Many people only think of the term “homeowner warranty” as it applies to the purchase of new construction. However, the term can also apply to the buying and selling of existing homes as well.
A home warranty pays for repair or replacement costs of the mechanical systems and built-in appliances that break down in a home. Warranties can be purchased by either the buyer or seller. If the home is new, the builder typically provides two types of warranties; a HOW warranty which covers structural defects for years two through ten and a one year builder warranty for most anything else which goes wrong in the first year after closing. For a resale property, it’s negotiable in the contract, but usually the seller will pay for the warranty. The coverage period is normally one year.
There are many companies offering home warranties (sometimes referred to as repair service contracts) and coverage of individual policies can vary widely. Please email me for a list of reliable, BBB A+ rated warranty companies. Usually, central heating and air conditioning systems, electrical, plumbing and major appliances are covered. The cost for a one year home warranty typically runs between $300 and $600 depending on the size of the home and the specific types of coverage. In addition to the policy premium, there is normally a deductible of $50 – $75 to pay when making a repair claim. This is normally paid directly to the service person that completes the repair.
There are some very good reasons to pay for a home warranty when selling. Providing a warranty can give you an edge over your competition. Buyers very much appreciate having a warranty, and will feel more confident about buying your home without having to worry about hidden issues or unexpected costly repairs shortly after closing. Providing a warranty can even result in a higher price, many times offsetting the cost. It’s been my experience that it can go a long way to an offer closer to your asking price. Certainly it can make it easier for a buyer to make an offer. These benefits make the home warranty an excellent marketing tool.
If you are considering purchasing a home and it doesn’t come with a warranty, your Buyer’s Agent may want to request it on your Offer to Purchase. I have found it to be an excellent negotiating tool. Or, you also may wish to purchase one for yourself. The first year after buying a home is a time when most people don’t have a lot of cash on hand to cover problems that might arise.
How Comprehensive Should the Home Warranty Be?
Be sure to check the home warranty policy to see what items are covered. Also check to make sure the policy covers the full replacement cost of an item that can’t be repaired.
Examples of covered items include:
| Dishwasher/Disposal |
Pool Equipment |
| Electrical Systems |
Refrigerator |
| Furnace/HVAC |
Stove/Cooktop/Ovens |
| Microwave |
Washer/Dryer |
| Plumbing |
Water Heater |
For more information on home warrantees, please feel free to contact me directly. I will be more than happy to assist you in answering any questions you may have.
