12 Jul What Homeowners Need To Know About Home Warranties
There are so many important moving pieces during a real estate transaction, that it’s easy for things to get overlooked, especially aspects that aren’t required. One of these items includes home warranties. They are extremely important, so take a look to get answers to the most frequently asked questions.
What is a home warranty?
A home warranty is a contract between a homeowner and a home warranty company. The warranty provides the homeowner with full replacements and discounts on aspects of the home when they break down, including heating, AC, major appliances, and plumbing and electrical systems.
How is it different from home insurance?
There are several key differences between home insurance and a home warranty. Here are just a few:
- If the homeowner has a mortgage, they will be required by their mortgage lender to purchase home insurance.
- Home insurance covers your home and personal belongings that aren’t covered in a home warranty, including events not covered by a home warranty like fire damage, storm damage, theft, flooding, or damage caused by weather. Of course, each policy is different.
- Home insurance may also cover expenses related to medical and injuries that take place on your property.
What does a home warranty cover?
Similar to your home insurance policy, not all home warranties are created equal. It all depends on which company you get your warranty from and what you want covered, but in general, the warranty will cover:
- Appliances, including refrigerators, dishwashers, built-in microwaves, washer/dryer, oven/stove, and garage door openers.
- Air conditioning, heating systems, electrical systems, smoke detectors, and ceiling fans.
- Some policies may also include: swimming pool and spa equipment, well pumps, pest control, and secondary appliances.
Why is it important to be aware of a home warranty in the escrow process?
A home warranty is an option that can offer both buyer and seller peace of mind if certain systems fail during the first year of ownership. However, we recommend parties review the policy carefully to match coverage to the property features and understand any out-of-pocket expenses. Specialty coverage, such as for a guesthouse, pool, roof, and Sub-Zero appliances, can also be explored with home protection plan providers.
How much does a home warranty cost?
The cost of a home warranty depends on several factors, including:
- Your home’s location and its age
- The home warranty plan you choose
- The deductible your warranty plan has
Typically, a home warranty may range in price from $350-$1,500 per year. However, keep in mind that there may be additional fees associated with a professional coming into your home to inspect the item that needs to be replaced or repaired. There may also be a maximum coverage limit, so be sure to clarify both of these aspects.
How do you get a home warranty?
You have the option to buy a home warranty at any time. However, most people purchase them at the same time they purchase their home. In addition, many REALTORS® have relationships with home warranty companies, so they can recommend one. There are also times that sellers will include a home warranty in the purchase of the home.
Do you need a home warranty?
While we cannot answer this question for you, we wanted to share some steps to take to see if a home warranty makes sense for you and your circumstances, including:
- Consider the age and condition of your home’s appliances and systems. Keep in mind that a home warranty won’t cover pre-existing wear and tear or cosmetic issues. The warranty will help fix or replace covered items, but there are limits.
- Take an inventory of your home’s systems. Are there a lot of items that could fail? What will be the cost to repair them without a home warranty?
- Call around if you are searching for a home warranty. Learn more about pricing, coverage, deductibles, and more.
We hope this information helped shed some light on the home warranty. Our team is here for you, so if you have any questions or need escrow support, please reach out. We are here to support you!