Choosing The Right Home Warranty Plan

Dated: 03/02/2018

Views: 279

When you put an offer in on a home, one of the negotiable items in the contract is a residential service contract, more commonly known as a home warranty.  It’s quite typical for the buyer to request that the seller contribute a certain amount of money towards the buyer’s home warranty purchase.  Why you should request a home warranty, how much money you should request towards a home warranty, and how to choose the right home warranty are all questions worth asking when you are purchasing a new home.

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Why should you get a home warranty?  

A home warranty reduces the costs of home repairs by providing an insurance policy of sorts on the maintenance of your home.  If an appliance breaks, you will pay a service fee for the repair which is much less than the actual repair cost.  There are really only a few situations when I will not recommend my client get a home warranty.  If the home is a fixer upper or tear down, it doesn’t make sense to purchase a home warranty. New construction homes sometimes come with builder’s warranties.  It’s a better use of my client’s funds to hold off on the home warranty if the builder’s warranties are as good or better than those offered by a home warranty company.   If you know it’s a multiple offer situation, you may not want to request a home warranty.  The home warranty weakens the offer by requesting an added expense for the seller.  Otherwise, I will advise my clients to request money towards a home warranty.  My job is to protect my client’s best interests so I will usually write in that the seller will pay a certain amount towards my client’s home warranty.  If the sellers don’t like this part of the contract, they can always make a counter offer, but the initial offer is going to be skewed towards my clients’ best interests.  

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How much does a home warranty cost?

Since you have to put a monetary amount that the seller will contribute towards the buyer’s home warranty in the contract, it’s a good idea to have a rough idea of home warranty costs before you submit an offer.  Home warranty costs vary significantly based on the type of home you are purchasing; a condo home warranty will cost less than a home warranty for a duplex with double the number of appliances as a single family home.  The average amount I recommend in the contract is $500, this will cover an extensive condo plan with extra money for added coverages, and it will cover a mid-level policy for a single family home.  Once we are under-contract on the home, I send my clients brochures from a few different companies so they can choose the policy that’s best for them.

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Which home warranty should I choose?

Choosing a home warranty policy is challenging.  You need to determine what coverages are most important to you, compare annual costs as well as service fees, and take a look at the fine print to really determine which one’s the best.  There are a number of different home warranty companies out there, and they all have multiple products to choose from.  Usually they will have 3 service tiers, a basic plan, a mid-level plan, and the ultimate plan.  Reviews.com did a great assessment of the options available for consumers looking to purchase a home warranty.  In their article, they point out some great tips for finding the best home warranty company for you, and they also made a key conclusion that rates may be negotiable.  Calling the home warranty company directly can often lead to obtaining the best rate. 

If you’re planning to purchase a home soon, it’s a good idea to understand the different home warranty options available to you.  Contact me today, and I can send you brochures for a variety of home warranty providers in the Austin area.  

This post originally appeared onshesellsaustin.com

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Erika Albert

Erika Rae Albert is an Austin native who has built her business around one guiding principle, YOU always come first. Prior to joining the real estate industry, she honed her her customer service s....

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