By Paige Tepping
When it comes to buying, selling, or simply enjoying your own home, few things can be as frustrating or as costly as dealing with the unexpected breakdown of a major system or appliance. Experienced real estate professionals know they can expect a call right away when this happens to a client, and they had better be ready to respond.
It’s understandable. If a home is on the market, the client is anxious to take care of repairs right away so there’s no distraction to potential buyers. And if the breakdown happens to a new homeowner, there can be other issues. Along with the inconvenience and expense of the repairs, the situation can raise fear and doubt in the client’s mind. What else will break down? Did their agent ask all the right questions about the quality of the home?
American Home Shield, the largest home warranty company in the nation, gets approximately 3 million service requests each year, and works with a network of more than 10,000 contractors and 45,000 technicians to repair or replace covered items. In this exclusive interview, Mark Barry, president of American Home Shield, explains why home warranties are more relevant than ever to homeowners, the role of home warranties in today’s changing real estate market, the keys to growing the industry, and how the company is transforming its operations and expanding its investment in the real estate market.
Paige Tepping: What makes home warranties so attractive to today’s homeowners?
Mark Barry: New homeowners want to be confident that they made a smart purchase and to know that they’re prepared for the unexpected. They’re busier than ever, and they have little time to deal with breakdowns to things like heating and air conditioning systems, major appliances, and the like. They want to avoid the inconvenience of searching for a qualified service contractor to make repairs, and they want to know that their budget is protected. A home warranty can help answer these needs with affordable, reliable coverage.
PT: How have the ups and downs of the real estate market affected the home warranty industry?
MB: The percentage of home sales that include home warranties has remained fairly consistent, which is great, considering the volatility that the housing market has experienced in recent years. And, with homeowners staying in their homes longer, direct-to-consumer sales have performed very well, too.
That said, I think the time is right for the home warranty industry to experience dramatic growth across all segments, but especially in the real estate market. We need to do a better job of informing real estate professionals about the value of home warranties, ensuring that they truly understand the benefit to their clients and how home warranties can be used as a tool to help build their business. As an industry, we need to work more closely with the real estate community to set clear expectations about service and coverage, focus on ways to create greater demand among consumers, and deliver experiences that will drive even longer-term relationships.
PT: With all of the changes in the real estate industry, how is American Home Shield responding?
MB: Our company has deep roots in the real estate community, and we are investing our full weight and energy into this segment of our business. 2013 was a very good year for us, and we’re positioning ourselves to grow even more in 2014. For instance, we significantly expanded our real estate sales team late last year, increasing our team of account executives by nearly 30 percent, which will allow us to better serve our existing clients and bolster our presence in key markets. We’re also spending a lot of time in the field, talking with the real estate community about what they want in a home warranty product, what they do (and don’t) like about what’s currently on the market, and understanding what real estate clients need from us to grow their business.
PT: How do home warranties fit in the transition from a buyer’s to seller’s market?
MB: Home warranties provide value in all market conditions, to buyers and sellers alike. The likelihood of mechanical failures and the need for protection does not change based on available inventory. That’s one of the reasons home warranties have become standard in the real estate community. Sure, there are certainly benefits to buyers, but the reality is, home warranties are an extremely powerful tool for sellers, too.
Sellers are looking for pricing, marketability and speed to close. Home warranties can help prevent downward price negotiation; services like American Home Shield’s Appliance Discount Program can help sellers upgrade key items and improve the marketability of a home; and home warranties can give buyers additional confidence in their purchase decision. All of these can help homes sell faster. What’s more, listing coverage can help sellers avoid investing money in costly repairs while their home is on the market.
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