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Home Warranties Explained

Home warranties exist to help home buyers cover any repairs or replacements for certain things in their home during their first year living there, particularly systems and appliances. Knowing what a warranty covers and what it doesn’t is important to know before you purchase it.

Does a home warranty cover everything?

There are many separate warranties that cover a variety of different things. One can cover just appliances, another can cover just mechanical systems, and some cover both. So it depends on which ones you are more concerned with.

Since coverage varies so much it is important to get the exact information and language that applies to the quote you received before you decide to buy it. Home warranties cover appliances like refrigerators, stoves and air conditioning units if they break after some normal wear and tear. Most warranties won’t repair items with pre-existing repair needs, but if a buyer just closed on their home the previous week and the refrigerator breaks a few days later, there’s no real way of knowing if there were pre-existing conditions or not. There can also be complications when debates arise about whether or not to replace an item versus repair it. Because of this it is so important to know the exact terms of your warranty before you buy it.

Make sure you know:

  • What exactly the warranty covers
  • Any limits to that coverage
  • Deductible amounts

What is the difference between homeowner’s insurance and a home warranty?

While homeowner’s insurance is required by lenders and involves replacing or repairing the home itself if it was damaged by fire or weather, it will not help you if your washing machine breaks. A home warranty covers appliances and mechanical systems and is not required though often recommended when purchasing a new home.

Is this different from a manufacturer warranty?

Usually in new homes the warranty provided by the manufacturer covers the broken part but usually not the labor expense involved in sending someone to repair and fix it after the first year.

How Much Does A Home Warranty Cost?

Since it depends on which coverage you choose, these are normally anywhere between $300 and $800, and these can be paid all at once or split into monthly payments. Warranties also have ranging deductibles from $50 to $100 which need to be paid each time the company sends someone to inspect anything that is broken. Specific quotes are always available online, and you can ask your real estate agent as well since agents are normally familiar with various warranties.

Are Home Warranties Different For New Construction Homes?

Many builders cover structural problems for up to 10 years as well as systems and appliances for anywhere between 6 and 12 months, so there usually isn’t a need for a home warranty with newly constructed homes. Just make sure you read all of the new construction purchase contract for the exact terms regarding what is covered and for how long.

Will the real estate agent or seller ever pay for a home warranty?

With a property inspection, you can discover if the home you want to buy has any appliances or systems with questionable conditions. If some are found, you can oftentimes negotiate with the seller and they will purchase a warranty for you. Agents will also occasionally buy a warranty for their clients, but that is less common and an individual decision for each agent.

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