The seller or the buyer can purchase a home warranty, and this is usually paid for at closing time. Home warranties cover repair or replacement for appliances or other things associated with the home. Each warranty is specific to the home it covers. If you’re looking at new home construction, most builders are required to provide at minimum a one year builder’s warranty. This is in case of problems that can be encountered after closing. That warranty, however, is different than a warranty for an already existing home. Listed below are details regarding warranties for pre-existing homes.
Differences in Hazard Insurance and Home Warranty
A hazard insurance policy is different than a home warranty. A hazard insurance policy will replace items that are damaged by fire, wind, flood, or other covered events. Discuss with your insurance provider what specific events are covered, as these vary greatly by area. A home warranty will replace items that fail on their own, such as appliances.
There are several kinds of “standard” home warranties. Some include coverage for appliances, plumbing, and heating and cooling units, while others cover the roof, etc. Study each policy carefully to understand their definition of standard coverage, as well as to understand what items are not covered. Some items can be purchased for an additional fee. Also keep in mind that coverage might differ for buyers and sellers. A real estate agent should be able to give you information about different providers, but if not, you can search the internet, ask friends or check your local listings.
Duration of Coverage
Again, the “standard” warrant is effective for one year from the date of coverage, and often includes an option to renew. However, renewing usually costs more than the original fee paid for coverage.
Cost of Coverage
Cost will vary depending on what standards are included and the area of the new home. Average coverage could start at $350, but contact a provider for a more definite price. Try to compare coverage from several providers, prices, and what “standard” coverage actually includes.
If you choose to provide a warranty with the home you’re selling, it instantly makes your home more attractive to a potential buyer. Also, although a buyer shouldn’t contact you if something goes wrong after closing, they still might do so; and if you have a home warranty it will offer some peace of mind both to you and the buyer. Also, if the included appliances and other items are a little older, the buyer might not be as concerned about replacement. If you think a home warranty might help your home sale, consider several companies before choosing one. Finally having a home warranty gives you the seller peace of mind. We live in a litigious society. Providing a home warranty may help you avoid a lawsuit in the future.
There are no specific rules stating who pays for a home warranty, buyer or seller. The seller might offer one as a tool to market their home, but a buyer can purchase on or ask the seller to do so, if there isn’t one offered. As a buyer, you might consider that coming up with funds for purchasing and closing a home can leave you without a lot of extra cash (if the seller will not pay for closing costs). If you think there’s a possibility an appliance will need to be replace within your first year, it’s definitely worth considering a home warranty.
Remember to ask certain questions when inquiring about a package. Find out which items are included under standard coverage. Ask which items can be added on as needed. Question how much you’ll be required to pay for the policy, additional add-ons, and inquire about the co-payment- most insurance’s will cover the entire cost of the repair, after you’ve made the co-payment. Also, if possible, talk to other clients or customers to find out what kind of quality and resolution you can expect from a particular company. Good luck in your choice!