Just picture it: it’s your first weekend in your new home, and all of a sudden, your washing machine stops working. What’s a brand new homeowner to do? If you purchased a home warranty, repairs might be covered.
If you’re buying a home, it’s important to consider a home warranty to help you manage the costs of potential repairs.
How is a home warranty defined?
Many people think a home warranty is a type of homeowner’s insurance, but it’s a little bit different. A home warranty is a type of service contract that pays for the repair or replacement of items covered under the contract for a certain amount of time. A home warranty usually covers appliances and systems, but it doesn’t cover big items like structural features and windows.
What is the average cost of a home warranty?
The cost of a home warranty depends on the warranty provider and what is covered. The average cost of a home warranty is $300 to $600, according to Consumer Affairs. The cost varies based on your location and how much coverage you select.
Keep in mind that there is usually a service call fee if you do need to have an appliance repaired. Also, there is typically a replacement allowance for appliances. For example, if you need a new washing machine that costs $600 and your home warranty provides a replacement allowance of $500, you’ll be responsible for the $100 difference.
How do you know if you need a home warranty?
After you get your inspection report on the house you want to buy, review the report and consider what repairs or replacements might be just around the corner. If several appliances are older and may need to be replaced, then a home warranty might be a helpful idea.
Some sellers also offer a home warranty to boost their home’s appeal, but in a busy real estate market, many sellers don’t need to do that because homes are in hot demand!
Things to remember with home warranties
The most important thing with home warranties is to read the fine print!
Look at the warranty’s annual dollar limit - some companies cap the amount of repairs or replacements they will cover.
Review the warranty’s term - some last for one year.
Generally, the home warranty company makes the decision on whether an appliance is repaired or replaced - you may not have a say in the decision since the warranty is paying.
It’s possible that a claim could be denied because the appliance hasn’t been properly maintained.
Shop around for price estimates and compare coverage before you purchase a warranty!
Buying a home is a big financial commitment, and for some buyers, a home warranty offers a little peace of mind. The most crucial piece of a home warranty is understanding what you’re paying for and what’s covered under the contract. Do your homework and you’ll be much better off!
Questions on the real estate process? Curious about home warranties? Reach out to me at 8Z Real Estate and let’s chat!