The Importance of a Home Warranty

Laura Insley's picture
The Importance of a Home Warranty

Purchasing your home is one of the biggest investments you’ll ever make. As with any object of great value, you will want to protect it against any harm or unforeseen costs. The best way to cover all bases is by getting a home warranty. Having a warranty plan will not only cover you during your time in the house, but it will provide great benefits to you when you decide to sell. In fact, it will serve both the buyer and seller well to have a coverage plan for the home. Our real estate experts, Lorraine Thielen and Linda Hahn, have kindly put together a brief overview of home warranties and why they’re important during a home sale.

What Is A Home Warranty?

A home warranty is an insurance policy that will cover unforeseeable issues after you close escrow. These policies will help with any potential disputes after the sale with regard to repair or replacement of items covered. Typically, it is a one-year contract, and renewable at the end of each term. Many companies offer a variety of warranty plans based on the extent of coverage. Basic plans cover large appliances, heating, plumbing, and electrical systems. They range in price from $250-$500 annually. As you add more items, prices increase. Examples of items you might want to include are: pool, spa, roof, garage door, additional appliances, and more.

Coverage During A Sale

Policies are paid in advance - usually at the time of escrow as a part of the closing cost. This would have to be part of the purchase agreement and/or amendment to it for it to be paid this way. Either the seller or buyer can choose to purchase a plan. It mostly depends on what is customary in your area. That said, in most situations, it is the seller who pays for the policy. In fact, it is to the seller’s benefit to have a plan in place. A policy can be purchased while the property is in escrow to protect the seller if something breaks.

Coverage After A Sale

Once the policy has started, the buyer cannot contact the seller about items under coverage in the plan. If service is needed, the owner simply calls the warranty company. The warranty company will facilitate the service call. Usually, they contract a local business with the appropriate expertise to go out to the property to assess the situation. If the issue cannot easily be repaired, a replacement may be covered depending on your policy.

A home warranty is highly recommended for both sides of a home sale transaction. There are a number of different companies that offer these insurance policies, so it is important to do your homework and find the one that will cover your needs the best.  Also, make sure that your account manager assigned to your policy is easy to work with. The better your relationship with the representative, the more pleasant your experience will be if you need services or repairs 

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