This question comes up a lot, especially for first-time home buyers. What is a Home Warranty… and who pays for it?
Let’s first talk about what it is. Essentially a Home Warranty is a protection plan, usually purchased a year at a time that covers certain components in and around your home. Plans vary, depending upon provider and what level of protection you’re buying. Generally, the plumbing & electrical systems, heating & cooling and sometimes even appliances will be covered. Make sure to read the plan details before purchasing and choosing which one fits your needs best.
How it works is that let’s say the A/C stops working in the middle of July… you would call the customer service number, pay a “service call fee” (usually $75 or less) and then the tech, usually at the provider’s choosing would come out to diagnose and repair the item, assuming it’s under the warranty guidelines. That $75 could turn into a whole lot less expense than a $5,000 new A/C unit. Of course the repair might be small and entire replacement isn’t needed, but you never know.
Home Warranties can give buyers some peace of mind after moving into a new home, in case one of those large expense items were to fail. Usually they just spent a lot of savings with down payment and closing costs so timing might not be ideal.
Who pays for the warranty is negotiable and as the market changes, so will the normalcy of whom pays… currently (April, 2014) in the Metro Phoenix Area, we’re seeing a lot of sellers pay for this during escrow. Costs vary, but usually will range from $350-500 for that 1-year plan. Homeowners can choose to renew it after the first year’s expiration if they like or even purchase one at any time. They’re not tied to only sales time.
Make sure to ask your professional REALTOR about these and if you’re looking for a REALTOR in Phoenix or surrounding communities, I want to be the one you call @ 623-203-2264!