Blog > What Buyers, Sellers, and Homeowners Need to Know About Home Warranties

What Buyers, Sellers, and Homeowners Need to Know About Home Warranties

by locationlouisville-chime-meJuly 31, 2018

  

Home warranties can be a massive asset to any homeowner, so today I’ll be answering some of the most common questions buyers and sellers ask me about these important policies.

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Home warranty plans are the topic of many questions I receive from buyers and sellers alike, and so today I want to answer just a few of the most important.

First, who is responsible for paying the home warranty?

Actually, this depends on your location. However, this can be negotiated. It often is something sellers pay for because they know the price and it is often already included into their portion of the deal. Some sellers might not think it’s necessary, but the reality is that most buyers, especially first-time buyers, will be interested in securing a home warranty.

The reason first-time buyers, in particular, tend to gravitate toward such a policy is that it offers them protection. In general, their lack of experience with homeownership means they are less informed about what responsibilities and expenses may appear. This makes the certainty associated with a home warranty quite attractive.

The second question buyers and sellers tend to ask is: How much does a home warranty plan cost?

Home warranty policies can cost anywhere between $300 and $600, but additional expenses can apply if add-ons, such as coverage for a pool or spa, are included. Things like extra refrigerators can also add to the cost. The important thing is that you closely examine any policy and find out what it does and doesn’t cover, so that you have a comprehensive understanding of what you are paying for.

Next: How does a home warranty work?

Basically, a home warranty is like an on-call handyman. Imagine that you wake up one morning, go to take a shower, and discover that you only have cold water. This nasty surprise can be made more tolerable if the underlying issue can be taken care of through your home warranty. To get such problems resolved, you will either call a 1-800 number or a local number, depending on your provider, to explain what has happened. After this, a licensed contractor (in this case, a plumber) will be contacted and sent out to assess your problem.

Depending on your plan, your deductible could be $75 to $100. Meaning that, in the worst case scenario, you just paid a plumber $75 to relight your pilot light. But in the best case scenario, you just paid $75 for a hot water heater. As this example demonstrates, a home warranty plan can save you thousands. Many choose to renew their coverage year after year because of the value it provides them over time, especially because these policies tend to cover what would otherwise be major expenses.

Of course, your choice of home warranty company matters. When shopping around, one thing you may want to look out for is whether the policy offers a hotel stay in the event of a major issue. Asking your Realtors which one they’ve used successfully in the past will be essential.

When you find a policy that suits your need, lifestyle, home, and budget, you will be able to rest easy knowing that you’re covered in case of an unexpected misfortune. But while it is important to look at what a policy includes, it is also crucial that you pay close attention to any exclusions or limitations. You should read the entire contract before settling on any company.

Finally, in addition to researching the various home warranty companies you consider, you should also examine the current level of wear and tear on the home your policy will apply to. Even small issues can become huge headaches if they go unaddressed for too long.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

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Todd Martin

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