Posts Tagged ‘home protection plans’

What Is A Home Warranty And Who Pays For It?

I was going over an offer to purchase with one of my sellers recently and one of the things the buyer was asking for was for the seller to supply a 1 year home warranty. The seller asked if this meant she was responsible for any repairs in the house for the next year. And her question is quite common; I’d say 7 out of 10 sellers ask that same question.

So to the first part of the question- What is a home warranty? Basically a home warranty is an insurance policy that covers the house for 1 plus year after closing. Policies vary in costs; the one our office endorses starts at $375 for a 1 year policy with a $100 deductible. They tend to cover things such as heating systems, water heater, appliances, well pump, plumbing and such. Now this doesn’t mean if the furnace breaks you get a new furnace for a hundred dollars. They may pay a large chunk of it- there are limitations, $ caps, conditions.

Basically it’s an insurance policy, and you need to read everything before you fix or call in a problem. Follow their rules to a T and everything should go smoothly. Sometimes they end up being just a waste of money. Sometimes you end up saving a lot of money. Some would say that $375 is cheap peace of mind.

Who pays? That depends on how it is written in the purchase agreement. It can be part of the negotiation process just like asking for appliances, possession, price, etc. The seller usually has a bottom line in mind and should factor the cost of the home warranty right along with seller concessions, offer price, etc.

If a buyer wants to purchase their own home warranty they don’t need to make it a part of the offer to purchase. Their agent should be able to hook them up with a good warranty company.

Jackie Hawley
ReMax Encore, Clarkston
cell: (248)736-6407

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