Just about everything we buy these days comes with a warranty – your car, phone and even that coffee maker you just purchased. Perhaps you like to live dangerously and slide by without coverage for your phone or computer by opting out of the extra expense, but do you really want to take that risk when it comes to your home?
What is a Home Warranty?
In a nutshell, a home warranty is a policy you purchase that covers the cost of repairing many of your home’s systems and appliances. Don’t mistake it for homeowners insurance, which will cover damages and loss caused by fires, floods, storms, and the like. Home warranty plans cover the replacement or repair of some of the home’s major features caused by normal wear and tear.
A home warranty generally includes these items:
- Plumbing systems
- Electrical systems
- Heating and cooling systems
- Washer and dryer
- Kitchen appliances such as a refrigerator, oven, range, and garbage disposal
Coverage for a home warranty plan can vary from policy to policy, so ask to see an outline of the policy before you commit. Don’t just settle! There is a plan out there that suits the needs of you and your home. For example, if your home has a pool you might want to search for a plan with the option to add extra coverage for that feature.
Perks for Both the Buyers and Sellers
Most people buy a home warranty right as they close on the home to provide some peace of mind. Nobody wants to wake up weeks after the move to a jet stream of water shooting out of the toilet that leaves the bathroom waterlogged. With the warranty, you won’t be shelling out money for repairs. Other than a small service fee of around $100, the warranty has got all those curveballs covered.
Home sellers also benefit from a home warranty during the listing period should a little complication occur. Companies sometimes cover the home warranty during this period with hopes the buyer will continue with the policy, so what seller wouldn’t inquire and initiate a plan? It is also common to see sellers offer to pay for the first year of a buyer’s home warranty in efforts to seal the deal when closing on a sale. It also prevents any post-sale conflict should the toilet actually become a fountain overnight.
Calling in the Agents
Plans and types of coverage differ so it’s best to consult your real estate agent if you’re feeling doubtful. Does the company pay for repairs to the home’s outdated system to bring it up to regulation? Will the company only cover the hot water heater and not the hot water tank itself? These questions are swimming in a sea of the company’s loopholes and limitations. Whether you’re looking for a home warranty as a buyer or a seller, your agent can help you stay afloat and make a reasonable choice.
Is it Really Necessary?
Unlike home insurance, a home warranty is a completely optional purchase. It can be purchased at any time, but you’re sure to snag the best deal at the time of the real estate transaction. Typically you won’t be forking over the big bucks. Basic coverage starts at $300 and runs to $800 for more comprehensive plans. Homeowners can add extras to customize their plans to cover special features, such as an external water well or pool. Just be sure to read the fine print so you are fully aware of the limitations.
The bottom line: homeowners and home sellers alike can benefit from the peace of mind that comes with the small annual fee associated with a home warranty policy. For many, that ability to rest easy is worth every penny.