Buying a home is a significant investment, and the last thing a buyer wants is for something to malfunction in their new home after escrow has closed. One way to mitigate this risk is to obtain a home warranty. These are annual service contracts that cover the costs to repair or replace certain items. First-time homebuyers are especially great candidates for a home warranty because they won’t necessarily have the experience or skill in maintaining a home. Here’s a closer look at the nuts and bolts of what a home warranty is!
How Does It Work?
There are different home warranty plans and types of coverage, but most have similar terms. For example, if the dishwasher were to break in the home after closing, the homeowner would call the home warranty company for assistance. The home warranty company would locate a provider who they have a business relationship with and dispatch that company to the home to remedy the issue. The repair (or replacement) cost would be paid by the home warranty company if within the contract coverage. Homeowners do pay a fee for the service visit, which can sometimes be negotiated when signing up.
Does the Buyer or the Seller Pay for the Home Warranty?
The short answer here: it depends. It really could be either, and just depends on your transaction. However, it is common for a seller to pay for the home warranty because it benefits them when the buyer can call someone else should something break.
How Much Do They Cost?
Again, the answer here is that it depends, and this time it’s on the coverage. Most plans are approximately $500 per year, give or take, but you can often get a deal. Plans are usually prepaid for a year in advance, and when they expire, the homeowner can renew them if they wish.
What Is Typically Covered By a Home Warranty?
This will also differ from company to company, but this is a general list of items that you can expect to be covered. Verify the specifics with your home warranty company.
● Air Conditioning Units
● Furnaces/Heating Units
● Water Heaters
● Garbage Disposals
● Ceiling Fans
● Inside Plumbing Issues
● Electrical Systems
Speak with your home warranty company to see what is covered specifically and what is not. Here are some common items that are generally left out:
● Outside Sprinkler Systems
● Garage Door Openers
● Spas or Pools
Are you buying or selling in the Pasadena area? I’m a local real estate agent with decades of experience in the local market. I have helped countless buyers and sellers, and I would love to discuss your unique objectives. Give me a call if you would like to chat. Stay healthy and safe!