Most of the time, the simple answer is yes. Many real estate companies are paid a fee by their home warranty provider for selling you a home warranty policy. There are many creative names for these fees, but most of the time, in my opinion of course, they’re nothing more than undisclosed kickbacks to the agent or real estate brokerage.
Why all the hullabaloo? Well, most of the time the agents don’t make it very clear to the client that they’re being paid a fee, at least not during their discussions. Yes, I know, it’s typically spelled out somewhere in the listing or buying paperwork that the agent may receive a fee, but it’s often not discussed openly with the client.
The question that may come to mind is “am I being sold this product because the agent thinks it’s in my best interest, or is it just to generate additional income for the agent and/or brokerage company?” The U.S. Department of Housing and Urban Development (HUD) has challenged these payments and raised the question of whether or not they are legal. Some real estate companies have even been sued over the payments, so it’s really not clear yet whether they should be allowed.
At Liquid Blue Realty we’ve solved this potential misalignment of interests with one simple commitment. We will NEVER accept a home warranty payment for offering a warranty policy to our clients. It’s that simple.
You may ask what happens to the payment then when a Liquid Blue Realty agent offers a home warranty? We simply use it to discount the cost of the warranty, allowing our clients to purchase the warranty at a reduced rate. Using some rough numbers for an example – if the warranty would normally cost $375 and the warranty company will pay a marketing fee of $100, we’re able to offer the warranty to our client for only $275. We never receive a payment, and our clients receive another benefit for working with a Liquid Blue Realty agent.
Are home warranty’s important? We think both buyers and sellers can definitely benefit from the coverage provided by a well-structured home warranty policy. They will typically cover unexpected repairs to items such as kitchen appliances, heating and cooling systems, electrical and plumbing, and roof leakage, during the first 12 months in your new home. Sellers benefit from the extra piece-of-mind provided to potential buyers, making their home more attractive in the market. They won’t cover everything, particularly pre-existing conditions, and there’s typically a small deductible, but overall they makes sense for both buyer and seller.
So, if your agent is pushing you to purchase a home warranty, ask them what happens to the marketing fee they receive for selling the policy. At Liquid Blue Realty there are no secrets. Why do other companies pass the cost on to you?
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