All about Home Warranties.
Home warranties are Limited Service Agreements covering internal defects from normal wear and tear, while homeowner’s insurance policies cover damage as a result of accidents and external forces, such as weather (including lightning), earthquakes, and fire.
Example: Mrs. Homeowner wakes to find a pipe has broken in her basement. Leaking water has damaged a part of the wall and the carpeting. Mrs. Homeowner immediately calls her home warranty company. The broken pipe is covered and will be repaired under the warranty, but the home warranty company will not pay for the property damage it is considered “consequential damages”. She contacts her insurance company to file a claim under her homeowner’s insurance.
A home warranty is intended to protect a Buyer or Seller from unexpected expenses caused by breakdowns due to normal wear and tear on covered systems and appliances. It also protects Agents and Brokers by providing a powerful risk management tool to help decrease some of the risk associated with a sales transaction.
What do home warranties cover?
A pre-owned home warranty is a one-year LIMITED SERVICE AGREEMENT for existing homes. This means that only the items specifically listed in the Agreement are covered, subject to the terms and conditions in the LIMITED SERVICE AGREEMENT. Items typically covered in the Agreement include: Heating, Air Conditioning, Plumbing, Electrical, Water Heater, Kitchen Appliances, such as Refrigerator, Oven, and Dishwasher, and more. There are also optional items available for Buyers, and with some programs, sellers have options also. Programs vary from state to state, and many times even in the same area there are several programs available with different coverage items.
What are the benefits of a home warranty?For the Seller?
The Seller is protected from sizable repair bills should something break during the listing period. The fear of post sale claims or negotiations failing because of quibbles over repair work disappear.
The perceived value of a home with a warranty is greater than that of one without a warranty.
A home warranty can reduce a buyer’s fear of future problems and discourage “lowball” price negotiations, resulting in a quicker sale and a higher selling price.
A home warranty greatly reduces the seller’s liability and helps to eliminate post-sale disputes, keeping them out of court!
For the Buyer?
The buyer is protected for one year from the date of closing against the high cost of home repair, which makes budgeting for home maintenance easier.
Home warranties are convenient. It requires one phone call, usually toll-free, and there are no forms to complete.
A warranty takes the guesswork out of finding a contractor. Warranty companies pre-screen contractors and use only those contractors who are licensed and insured. They are monitored for quality assurance.
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Meanwhile, their ability to sell out and move to something they can actually afford is being limited by falling real
charlotte estate real vt said this on January 13, 2008 at 1:39 am |