What Is a Home Warranty and Why Do I need one?
Your home is probably your single biggest investment. For most new home buyers the last thing they need to worry about is an unexpected repair that can seriously strain their budget. For peace of mind and as added protection against anything major that might go wrong with a homes major systems, it's a good idea to get a home protection plan.
It safeguards you against the financial strain of a major repair and for first time homebuyers that have little or no experience in maintaining a home this can be a real lifesaver.
What exactly is a home warranty? It's actually a renewable service contract that covers the repair or replacement of most of a homes major systems. Most home warranties will cover the plumbing, electrical, and heating systems of the home and also some of the homes major appliances such as refrigerators, dishwashers, and ovens.
The way it works is that the home warranty company contracts with local repair companies and servicemen to provide service. If something breaks you call the home warranty company and they send an insured and approved contractor to do the work. In most cases, your only out of pocket expense will be a small service charge to the contractor. All other work and replacement parts are assumed by the the warranty company. If it becomes necessary to replace any appliance or system, they will replace like with like or in the case of a discontinued item, they will replace with the next closest comparable item.
If, as a seller of a home you offer a home warranty to your buyer, then the coverage offers protection for the home the entire time it's on the market from the time its listed until one year after title transfer. This gives buyers extra confidence in the real estate transaction since they know that if anything goes wrong while the house is under contract, the home warrenty company will fix it. They don't have to rely on a seller who might avoid investing more money into a home he's trying to sell.
The best source for a Home Warranty company would be your Realtor since they deal with these companies daily and know which ones are the most popular ones with their home buyers.
As a realtor I generally encourage both my home sellers and buyers to invest in a home warranty. They range in price between $350-600 /yr depending on the company, location and coverage. I'll negotiate it for my buyers and contribut to the cost of it for my sellers. Its a small price to pay for piece of mind.