Being on the verge of putting my home on the market, this article about the value of offering a buyer a home warranty in a recent issue of Market Matters put out by the CALIFORNIA ASSOCIATION OF REALTORS® made me stop and reflect on doing so. Let me know what you think?
- Some sellers wonder whether it is necessary to offer a home warranty, especially when inventory is low like it is currently.
- The biggest advantage of a home warranty – which covers breakdowns in major systems – is that it is an incentive many buyers value, particularly if they are stretching to buy and don’t have a lot of money left over for repairs.
- A home warranty is a relatively expensive form of insurance, and will set back the purchaser several hundred dollars, depending on the coverage selected. Also, there is a service fee for each call, which can be more than $100.
- Home warranties have limitations. They don’t cover static elements like the roof or siding, but do cover operating systems that often fail, like major appliances including garbage disposals, electrical wiring, plumbing, and heating and air conditioning. Some companies allow the homeowner to add riders to cover extras like the mechanical elements of a pool system or hot tub.
Costs and exclusions vary widely, as do caps on what the warranty company will pay. Some companies also offer less coverage for systems that are near the end of their useful life. As in medical insurance, pre-existing conditions are usually exempted from coverage – and the warranty company makes the call as to whether the condition was pre-existing, as well as to whether the particular system should be replaced or just patched up.
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