Home Warranties
Depending on the age and condition of the home, it may be advisable for the Buyer to purchase or the Seller to provide a home warranty. The most prominent of these warranties are:
American
Home Shield
First
American Home Buyers Protection
Old Republic Home Protection
Although described as warranties, these programs are probably closer to insurance. If the homeowner experiences a failure of one of the covered components, they contact the customer service number, which is typically toll free. A service technician is dispatched to evaluate the problem and determine if it is covered. Charges are generally in the $45 to $90 range for a service call, although multiple service charges can apply if the requested service is for two separate items such as a dishwasher and air conditioning. The technician will generally repair the problem for this service charge, although sometimes there are limitations to the maximum amount of the repair that is covered. If the component is not covered, the technician can generally make the repair for a charge. It is important that the homeowner not have the item repaired himself, as the warranty company will not reimburse for these repairs.
The cost of these warranties is in the $360 - $500 range. It is not uncommon to ask the Seller of a home to provide such a warranty in the offer to purchase their home. Also, many Sellers use the home warranty as a marketing tool. Should they choose not to include the warranty, the Buyer can always purchase one himself.
When buying a new home, you may request the builder provide a one year limited warranty and the various mechanical components will have one year manufacturer's warranties.
These warranties are not a substitute for regular, ongoing maintenance that every home requires. I strongly recommend you purchase a home warranty on any home in which the warranty period for the mechanical components has expired.
