Home Warranty - Waste Or Worth It?
What does everyone think of a home warranty? Dan and Amy Schuman of Cleveland, Ohio are asking. I have mixed feelings, though I must admit I currently have a home warranty policy with American Home Shield.
There are some who think home warranties are a waste of money, just another way for brokerages to profit off of consumers. However, given the benefits to both buyers and sellers, perhaps they are a wise investment.
WARRANTY BASICS AND BENEFITS
I'll be honest, when I first got into real estate, I thought warranties were a waste of money. Over the years, I have started to have a new found respect for them as my clients have really seen beneftis.
In a basic sense, a home warranty covers you in the event appliances or major systems break down. In most cases, a warranty will cover things that your typical home owners insurance policy does not. Having both a comprehensive home owner's insurance policy and a home warranty will provide you will excellent coverage.
Most homes experience issues pertaining to mechanical systems and appliances on a regular basis. It could be once a year or every few years, you just never know when something will happen. That is why having the protection of a home warranty is a smart thing to do for both buyers and sellers.
FOR BUYERS
1. CONVENIENCE - When covered by a warranty, you will have access to qualified contractors simply by calling an 800 #. This is especially nice if you are new to the area.
2. LONG-TERM PROTECTION - While a seller will typically pay for the first year of a buyer's home warranty, the buyer has the option of renewing every year. As your home ages, the likelihood of a problem increases. So for the long term, having a warranty can be a huge help.
3. PEACE OF MIND - There is a tremendous feeling of knowing you will be covered if certain problems arise.
FOR SELLERS
1. COVERAGE WHILE ON THE MARKET - You will get covered during the listing period and NOT have to pay for the policy until closing.
2. STAND OUT FROM COMPETITION - Offering a home warranty may entice a buyer to purchase your home over another that is not offering one.
3. ELIMINATES PROBLEMS AFTER CLOSING - If a problem arises after title transfer, it is better for the buyer to contact the warranty company instead of you.
DO YOU REALLY NEED ONE?
We are not here to tell you what to do, but based on the chart above, claims are certainly a common occurrence. In fact, we get emailed every time one of our clients has a claim paid by the warranty company, and it seems like it happens all the time. From an agent's perspective, I do feel it provides tremendous value to both buyers and sellers.
When it comes to buying or selling a home that costs hundreds of thousands of dollars, spending $350-450 on a home warranty seems pretty minimal. If you think of a warranty as more of an investment than an expense, it will hopefully make more sense.
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Here are some of our others posts that may interest you as well:
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About The Authors:
Dan and Amy Schuman are agents with Howard Hanna, the area's largest real estate company. They live in Solon Ohio and specialize in Cleveland Luxury Homes, working with buyers relocating to Cleveland, and first-time buyers.
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Home Warranty - Waste Or Worth It? is the property of The Schuman Team and may not be duplicated or used without their written consent. ©February 2013
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