Home Warranties
For most people, buying a home will be the largest investment they will make, so it makes sense that home warranties are gaining popularity. Homebuyers find that a warranty can give them peace of mind as well as save a significant amount of money during their first year of home ownership. And sellers have discovered that a home warranty often attracts more buyers. Because more consumers are electing to purchase home warranties, it's important to understand the limitations of this type of coverage, as well as the benefits a home warranty can provide.
Home warranties generally include standard coverage of the home's heating, electrical, and plumbing systems, as well as major kitchen appliances-range, oven, dishwasher, and disposal. Some companies offer coverage for air conditioners, pool/spa equipment, well pumps, solar components, and even limited roof coverage for an additional premium.
It's important to note that things like foundation wall cracks, basement leaks, bad wiring, or faulty plumbing are covered only during the first year. After that, coverage is usually limited to major structural defects that make the home unsafe, unsanitary, or otherwise unlivable. It's important to read the policy to know what is actually covered, and whether the policy can be renewed at the end of one year.
Purchasing a home warranty can be a win-win situation for every party in the transaction, but the homebuyer reaps the greatest benefit. The home buyer is assured that a problem arising during the first year of home ownership will be fixed for the minimal cost of a service call, typically no more than $50 to $75 per service call, depending on the deductable.
More and more sellers are purchasing home warranty products for their buyers. To a seller, a home warranty is more like an insurance product: for about $350, sellers are assured that mechanical problems occurring during the first year will be fixed by the warranty providers, and they can walk away form the closing without having to worry about liability issues.
Some warranty companies, like 3-10, offer to extend the warranty period to the seller during the listing period for about the price of one service call. Having a home warranty during the listing period can be added convenience when a sellermoer concerned with the details of selling his home and moving.
During the first year of home ownership, a homeowner calls the home warranty company directly when there is a service need. The home warranty company dispatches the appropriate service person, who fixes the problem. The homeowner pays only the service fee stated in the contract. Because of the low service fee, it is in the warranty company's best interest to fix the problem on the first visit.
If the company disputes a claim, the homeowner may need to hire an independent inspector to support his claim. It's a good idea to keep records and copies of all correspondence and notes of any phone calls, and to give the warranty company a reasonable opportunity to review claims and make repairs.
If buyers or sellers do their homework, shop around, and choose a reputable warranty company, most homeowners will find that a home warranty makes life easier, provides peace of mind, and saves them money on costly home repairs. For the price, it is one of the most cost-effective investments a buyer or seller can make.