A home warranty is often referred to as a home owners warranty or home protection plan. Home warranties are often used to cover expenses that are not covered by insurance. It can be purchased by a home seller, buyer or even the real estate company.
Whether you are buying or selling a home , you should have facts that guide you in making decisions regarding home warranties.
Know The Cost
If you are a home owner trying to sell a or a real estate agent considering adding a home warranty to the deal, it may be the very sweetener needed to make the sale. If you are a buyer looking at homes for sale, asking for a home warranty can save you the cost of purchasing it yourself.
Homes that come with a warranty often sell faster because the buyer feels an added sense of security. The added protection of a home warranty comes with a surprisingly low price tag. A one year home warranty costs $400-$600, on average. For each service call, a small deductible will have to be paid. The cost of the deductible is typically less than $100.
Know What is Included and Excluded
Before signing on the dotted line, it is imperative to understand what is and is not covered in a home warrany. No one wants to put in a service call, only to discover that the needed repair is excluded. Types of repairs generally covered in home warranties include electrical, plumbing, furnace, heating ducts and central air conditioning, major appliances included in the home and the water heater. Even within the list of covered repairs, there can be exclusions.
As explained by Bankrate, a water heater is covered. But if the service repair person discovers it went out because of rust or poor maintenance, the repair or replacement may be excluded and “you might have to pay the bill yourself.”
Exclusions in home warranties typically include solar heating units, lighting systems, pool or spa, septic systems and other such items. If you are unsure about what is included, ask your real estate agent if the home warranty company fails to make all the details clear to you.
Pros and Cons of Home Warranties
Having a home warranty can potentially make the difference in the quick sale of your home, since statistics show that homes sell faster when a home warranty is included. In spite of the seemingly considerable advantages, there are those who say home warranties are not worth the nominal cost. The Los Angeles Times quoted Consumers’ Checkbook as saying “you’ll do better to place that money into a home-repair fund.”
When buying or selling a home, having the protection of a home warranty can be a blessing in disguise to the buyer and seller. Ask your real estate agent for guidance if you are unsure about getting a home warranty included. While some organizations question the need for it, home warranties have become almost universal in the real estate market and are probably unlikely to disappear any time soon.
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