Home warranties have gained much popularity in recent years and I am often asked by my buyers when negotiating,"Should I ask for one?" and by my sellers,"Should I provide one?"
In general, I think this is a good product, but take care to
read the fine print.
For me personally they have paid off. Two of my previous homes were protected by a home warranty. As unbelievable as this sounds, both of my homes had hot water tanks that failed, both a few days before Christmas! I called my home warranty company, hired an approved contractor and, in both cases, I had a new hot water tank the next day, all for the cost of my deductible, the first time $35.00, the second time $50.00. (Deductible costs have since risen).
So what exactly is a home warranty? In general it is an insurance policy (different from a homeowner's insurance policy) that is issued for a period of one year and sometimes 13 months from the date of title transfer for the new homeowner.. The average cost for the seller is approximately $400.00 but this can quickly go up if there are additional commodes, a swimming pool, etc.
Read the fine print.
Some policies cover all appliances, and some charge more to cover the washer and dryer. I have never seen a policy that covers a leaky basment (due to structural or foundation problems) and I have not seen any that will cover a leaky roof, but will cover a "roof leak repair". The buyer pays the deductible. The average cost of the deductible to the buyer if he/she makes a claim is $100.00 Most companies require that you call them FIRST before calling any contractors because you must obtain permission from them as to which contractors you may use.
Read the fine print.
These are some items that typically would be covered but there are many more depending on the company you choose:
- hot water tank
- ceiling fans
- garbage disposal
- central vacuum
- whirlpool tub
Home warranties can be good for the buyer and seller. Remember that not every home will be eligible for coverage such as those whose utilites are turned off. I was told recently by a rep from one warranty company that there are even a few banks that will purchase the warranties for a buyer on a foreclosed home. Always ask if the home you are purchasing qualifies for a home warranty and don't forget to
Read the fine print!
If you are thinking of buying or selling a home this year, please call Barb Szabo. I'd be happy to talk with you.