A
home warranty pays repair or replacement costs for the mechanical
systems and built-in appliances that break down in a home. Warranties
can be purchased by either the buyer or seller. When the seller is
paying for the warranty, it is usually paid for and goes into effect at
closing. The coverage period is normally one year. There are a lot of
companies offering home warranties and coverage of individual policies
can vary widely. Usually, central heating and air conditioning systems,
electrical, plumbing and major appliances are covered. It's important
that you read the policy closely and understand what is and is not
covered. The cost for a one year home warranty typically runs between
$300 and $600, depending on the size of the home and the specific types
of coverage. In addition to the policy premium, there is normally a
deductible of $50 - $75 to pay when making a repair claim.
There
are some very good reasons to pay for a home warranty when selling your
home. Providing a warranty can help set your home apart from the
competition. Buyers will appreciate having a warranty and will feel
more comfortable about buying your home without worrying about hidden
problems. Providing a warranty can even result in a higher price,
offsetting the cost. Certainly it can make it easier for a buyer to
make an offer. These assets make the home warranty an excellent
marketing tool.
In addition to marketing advantages, you
could also avoid getting sued down the road. When a major appliance,
heating or air conditioning system goes bad shortly after a home is
sold, it's not uncommon for the buyer to blame the
seller. Unfortunately, this can and does lead to lawsuits. Providing a
home warranty with the sale of your home can go a long way towards
preventing these types of suits. In some areas where lawsuits are
particularly common, almost all homes are sold with a home warranty
included.
If
you are buying a home and it doesn't come with a warranty, you may want
to consider paying for one yourself. The first year after buying a home
is a time when most people don't have a lot of cash on hand to cover
problems that might arise. Having a one year home warranty in place can
provide peace of mind during this time, and if something could really
save your budget.
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