Real Estate Transaction
This section provides a high-level overview of how the Cinch Real Estate Home Warranty plays a role in the various aspects of a real estate transaction. It provides information on:
- The listing process
- Attracting buyers to properties listed for sale
- The purchase offer and contract process
- The property condition and inspection
- The closing process and warranty conversion to the buyer
Listing a Property
The Listing Agreement is a legally binding contract between the real estate brokerage and the seller of the property. It defines the terms and conditions of the listing including the price that the seller wishes to list the property for, as well as the responsibilities of the real estate brokerage and the seller.
One of the attachments to the Listing Agreement is a Seller’s Disclosure of the condition of the property. If there are any known defects, they must be disclosed by the seller when the property is listed.
Placement of the Seller Home Warranty
The Real Estate Agent will market the Cinch Real Estate Home Warranty to the seller during the listing appointment, highlighting the benefits.
Seller Benefits:
- #1 buyer incentive on a home for sale while the home is on the market (paid by seller at closing)
- Seller has the same coverage benefits up until the closing of the house
- Protects the seller’s budge from potential costly repairs, which would have impact at closing
- Reduces after-sale liability for the Real Estate Agent
Buyer Benefits:
- Helps protect buyers from costly breakdowns for one year after purchasing the home
- Gives the ultimate closing gift – peace of mind
In addition, the seller does not have to do anything extra in order to place the Cinch Real Estate Home Warranty on their property for the listing period – their Real Estate Agent can enroll them. If the seller wishes to place a Service Request with Cinch Real Estate, their Agent can take care of that as well, either by phone or via the Cinch Real Estate website.
Marketing the Property to Potential Buyers
When properties are entered by the Real Estate Agent into the local or regional Multiple Listing System (MLS), listings are automatically fed to hundreds of websites. When the availability of the Cinch Real Estate Home Warranty is entered to the “source”, it is included in the information shared with these sites. Buyers from all over the world can review the listings and can see that there is a Cinch Real Estate Home Warranty long before they actually visit it.
Purchase Offer and Contract
So, what happens when a buyer finds their dream property? With the assistance of their Real Estate Agent, they make an offer to purchase.
After much negotiation, an agreement is eventually reached regarding the sale price of the home, and the property goes under contract to be sold. The contract defines responsibilities of both buyer and seller to the sale transaction. Once of the items included in the sales contract is the conversion of the seller warranty (during the listing period) to a buyer warranty (at closing, providing coverage for the buyer for 1 year).
This arrangement is paid for at closing, and the final contract defines who will be responsible for the cost.
Condition of Property and Inspection
One of the most important things that a buyer wants to determine is the true condition of the property they have agreed to buy.
While the seller provided a disclosure of the property’s condition when it was listed for sale, it is still in the best interest of the buyer to conduct their own home inspection prior to closing.
It is recommended that a buyer inspect all aspects of a property – structural and mechanical, as well as for things like termites, rot, mold, etc.
The value of the Seller Home Warranty at this point in the process is critical. If the buyer’s inspection identifies covered items that have mechanically malfunctioned due to normal wear and tear, the Cinch Real Estate Home Warranty can save the seller an enormous amount of money if they are asked to remedy these situations prior to closing.
After closing, the buyer will also have peace of mind because if anything else goes wrong, it may also be covered by the Cinch Real Estate Home Warranty for one year.
The Closing Process and Warranty Conversion to Buyer
At the closing, the TILA-RESPA (Truth In Lending Act-Real Estate Settlement Procedures Act) Integrated Disclosure Forms (loan estimate and closing disclosure) summarizes all of the financial responsibilities for both buyer and seller.
The TILA-RESPA is a standard, government-issued from that is used for all residential real estate closings.
The cost of the Cinch Real Estate Home Warranty (and who is paying for it) is included in the closing disclosure form, and once the transaction has been completed, the seller warranty converts to the buyer, and is in effect for one year from closing. The payment for the warranty is paid through the title company (closing/escrow company) and faxed to Cinch Real Estate.
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