Wednesday, November 14, 2012

Do You Need a Home Warranty?

One of the more stressful aspects of buying or selling a Lake Of the Ozarks home is the uncertainty that both buyers and sellers face regarding the decision itself.  In each instance, there is risk and liability.  It is worthwhile to understand and consider the value of a home warranty, especially during the period of listing or buying a home.  Both buyers and sellers should research home warranties to understand how they work, what is covered, and the limitations of a warranty.

Home warranties are not homeowners insurance.  Homeowner's insurance covers the house itself, usually against fire, theft, vandalism, windstorms, natural disasters, accidental damage, or injuries.  The job of this type of insurance is to protect your investment and your liability.   But homeowner's insurance rarely covers the home's mechanical systems, leaving you vulnerable to the inconvenience and costs associated with breakdowns of these systems.  This is where a warranty can come in.

Home Warranties purchased for older homes vary widely.  These home warranties are more likely to be used, and should be considered a form of insurance designed to offer peace of mind to the homeowner when looking at the cost of repairs not normally covered under other insurance.  Home warranties may be purchased for specific periods, for example, the duration of  a listing of a home, or for longer periods of time.

Buyers benefit from a home warranty because they offer the assurance that repair to mechanical systems in the home will be covered with only a small out of pocket expense.  Sellers benefit from them because they make the home more attractive to buyers and they are "off the hook" if a large repair is needed.   For this purpose, a home warranty might indeed offer just that - peace of mind, and a message that everyone wants the deal to go through.

Here are things to be on the lookout for:  A home warranty bought by the seller for the term of the listing to expire upon the sale of the home, tends to cover fewer systems (often only heating/cooling, some plumbing and electrical).  The advantage of these warranties are if a problem is spotted during the inspection, and that system is covered by the warranty, the seller can have the problem fixed under the warranty, rather than have to cover the entire cost.  A positive factor is that this type of warranty tends to require less money up front.

Some warranties are transferable and provide coverage up to a year, or a new policy my be offered by the seller to the buyer for the duration of one year after the sale.  Buyers should ask about the nature of the warranty, and sellers should do the research to know what they are buying.  When purchasing a home warranty there are a variety of options including duration of the plan and what systems are covered.  

Generally, these warranties cost $300-400+ a year, and the current owner of the home would pay a service fee of $50-75 for a service call.  Some companies require the use of certain service providers and will even schedule the calls;  others provide a list of providers from which to work. Getting a home warranty is easy - most companies are willing to take your money after you fill out an online applications without a home inspection.  

Peace of mind can be worth quite a lot, and a home warranty might offer just that.  When selling or buying a house, a home warranty can be just the ticket to ease troubled minds.  Purchasing a home warranty involves doing some leg-work to understand just what is covered, for how long, and for whom.  Ensuring that each party understands the nature of the warranty is critical, but in the end it might be a good deal for everyone involved. Only you can decide.

We hope that this information is helpful and will help you decide whether or not a home warranty is needed.






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