When Considering a Home Warranty

When Considering a Home Warranty

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Is a home warranty worth it?

If you are buying or selling a home, a home warranty may come up in the price negotiation, something the buyer may want as assurance to help protect themselves against unexpected repairs for up to one year after closing. Home warranties are designed to protect against electrical and plumbing problems and usually cover most major appliances.

Home Warranties

For the seller, a home warranty may be one of the easiest and cheapest ways to put the “frosting on the cake” when selling a house. Most home warranties can be had for about $600 or less, a price that the seller may gladly “eat” just to seal the deal. From the sellers point of view, if the only stumbling point is the home warranty, then you may be given one. Besides, they’re much cheaper than having to replace an old air-conditioner unit or fix a potential plumbing problem.

For the buyer, a home warranty can look like a good deal on the surface, but they will often not live up to expectations. For one, not everything is covered — some things, like the roof, may be excluded or can be added for an extra fee. The seller may object to having a laundry list of items included, but sometimes warranty companies allow the new homeowners to buy upgrades themselves.

For the new homeowner, a home warranty may provide some peace of mind, but there are strings attached. If something breaks and it is under warranty, then the owner will call the warranty company who will dispatch its technician to make the repair. A co-pay is made, ranging from $25 to $75 according to Liz Pulliam Weston, writing for MSN Money.1

Warranty Exclusions

Weston advises consumers to examine what they’re getting with their home warranty. There are enough clauses and exclusions in some warranties to where you may find it impossible to replace an aged appliance even if it can no longer be repaired.

Some states regulate the sale of home warranties, particularly what can be included with these plans. In the state of Washington home warranties include, but are not limited to air conditioning systems; electrical systems; furnace/heating systems; plumbing/water systems; structural building components; and built-in appliances, such as ovens. These systems are considered “tangible personal property” and other items can be included.2

References

1 MSN Money; A Home Warranty is no Guarantee; Liz Pulliam Weston; Jan. 5, 2010

2 State of Washington: Home Warranties

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About Author

Matthew C. Keegan

Matt Keegan is a freelance writer and editor as well as publisher of "Auto Trends Magazine", an online publication. Matt covers campus, consumer, business and financial topics on various websites and weblogs, and has been published in the "Houston Chronicle", "Sam's Club Magazine" and "Wisconsin Golfer".