QualifyBuyersNow Blog

Today’s ever changing housing market, currently dominated by first-time homebuyers, is seeing an increase in demand for home warranties also known as residential service contracts. This trend seems to be indirectly attributed to increasingly constrictive lending practices, and higher down payment requirements. More directly, this increase in demand for home warranties is attributed to the fact that many of the homes on the market today are exempt from seller’s disclosure statements because they are bank owned properties that may have been vacant for some time. Homebuyers are wisely seeking protection from unexpected repair costs by purchasing residential service contracts that cover normal wear and tear of home appliances and systems during the first year of ownership. In response to this market trend, banks that hold substantial portfolios of REOs are now recognizing the value of offering home warranties as concessions to prospective buyers. Offering these warranties helps alleviate buyer concern thus allowing the banks to move more homes. As the cost of home appliances increases, and the number of bank owned properties continues to increase, look for the cost of home warranties to increase in the near future.

- Ron L. Robinson