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Our home is the single largest
investment that most of us will
ever make, and the last thing
that any new home owner wants
to deal with are costly repairs
or replacement of complex or aging
systems. Whether you are
a first time home buyer, seller
or existing homeowner, a home
warranty is a very affordable
way to preserve peace of mind
and to help protect your most
valuable asset.
What is a Home Warranty?
What a Home Warranty is not.
Benefits of a Home Warranty for
the Seller.
Benefits of a Home Warranty for
the Buyer.
How Much Does a Home Warranty
Cost?
What's Covered?
How Does a Home Warranty Work?
What is a Home Warranty?
The Home
Warranty is usually a one-year
limited home service agreement
that helps protect homeowners
against the costs of repair or
replacement of covered appliances
and major systems that breakdown
due to normal wear and tear.
What a Home Warranty is not.
The Home
Warranty is not a substitute for
Homeowners Insurance. A Homeowners
policy is "hazard" insurance ―
protection against events such
as damaging winds, fire, theft,
and even liability for injuries and
damage you cause to other people.
It will not cover your furnace
when it fails to come on next
October, but your Home Warranty
will. The home warranty protects
your homes systems (plumbing,
electric, heating and cooling)
and major appliances (refrigerator,
stove, dishwasher, etc.) when
they break or stop working all
by themselves.
Benefits of a Home Warranty for
the Seller.
The major
benefit is peace of mind. By providing
the Buyers with a warranty, your
more confident that the buyer
won't be knocking on your door
after the sale with charges of
non-disclosed defects. Considering
the expense of defending yourself
against such a charge (true or
not) the cost of providing a home
warranty is minimal.
Secondly, if
you purchase a home warranty at
the time your home is listed for
sale, your home is warranted for
you during the listing period
until it's transferred to the
buyer at closing. Although the
seller coverage is not as extensive
or far reaching as the buyer coverage,
considering that you will probably
be asked to provide a home warranty
for the buyer anyway, you might
as well take advantage of this
added protection. (You don't even
have to pay for it until closing).
Thirdly, there
is a
wealth of evidence that homes
with a warranty are more attractive
to the buyer, therefore they will
sell faster and for more money
than homes without a warranty.
Benefits of a Home Warranty for
the Buyer.
Again,
the major benefit is peace of
mind. Only now, it's peace of
mind knowing that after you've
used all your cash reserves coming
up with your down payment, you
won't have to shell out another
couple of thousand to fix or replace
the furnace or hot water tank
any time soon. You'll rest easier,
knowing that unexpected repair
costs are shared by the warranty
provider.
For the first
time home buyer, who is not yet
used to dealing with such problems
the warranty can be invaluable,
because after you contact the
provider with the problem, the
provider will handle everything
including calling a reputable
repairman or service contractor.
How much does the warranty cost?
There
are many providers and they all
have different coverage, cost
and co-pay plans. You should take
time to compare companies and
plans before you purchase. Typically,
however, the cost of the home
warranty will run between $350
and $450. For each claim there
will be a co-pay (or deductible
amount) of $50 to $100. Also,
there will be a service fee (usually
$35 - $75) for each time a service
contractor must make visit your
home.
What's
Covered?
Basic
coverage typically includes:
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Seller Coverage
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Central Heating
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Plumbing
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Water Heater
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Attic/Exhaust Fans
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Electrical System
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Ductwork
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Buyer Only Coverage
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Roof Leak |
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Central Air Conditioning
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Septic System |
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Refrigerator
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Dishwasher
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Range
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Oven
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Garbage Disposal
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Trash Compactor
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Built-in Microwave
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Garage Door Opener
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Door Bell
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Central Vacuum
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Lighting Fixtures
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Fire/Burglar Alarm
System
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Buyers Optional Coverage
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Washer/Dryer
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Pool
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Pool/Spa Combo
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Water Well Mechanical
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How Does A home Warranty Work
- You determine that a
failure has occurred in a
covered system or appliance.
- You call your warranty
provider. (Note: Your first
call is always to the provider.
If you call a repairman first
you will almost always void
the warranty. Call the warranty
provider first for instructions.)
- The provider will contact
an approved service contractor
with whom the provider already
has a business arrangement.
- The service contractor
will contact you for an appointment
to access the problem.
- The service contractor
will repair the problem according
to the terms of the warranty.
- The provider will pay
the service contractor for
parts and labor and bill
you for the deductible portion
of your plan as well as the
service fee.
See Also
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