Get Exactly The Right Home Insurance For You

Get Exactly The Right Home Insurance For You

Home Warranties In The Real Estate Market: Who Needs Them & Why

Yvonne Harvey

One of the biggest investments people make is their first home. However, after spending months or years improving their credit score so they can get a better mortgage rate, many people are left struggling to cover costs of unexpected expenses that go along with being a homeowner, especially within the first year of buying the home, when they are trying to get accustomed to paying the mortgage payment and related household expenses.

The breakdown of a major appliance, such as a heat pump, can make it difficult or impossible to make ends meet. Fortunately, home warranties provide peace of mind. Here's an explanation of what a home warranty is and who should consider buying home warranties. 

What is a home warranty? 

A home warranty is not the same thing as homeowner's insurance. Homeowner's insurance covers the costs of damages and losses caused by natural causes, such as fires, plumbing disasters, and weather damage. Home warranties cover the costs of breakdowns in appliances and mechanical systems caused by normal wear and tear. However, keep in mind that there may be deductibles and monetary caps, so you'll want to read the contract closely before signing. 

In order to obtain a home warranty, the appliances and mechanical systems in the home need to be in good working condition. Therefore, a home inspection service will need to verify that the appliances and mechanical systems are in good working order before a contract can be entered into for home warranty coverage. 

Who should consider buying a home warranty? 

There are several types of people who can benefit from buying home warranties. 

  1. Sellers. Buyers tend to have peace of mind when they see that a home warranty is included in the sale of a home they wish to purchase. Therefore, sellers offering home warranties can use them as marketing tools, since home warranties increase the confidence of buyers. Home warranties can also cover any issues while the house is on the market, which can give the sellers peace of mind, especially after they've already vacated the home. Home warranties also allow sellers to not have to worry about paying repair or replacement expenses when they are trying to gather money for their next home purchase. Home warranties can then be transferred to the buyers and are typically good for one year after closing. 
  2. Buyers. While home inspection services do find many problems in appliances and mechanical systems, they are not fortune tellers and, sometimes, cannot determine the longevity of the appliances and mechanical systems. Buyers that buy homes without existing home warranties can purchase them before closing on the homes. Typically, warranty plans that are offered during the real estate transaction often are the most comprehensive in coverage. 
  3. Real estate agents. Real estate agents can purchase home warranties for their clients for an attractive selling point that can result in a faster payout for the seller and, therefore, for the real estate agent. In fact, according to a study conducted by the Service Contract Industry Council (SCIC), homes covered with warranties sell for $2,300 more and almost 11 days sooner than homes that do not have home warranty coverage. Real estate agents can consider the purchase of home warranties as a gift to their clients as well as to themselves. 

In conclusion, it's important to note that some home warranty companies require regular maintenance on the appliances and mechanical systems that are covered. Whether you are a seller, buyer, or real estate agent, be sure to schedule maintenance appointments and keep adequate records of the maintenance that is performed on the various appliances and mechanical systems to ensure that any breakdowns are covered. 

To learn more about home warranties, contact a company like America's Preferred Home Warranty.


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About Me
Get Exactly The Right Home Insurance For You

My name is Krista McMullin and this is a blog about home insurance. Life is full of uncertainties, but it doesn't have to be. For every uncertainty, there is often a form of insurance that can be used to help you feel less nervous. However, some of these forms of insurance may be unnecessary. How do you know exactly what form of insurance you really need? I always wondered this and I have spent a lot of time studying home insurance policies and various situations in order to come up with the perfect home insurance policies for each individual. I hope my blog is helpful to you.