Q: I am buying a house and have been asked if I want a home warranty. What is a home warranty?
A: There are so many obligations a home buyer has to look into upon engaging in a purchase deal. One of your primary tasks is to ensure you are getting your hands on a sound investment. And just to add another layer of protection to your future investment, getting a home warranty attached to the property would be a wise move.
A home warranty is basically a service plan that usually runs for a full year after the home purchase. This plan provides funding for repairs of replacements of systems and appliances included in the property. Its typical coverage is the mechanical and electrical components of a new home, such as heating and cooling equipment. The damages and need of repairs incurred must be solely due to ordinary wear and tear throughout the years of operating the items.
There are many advantages for purchasing a home warranty. Realtors especially encourage buyer clients to get this plan. The last thing a buyer wants to be faced with after purchasing a home is an unforeseen costly repair.
The home warranty is beneficial because once you move into the home you are saved from facing major expenses for replacing heating and cooling equipment or other repair issues. And the home warranty can give you some sort of convenience. Once any of the covered systems or appliances is not working, you have the right to claim assistance from the warranty company. When you call them up, they will send a contractor to do the work. Hence, you are saved from scouring for a professional service provider.
Just so your decision can be more guided in getting a warranty for your new home, you also have to take note of some down sides. Although the company will send a contractor right away to repair the damages, you will still be charged for the repairs. However, this should only be a minimal amount.
Further expenses can also be expected as some warranties cover home items you actually did not anticipate being included. For example, a one-year warranty for an existing home may include repairs for heater problems but it does not actually cover for the damage costs if it has been due to rusting. You have to shoulder the expenses if this is the case then. You would also have to pay a deductible which can be from $50 to $100.
You really have to be thorough in assessing the details of the home warranty presented to you. It would be better if prior to purchasing, you already know about the timeframe, meticulously itemized list of covered areas, dues and claim process of the plan.
There are several companies offering home warranties and you should compare their services. You also have to check on the credibility of the warranty company. Check out web forums on home warranties wherein clients have expressed their approval or disappointment regarding the guarantees they have. Do research about the track record of the company.
Many times sellers offer a home warranty in conjunction with the sale of their home. Most home warranties provide coverage for the seller while the home is listed for sale and the coverage extends to the new buyer of the home at the time of the sale.
For a home seller, it can be a marketing tool in the sale of the property. Typically, the home warranty does not require a payment for the policy until the sale of the property actually occurs. So, a home seller is not faced with any out-of-pocket expense for the home warranty at the time of placing their home on the market for sale.
Get answers to questions you might have about real estate from Randy Durham, who is president of the Chattanooga Association of Realtors and a broker with Keller Williams Realty. His column appears on Sundays. Send your questions to Business Editor John Vass Jr. at jvass@timesfreepress.com