Homeowner warranties

A home warranty pays for repair or replacement costs of the mechanical systems and built-in appliances that break down in a home.  Warranties can be purchased by either the buyer or seller.  When the seller is paying for the warranty, it is usually paid for and goes into effect at closing of escrow. The coverage period is normally one year.  However, the buyer has the option of renewing the warranty plan at the end of the term, prior to the expiration date at his/her cost.

There are many companies offering home warranty plans and coverage of individual policies can vary widely.

Usually, central heating and air conditioning systems, electrical, plumbing and major appliances are covered.  It's important that you read the policy closely and understand what is and is not covered.  The cost for a one year home warranty typically runs between $300 and $600, depending on the size of the home and the specific types of coverage.  In addition to the policy premium, there is normally a deductible of $50 - $75 to pay when making a repair claim.

There are some very good reasons to pay for a home warranty when selling your home.  Providing a warranty can help set your home apart from the competition.  Buyers will appreciate having a warranty and will feel more comfortable about buying your home without worrying about hidden problems.  Providing a warranty can even result in a higher price, offsetting the cost.  To the seller, a Home Warranty is an excellent marketing tool.  To the Buyer it's a piece of mind!

In addition to marketing advantages, you could also avoid getting sued down the road.  When a major appliance, heating or air conditioning system goes bad shortly after a home is sold, it's not uncommon for the buyer to blame the seller.  Unfortunately, this can and does lead to lawsuits.  Providing a home warranty with the sale of your home can go a long way towards preventing these types of suits.  In some areas where lawsuits are particularly common, almost all homes are sold with a home warranty included.  

If you are buying a home that doesn't include a Warranty Plan, you may want to consider paying for one yourself.  The first year after buying a home is a time when most people don't have a lot of cash on hand to cover problems that might arise.  Having a one year home warranty in place can provide peace of mind during this time, and if something does break down, it could really save your budget!