A home warranty is a stand-alone service contract that covers repairs and replacements on systems in your home, usually for a period of one year. It is designed to protect your budget from costly, unexpected repairs or replacements especially during the same year you've already spent your savings on a home. In addition, it provides the convenience of securing a reliable service professional usually within just one phone call. A home warranty is not the same thing as homeowner’s insurance, nor is it a replacement for homeowner’s insurance.
What does a home warranty usually cover?
A home warranty covers your appliances and systems such as electrical and plumbing. The home warranty usually does not cover exterior issues such as anything to do with roofing, fencing, decking, landscaping, sheds, or garages. While home warranties cover many of your new home’s crucial systems and appliances, those items must be in working order before the contract is entered into with the warranty company. When you buy a home warranty, consider premium and optional coverage to customize the plan to fit your needs, especially if your home has more than one oven, dishwasher, a wine fridge, etc. These extra appliances may not be covered under the standard warranty.
Who pays for the home warranty?
A home warranty can be a negotiable item. Sometimes the seller will offer it right upfront to attract buyers or later in inspection repair negotiations. You, as the buyer, can ask for it as part of your offer or during negotiations as well. In any of these cases, the home warranty would be provided and paid for by the seller. If it is, the account details of the home warranty would be given to you at closing. If we did not ask for a home warranty as part of the contract, you can still decide to purchase a home warranty on your own.
How much does a home warranty cost?
Home warranty plans typically offer basic coverage with options to upgrade. Consider the age of your new home and consider all of the ages and conditions of the appliances and systems within the house when determining which plan and options work best for you. If you are selecting the plan yourself, it may be best to do this following the home inspection. Competitive plans typically cost about $450 with service calls of $75-$100. In the calls the service person will try to repair the item. If the item needs to be replaced, typically they will replace it with an item with similar features. But buyer beware, the item may not be replaced with an exact replica or even the same brand. It is possible that the Subzero refrigerator that sold the house for you could be replaced by a GE refrigerator with similar features. You may be able to work with the warranty provider ahead of time to arrange to pay the difference and get the brand you want.
Where can I buy a home warranty?
If the seller is not providing you with a home warranty and you want to purchase one, there are many reputable companies that you can get a quote from online. Click here to see our recommended real estate resources. Ideally, you should apply for a home warranty prior to closing and have it start the day of closing.
When a home warranty is understood and utilized for its intended purposes, it can be the easiest way to save on home repairs and reduce the extra stress that comes with buying or selling a home.