Congratulations! If you are reading this we are assuming that you just bought a new home (or you are really close to doing so).
This is such an exciting time. You get to look at pretty houses and buy new furniture. You may even have the opportunity to live in the home of your dreams.
But, wait. Did you remember to invest in a home buyers warranty? Do you even know if you need to invest in it?
If not, keep reading. We are going to discuss everything you need to know about home buyers warranties and where you can find the best home buyers warranty.
What Is a Home Buyers Warranty?
A home buyers warranty is not the same as homeowners insurance. Homeowners insurance covers homeowners in the case of a major peril like a natural disaster or property damage. On the other hand, a home warranty helps the homeowner get repair and replacement services for everyday problems.
In depth, a home buyers warranty is a contract. It exists between a home warranty company, that can provide resources, and the homeowner who is looking to protect their property.
This contract gives the homeowner discounted repair and replacement services on major home components. This includes the HVAC system, the plumbing, the furnace, and even the electrical system.
Some home warranties even include major appliances, like refrigerators, washers and dryers, dishwashers, pools, and more.
In other words, a home buyers warranty fills in the gap that often occurs with homeowners insurance. A lot of homeowners insurance policies do not cover major components of the home. And, even those that do, do not have a low enough deductible to assist with the repairs.
This means that the homeowner is left to fund these repairs alone.
If a homeowner signs onto a home buyers warranty, they can call the company that they have signed with whenever there is an issue with one of the major components or appliances that the contract covers. Because this homeowner has already paid for the warranty, they will only have to pay a service fee.
Over time, these policies can save a lot of money. This is why homeowners opt into these deals upon purchasing a home.
How Much Does a Home Buyers Warranty Cost?
The cost of your home warranty will depend on the kind of home that you have and the kind of coverage that you want.
These policies can cost several hundreds of dollars per year, but the investment is worth it, especially if you are living in an older home. You may pay this amount up-front or pay in installments (if your policy has a payment plan).
As your home ages, the cost of the warranty does not increase; however, newer houses may lead to more expensive policies since these properties have newer parts.
The square footage of your home also does not alter the price (unless your property is more than 5,000 square feet). If you have additional structures on your property such as a guest house, you may have to pay an additional fee for each extra property that you want the policy to cover.
The size of your home and lot also do not affect the service call fee that you will pay when you call for a repairman. This service call fee is usually around $75 to $125 per specialist who comes to the property.
If your warranty does not cover a particular appliance or component, you may end up paying for the repair yourself on top of the service fee on top of the annual premium. So, you should make sure that your warranty covers everything. This will minimize the amount of money that you have to pay in the long run.
Should I Invest in a Home Buyers Warranty?
Most homeowners should invest in a home buyers warranty. Over time, this warranty acts as an insurance policy. It is meant to cut the costs of home repairs and replacements while providing peace of mind to the homeowner.
Home warranties act like a buffer for the majority of homeowners. Since most people cannot afford to drop thousands of dollars on a whim, it helps to have a policy that is there to help.
Warranties help homeowners who are not handy or do not want to track down specialists. With a warranty, you will always know that you are protected. And, you will always have a specialist with one call. There is no need to track down people or get quotes.
Warranties are also useful for homeowners who have expensive components and/or appliances. Repairing and replacing more expensive parts can add up to more money than most people are willing to spend. So, having a warranty helps cut down on costs.
Warranties can also help new homeowners save money. The new owner may have limited knowledge about the home's condition or they may have used all of their savings to buy the home. In both cases, a home warranty can help ease the owner's mind and save him/her money if something were to happen.
In some cases, the home seller may offer the buyer a 1-year home buyers warranty during the home buying process. This can help ease any tension about potential repairs. Thus, it can progress a sale that may be in turmoil.
We should note that providing this 1-year home buyers warranty does not free the seller of any legal obligations. If the seller knows about any current or impending problems with the home, he/she has to disclose that information.
The Drawbacks of a Home Buyers Warranty
The number one complaint about home buyers warranties is that they do not cover components or appliances that have not been maintained properly. Unfortunately, the definition of 'properly maintained' can lead to heated discussions since it is a grey area.
Maintenance means different things to different people. And, for new homeowners, they may not have had the chance to do any maintenance themselves since they did not own the home.
When you are setting up your contract, you may want to discuss what your warranty company defines as proper maintenance. And, you may want to have a discussion regarding the care that the previous homeowner did or did not give to the property.
Another drawback is exclusions. Most home warranty companies define a limit on the dollar amount that they will perform on repairs in a given year. This means that—if you have too many costly repairs—you could find yourself without a policy to back you up.
However, meeting this limit also means that you got the most out of the insurance policy.
We should also note that buying into a home warranty does not guarantee that you will use the warranty. Just like other kinds of coverage, the warranty is there in case anything goes wrong. So, if nothing happens within that year, you have paid for a year's worth of insurance without actually using it.
However, this is comparable to insurance that you pay for your car and house. Hopefully, you do not have to use these insurance policies at all. But, they are there when you need them.
Lastly, some homeowners complain that a home buyers warranty does not give them the freedom to choose the professionals that they work with. And, they do not get to choose the parts that those professionals are using.
This is great for homeowners who do not want to worry about this part of the repair process. But, if you do have an opinion, you should talk to your warranty company about how they choose their professionals and what they can do if you would like to work with another individual.
Is a Home Buyers Warranty Worth It?
All in all, it is best for most homeowners to invest in a home buyers warranty. It has the potential to save a lot of time, money, energy, and stress.
If you are looking to make the repair and replacement processes easier, these warranties are the way to go. All you need to do is call a number and a professional will be on their way to help.
Usually, these processes can take weeks to get started. Homeowners normally have to choose from multiple professionals, collect quotes, and ensure a harsh repair period.
With a home warranty, you do not have to worry about any of this. Assuming that you are under the rules of the contract, you can get fast, easy, and cheap repairs whenever you need them.
We do ask that you shop around when you are looking at policies. In other words, you should not settle for the first one you see. Look at the terms and conditions to see if the policy fits what you want.
Starting the Home Buying Process
Now that you are educated on how to find the best home buyers warranty, you need to get started on looking for the best house, and that is where we come in.
We have online 3D tours, a home search engine, and more. With our resources, you will be able to find the home that you are looking for in no time.
And, as you are looking, you can check on the home's maintenance record. So, you will be able to see when home components were last maintained.
Get started today and get in touch with a real estate agent. It is time to buy a house!