Buying a home is a major life decision. Buyers deserve peace of mind knowing they have made a good investment. Sellers want to stand out and market their home effectively to avoid unforeseeable issues. That is why having a home warranty included in the purchase agreement is essential.
Real estate professionals almost always require a home warranty in their real estate transactions. Basically, it is a contract between a homeowner and a home warranty company to provide discounted repair services on the furnace, HVAC, plumbing, and electrical systems. Of course, warranties vary and may also cover washers, dryers, and refrigerators. When something breaks down, the homeowner calls the home warranty company. If the item is covered by the warranty, a service provider is sent to examine the problem. The work is completed if the repair is covered by the warranty, and the homeowner pays a small service fee. At the end of the first year, the homeowner is given the option to renew or cancel the warranty.
So how much does a home warranty cost? The pricing may differ significantly based on various exclusions and limitations. Basic coverage starts around $300 and goes up to $600 for more comprehensive plans. Property type (single-family detached, condo, townhouse, or duplex) and whether the homeowner purchases a basic or an extended plan can also affect pricing. Add-on services can be included for properties with additional components such as a swimming pool or an external well. It is ideal to lock-in at the time of the real estate transaction, because that is typically when warranty companies offer the most comprehensive coverage and best pricing. Before the purchase contract is signed, the buyer and seller negotiate who will pay for the warranty.
A home warranty gives the buyers confidence that they can move into their new home without worrying about unexpected repairs. It is also beneficial for people who are not handy or do not want to track down a contractor when they have a problem. However, it is good to note that home warranties usually do not cover home components that have not been properly maintained. Therefore, be sure that the property was thoroughly inspected before closing on the purchase.