The purchase of a new home is exciting! It’s likely that when you purchase a home, even if it’s an older one, you’ll be offered a home warranty. Home warranties are offered as a means of protection against unexpected and expensive home repairs.
What is a home warranty?
A home warranty is like an insurance policy. It’s a contract between a home warranty company and a homeowner designed to protect against major home system and appliance breakdowns caused by regular use.
If something breaks down that is covered by the warranty, the homeowner simply calls the company, and the warranty company handles the repair.
A Home Warranty Is Not Homeowner’s Insurance
A homeowner’s insurance policy protects you against things like fire damage, hail damage to your roof, and property damage that results from a crime. In other words, an insurance policy is designed to protect you from things that could affect your personal possessions or the home’s structure.
A home warranty is a contract under which the warranty company is responsible for arranging replacement services or discounted repairs on major home systems such as air conditioning, plumbing, and electrical systems.
Home warranties also cover appliance repair and replacement for things like ovens, ranges, washers, dryers, and refrigerators.
Benefits of a Home Warranty to a Home Buyer
Sellers or builders might offer to pay a year’s premium for a home warranty for a buyer. This can be enticing, especially if someone is putting all their cash into the down payment. Buyers can benefit from a home warranty because it can:
- Protect the buyer from costly and unbudgeted repairs for covered items
- Offer a resource for qualified repair professionals
- Often provide unlimited service call requests that are available 24/7
- Protect home systems for a year (sometimes more) after closing
Whether buying a new or an older home, a home warranty can offer peace of mind to a buyer. Knowing there won’t be surprise repair costs can help them feel confident in their purchase.
Benefits of a Home Warranty to a Home Seller
Home warranties can provide peace of mind to sellers as well as buyers. By purchasing a home warranty for themselves, the seller can benefit from coverage because it can:
- Protect them from any breakdowns while the house is listed for sale
- Provide budget protection from unseen repairs
- Encourage buyers to submit their highest possible offer
- Prevent the sale from being postponed because of a home system breakdown
It’s impossible to predict when an appliance or major home system will fail. If those systems are protected by a home warranty, it can be of benefit to everyone.
The Cost of a Home Warranty
Often, home warranties can be purchased for a few hundred dollars per year. Depending on the company, the premium might need to be paid upfront, or it can be broken up into installments. Normally, the age of the home or the size is not a determining factor in the cost.
Separate structures will require additional fees because, most times, they are not covered under the warranty. Some companies charge extra fees each time they are called to examine an issue or if an issue requires two or more contractors to address.
Having a home warranty in place doesn’t mean that the owner won’t ever have to spend money on a repair. But the cost of a warranty is often far less than the cost of replacing a major home system or appliance.
Legal Remedies for Home Issues
The law firm of Merlino & Gonzalez specializes in real estate law for homeowners in Staten Island, New York. If your home warranty isn’t operating as expected, we may be able to help. Give us a call today.