is typically between $50 and $100 per call, but can be as high as $150 for each occurrence. Check to see if the warranty limits the number of calls per a particular time period, or if the company can cancel the warranty if there are too many claims.
Make sure there are no age limits on the appliances and other house parts being covered by the warranty.
Who will do the repair work? Many home warranty companies have a network of contractors and repair people, while other let you pick a contractor. If the company provides contractors, find out how long it will take to get someone to your house when you call for service.
Some home warranty companies offer coverage to the seller while the house is on the market or during the time between agreement of sale and settlement.