What is a Home Warranty, and Do I Need One?
I often get asked what a Home Warranty is for, what does it cover, how much is it going to cost, through the process of both buying and selling a home. For our San Pedro area, providing a Home Warranty for the buyer, as a seller, is a very typical duty and common place in many transactions. Depending on your area, who pays for, and whether or not it is a common item, the home protection plan may vary but for San Pedro it’s generally referred to as a Seller’s benefit.
Now your next question may be, how is this a seller’s benefit? In many ways this does benefit the future buyer of the home, but it also benefits the seller’s peace of mind. What exactly is meant by that is this, after the sale ends, and for example something goes wrong with the appliances that were included in the sale, they buyer, and likely the buyer’s agent, will not be hounding the previous owner for repairs and the like. Though having the home warranty does protect the seller in certain fashions, it does not exempt them from disclosing any known defects with the property.
How much is this going to cost me?
Generally, the home protection plan and the home warranty will only make up a fraction of the cost of the sale of a home. In most cases the cost will run a few hundred dollars, and it is likely that in your transaction your purchase contract will state an amount that you will not exceed. Depending on the provider selected, most commonly stated in the Purchase Agreement, the cost can very to certain degrees based on what is included in the various packages and if there are any additions necessary.
There are generally a few categories of items that are covered by a basic Home Warranty Plan:
- Plumbing Issues
- Electrical Issues
- Kitchen Appliances
- Water Heaters
Once again, depending on what provider is used may change what initial items are covered, and subsequently what items are thus in different package levels henceforth.
In many cases, the home warranty plans come in very handy, but there are also times where there are complications that arise between the new homeowner and the provider. A common issue arises is the issue that a provider may dispute claims for improper care of an item. Also stemming from this would be the fact that a homeowner and the employee may disagree for what item may have or have not been improperly cared for.
Home Warranty providers will also bring a contractor of their choice to make repairs to any item that may be needing work, which can create problems of its own. Sometimes the homeowner may not think the repair done by the hired contractor may not be satisfactory or to their liking. Repairs can become a little bit more involved as well with the addition of a third party, that being the Home Warranty provider.
In the end…
All in all, such as most things in real estate, a Home Warranty has both good and bad qualities, generally I would say much more of the good than the bad. They can get you out of a tight fix, save you some cash, and relieve you of a headache. If you’re currently thinking of asking for a Home Warranty to be included in your transaction, be sure to ask your Realtor to lead you to their preferred provider and explain to you the in’s and out’s of their plans and coverages.