As homebuyers and sellers negotiate toward closing, the home seller will often offer to purchase a home warranty for the new owner as part of the deal. These home warranties are designed to set the homebuyer’s mind at ease about moving into a new house, as the last thing the homeowner wants to worry deal with is a broken appliance. So, what exactly is a home warranty and should all homebuyers seek to have one at closing?
What is a home warranty?
A home warranty is a policy that typically covers basic electrical, plumbing, HVAC, and major appliances such as refrigerators, dishwashers, and stoves for the first year. Each policy will be different, however, and it’s important to be familiar with the specifics of the policy chosen. Additionally, these policies are annual, and at the end of the year the new homeowner must then decide if they want to keep the policy or not.
How does it work?
Homebuyers can get frustrated if they aren’t familiar with how these policies work, as the companies prefer to repair rather than replace when possible. For example, if a homebuyer buys a home with an older dishwasher that suddenly breaks down, it does not necessarily mean a brand new one is coming. It may be that the old dishwasher can be repaired to working condition again. And it will need to be reported to the home warranty company before the repairman, which can lengthen the amount of time it takes to be repaired.
Also, no policy is going to cover a known condition. So, if there is a leaky faucet somehwere in the house that was found and noted prior to closing (but not fixed), the homebuyer cannot turn around and have it repaired under the home warranty.
What’s the cost?
These policies generally cost between $250-600 per year. Again, each one will be different and the cost will be specific to what’s covered.
Who buys it?
As mentioned previously, home warranties are often provided by the seller to “sweeten” the sale. This doesn’t mean all home sellers will automatically do this so if it is not offered, most homebuyers will purchase one anyway.
Home warranties are not going to cover everything. However, they can provide peace of mind and savings to a new home owner. Want to see real estate listings in the Nashville area and find out whether or not home warranties would be part of the deal? Call us today!