Do you know the basics of a home warranty?
Home Warranty Basics
A home warranty is exactly what it sounds like. It’s an extended warranty for your home. Just as an extended warranty for a TV or refrigerator protects you against failure, it protects your home. Does this sound interesting? If yes, read on.
Why Do I Need a Home Warranty?
The reasons are valid. When purchasing a home,many people use almost all or their financial resources to purchase the home. As a result, many buyers aren’t left with cash should an expensive repair become necessary. Here’s how the home warranty works. First, you purchase the warranty.The typical cost is $400 – $500 per year, and it’s renewable. If a covered item fails, and needs repair or replacement, you call the warranty company. They handle sending a qualified technician to your home. You’ll need to pay a small co-pay ( usually under $100). Then, at their discretion, the warranty company will either repair or replace the item.
As an example let’s say that soon after you closed on your home, the air conditioner stops working. In fact, we’ve seen this happen more than once. It was working n the day you closed, which means you can’t go back to the seller. So what to do? We had one client whose air conditioner died two days after she closed on the house. She called the home warranty company and paid the copay. The air conditioning unit was old and it wasn’t economical to repair. As a result, she had a brand new air conditioner installed within 48 hours.
What Is Covered?
Most warranty companies offer different coverage packages. However, most people purchase the full package. This typically covers all appliances, in addition to the heat and air conditioning systems, the hot water heater, electrical and plumbing systems.
However, if all (or most) appliances are newer and under manufacturers warranty, you may want to save and get less coverage. Another option many people purchase is a basic home warranty just for the heat and air conditioning system. And for some people, this may be a good call.
What if I’m Selling the home?
In our opinion, this is a great thing to do if you’re selling. It will offer peace of mind to the buyers, especially if the systems are older. And quite often, it also covers items that may arise during the home inspection. Additionally, many, but not all home warranty companies offer a great program for sellers. When the home is listed for sale, purchase the home warranty. The effective date is whatever the closing date is. This is when the one year policy begins. However, should any of the covered items fail during the period between purchasing the policy and the closing, they will be covered.
We find this to be a valuable and effective selling tool.
Bottom Line
Many people think a home warranty is a good idea. They would rather buy the service contract than possibly face a large repair bill. And, if you’re buying a home, ask the seller to pay for the warranty as part of the negotiations. Quite often they will.
For more information contact us.
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