The last thing that any new home buyer wants to think about after closing on their dream home is what could go wrong. And since the list of “what could possibly go wrong” can be quite extensive and can cover a multitude of items and systems. In order to maintain peace of mind, it is a good idea to get a home warranty plan. It's especially a good idea to obtain a home warranty if you're a first-time home buyer. This is because new home buyers have no experience maintaining a home.
How Do Home Warranty’s Work?
- Although specific details vary from plan to plan, most home warranty plans operate the same way.
- If an appliance or home system stops working properly, the home owner calls the home warranty company.
- The home warranty company then calls a provider with which it has a business arrangement.
- The specific provider calls the home owner and sets up an appointment.
- The provider fixes the problem. If an appliance is malfunctioning and cannot be repaired, depending on contract coverage, the home warranty company will pay to replace and install the appliance.
- The homeowner often pays a small trade service fee (generally less than $100).
Types of Home Warranty Coverage
Due to the fact that home warranty plans differ in detail, you will want to ask specifically what is covered. Ask your real estate agent if upgrades are available if you are not happy with your existing plan. Pay close attention to whether the home warranty company will pay for repairs to make certain types of systems or appliances compliant with new regulations.
Who Pays for a Home Warranty?
It varies with the plan, and situation. In many cases it is normal for a seller to pay for the coverage because it is a benefit that the seller offers. Why do so many sellers make sure that there is a home warranty in place? Because then the buyer won't be calling the seller after closing if something breaks.
How Much Does a Home Warranty Cost?
Generally, a home warranty is inexpensive, typically ranging somewhere from $300 to $500, depending on the plan you pick. Home warranty companies sometimes run special sales and either discount policy prices or offer additional coverage for the same price. Policies are prepaid for a year in advance, at which time they expire if not renewed on time. At the time of renewal, if a home warranty was originally purchased at a discount price, it is common for the homeowner at a slightly higher fee.