WHAT IS A HOME WARRANTY AND HOW DOES IT WORK?
WHAT WILL IT DO FOR ME AS A BUYER?
A home warranty can give a purchaser peace of mind. If anything catastrophic happens in the house, you are only financially liable for the deductible. So if the furnace goes out one evening and you just can't get it going (as long as it is maintained and not abused) you would call the warranty company and they would send out a technician to fix/repair/replace the furnace depending on the problem. So yes, if the furnace did indeed blow up (heat exchanger) you would get a new furnace of comparable quality. You cannot choose the technician or company involved but for years my clients have used these warranties with no problems. You just have to give up a little control with that extra peace of mind.
What if the house is a disaster? Foreclosure? You can only guess from the home inspection how the systems and appliances were previously treated. In some homes it is completely obvious that they haven't been maintained at all! The particular system or appliance must be in working order as of the closing for the warranty to cover that particular item. So if you purchase a home where the dishwasher is not working or cannot be fully tested, the dishwasher would be excluded.
WHAT WILL IT DO FOR ME AS A SELLER?
It can offer the buyer peace of mind and bolster their faith that all the appliances and systems in the house can be repaired if anything does go wrong. The nominal deductible seems very reasonable when a service charge alone is usually double the deductible. Normally I wouldn't suggest this if you have a new furnace or this is a newer home. The perfect selling solution for a warranty is where the furnace is around 10 years old and all the appliances have been well maintained and cared for but vary in ages.
As a seller, your home would be covered as of the listing day thru the closing day. Then the warranty would transfer to the buyer at closing and then continue for that full year. The warranty is paid for at the closing.
I currently work with companies that are RE/MAX Benefits Partners which lets me offer you a reduced price on warranty policies for listing or buying a home through me.
Possible Savings: AC or Heating System $2250 to $6500
Washer or Dryer $500 to $1000
Stove $700 to $1600
Refrigerator $600 to $2200
Water Heater $800 to $1200
A home warranty is a service contract, normally for one year, which helps protect home owners/home buyers against the cost of unexpected covered repairs or replacement on their major systems and appliances that break down due to normal wear and tear. Coverage is for systems and appliances in good working order at the start of the contract.
Check each home warranty policy from each company to see which of the following items are covered and which company you prefer. Also find out if the policy covers the full replacement cost of an item.
- Electrical systems
- Water heater
- Heating ducts
- Water pump
- Garbage disposal
- Swimming pool (optional)
Deductibles are usually $75 - $100 - $150 depending on what plan you select for 'EACH' occurence.
Who typically buys the home warranty?
It can be either the buyer or the seller in a transaction & is paid at closing.