One of the helpful resources many of us in the business recommend the use of are Home Warranties. Commonly, Home Warranties are meant to help protect home buyers against some of the immediate functional pitfalls of being home owners. In the first year of homeownership, it is not uncommon for the new homeowners to experience a broken appliance (stoves, microwaves, dishwashers, water heaters, etc.), and having an affordable solution to fix it is helpful. But how do Home Warranties work? What are the costs of Home Warranties, and are they worth the trouble?
Home Warranties typically cost a flat fee that is either collected out of escrow or paid for in advance before a home sells. I have personally seen that fee as high as about $600.00. Additionally, the new homeowner pays a service fee if they make a claim, which can be an additional $70-80.00 or more. When something goes wrong and the new homeowner makes a claim on their warranty, a licensed tradesman is contracted to come out to their home, investigate the problem, and provide a repair or replacement option that the Warranty will cover. Considering the replacement costs of just one expensive appliance, one can see the benefit of having this Warranty.
Anyone can pay for a Home Warranty, whether it’s the home buyer, seller, or brokers involved in a transaction. If you have adult children who are buying a home, and you want to help them – consider buying them a Home Warranty, that would be a great housewarming gift. Depending upon the warranty company, and what they offer, costs will vary. Additionally, the subject property being purchased will also have an impact on the cost and recommendations of what scope of coverage should be included in the warranty.
Coverage is typically for 12 months after the sale closes, and covers most or all appliances in the home, including heating sources. Some warranties also include plumbing or electrical issues, septic systems, and well pumps. If you are planning on buying a Home Warranty, research at least three different providers and find one that fits your interests.
It’s obvious that a buyer would benefit from having a Home Warranty, but who else benefits? Everyone! Brokers (buyer and listing) benefit by offering peace of mind for their clients, a decrease in post-sale liability, and an overall better value of service for the clients they serve. Sellers can also benefit from a Home Warranty with an added protection for problems that occur during the sale with policies that cover both buyer and seller.
In spite of all the benefits Home Warranties can offer, they do have their limitations – nothing is fool proof. If you’re shopping for the best Home Warranty, focus on the servicing end. Here’s some suggested questions you could ask representatives before you buy:
Which contractors do you work with to resolve the repair or replacement issues?
What is the average turn around time from placing the call to remedying the claim?
If a contractor they mainly use is booked up for service, are there others that can be called on who are available? Who are they?
Do I have an option to use my own local contractor for service?
You should also clarify coverage conditions with the warranty representative, and ask scenario questions for clarification. Do searches online for reviews and feedback, and ask people you know who have had experiences with Home Warranties.
Last but not least, check with your insurance provider. You will need a homeowners policy when you buy a home, and your insurance agent may have a Home Warranty solution that you were not aware of. You may even be able to obtain a Warranty at a discount.
Are you in the market to buy or sell Real Estate? Have questions? Let me be your advocate to protect your interests and guide you towards success! Mention this BLOG when we meet, and you too will have a Home Warranty. Thanks for reading!