Home Warranties...Should You Offer One to Buyers?...Should You Request One Of The Seller?
Home
warranties have gained much popularity in recent years and I am often
asked by my buyers when negotiating,"Should I ask for one?" and by my
sellers,"Should I provide one?"
In general, I think this is a good product, but take care to
read the fine print.
For
me personally they have paid off. Two of my previous homes were
protected by a home warranty. As unbelievable as this sounds, both of
my homes had hot water tanks that failed, both a few days before
Christmas! I called my home warranty company, hired an approved
contractor and, in both cases, I had a new hot water tank the next day,
all for the cost of my deductible, the first time $35.00, the second
time $50.00. (Deductible costs have since risen).
So what exactly is a home warranty? In general it is an insurance policy (different from a 
homeowner's
insurance policy) that is issued for a period of one year and sometimes
13 months from the date of title transfer for the new homeowner.. The
average cost for the seller is approximately $400.00 but this can
quickly go up if there are additional commodes, a swimming pool, etc.
Read the fine print.
Some
policies cover all appliances, and some charge more to cover the washer
and dryer. I have never seen a policy that covers a leaky basment (due
to structural or foundation problems) and I have not seen any that
will cover a leaky roof, but will cover a "roof leak repair". The buyer
pays the deductible. The average cost of the deductible to the buyer if
he/she makes a claim is $100.00 Most companies require that you call
them FIRST before calling any contractors because you must obtain
permission from them as to which contractors you may use.
Read the fine print.
These are some items that typically would be covered but there are many more depending on the company you choose:
- plumbing
- heating
- electrical
- hot water tank
- ceiling fans
- garbage disposal
- central vacuum
- whirlpool tub
Home
warranties can be good for the buyer and seller. Remember that not
every home will be eligible for coverage such as those whose utilites
are turned off. I was told recently by a rep from one warranty company
that there are even a few banks that will purchase the warranties for a
buyer on a foreclosed home. Always ask if the home you are purchasing
qualifies for a home warranty and don't forget to
Read the fine print!
If you are thinking of buying or selling a home this year, please call Barb Szabo. I'd be happy to talk with you.