Understanding the Home Warranty Process
Home warranties are not a new product on the market; however they are growing in popularity. The real estate market is cooling off a bit, and many people who are looking to purchase a home are considering what they are purchasing and being more selective. One of the key points that many home buyers are looking for is a home warranty. Home warranties can be offered by the seller of an older or a new home as a selling feature to help secure a better price for the home. However, home warranties can also be purchased by a buyer of an older home to ensure that any major repairs that are needed are covered.
There’s a lot to understand in home warranties though and it’s advisable that you really research home warranties before you sign up for one.
Home warranty pricing
One of the biggest aspects of home warranty is the fee – it’s important to understand that the price of a home warranty can vary greatly from one company to another. If you request a quote on a home warranty and the price is too high, you can negotiate on the price or ask the sales representative for other options which might fit your budget better.
The big difference – sellers and buyers home warranties
There is a significant difference between a sellers home warranty and one that a buyer purchases. A seller’s home warranty usually covers specific systems and appliances and covers the home for the time it is on the market and for one year after the sale. This home warranty can not be renewed.
A buyer’s home warranty is a little different from that of the sellers. The home warranty covers repairs for a period of time, usually one year, for the house that was purchased. Buyer’s home warranties, in many cases, can be renewed after the initial time frame and extended.
The deductible
When you purchase a home warranty, it’s important to discuss the cost of the deductible. Similar to car insurance, when you put in a claim, you will have to pay the deductible. Usually the deductible on a home warranty is about $50; however that can dramatically change from company to company. You have to have a worthwhile deductible on your home warranty, or many of the repairs may not be worth claiming through your home warranty. Be sure to ask what the deductible is for a claim and get that number as low as possible. It’s also good to note that sometimes increasing the deductible can lower the cost of the home warranty. It’s a process of decision making where you have to weigh the possibilities of something major going wrong and if increasing the cost of your deductible will be worth it.
What does the home warranty cover specifically?
It’s important to find out, and get in writing, what the home warranty covers in specifics. You need to know if the air conditioning unit, the garbage disposal, electrical, plumbing, appliances, etc., are covered with the home warranty. Not everything will be covered, such as garbage disposals in many cases, and it’s best to know what is and isn’t covered before you sign on the dotted line.
What is excluded from the home warranty specifically?
You will also want to know and get in writing what is not covered with your home warranty. This will let you, or your buyers, know for sure what is not covered with the home warranty. Once again, the list of covered and not covered can change from company to company, so it’s important that you research each home warranty company individually and compare them to each other to be sure you are getting the best deal for your money and that you are getting the best coverage possible with your home warranty.
Other variables
There are various other variables with home warranties that differ from company to company. You will want to include these differences in your research. Sometimes the littlest difference can make all the difference in the world for the viability of a home warranty purchase.
Length of the home warranty and renewal dates
You will want to find out how long the home warranty is active for and when the renewal date is, if you are purchasing a buyer’s home warranty. You will also want to find out when the home warranty becomes active – is it upon the final closing, during the listing, etc.
Claim process
You should also ask about the claiming process with your home warranty – how do you file a claim, how long does it usually take to process a claim (a week without a stove can be a big deal), and if you need to use a specific repairman or service company.
By following this general advice, you should be well prepared to purchase a home warranty.
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