By Bruce Cathcart
In last week’s article I wrote about the benefits to both buyers and sellers of getting a home inspection report from a professional, certified home inspector before closing escrow on a home purchase. In this week’s article I will write about another service available to buyers and sellers that I also strongly recommend taking advantage of… a Home Warranty Policy.
The last thing I want my buyers and sellers worrying about after they close escrow is the air conditioner, water heater, dishwasher or any other appliance or system failure. I always recommend for peace of mind that a home warranty policy (sometimes called a home protection plan) be included as part of the sale of the home.
Home warranties are relatively cheap… especially if you have to use them! Prices typically average from $275.00 for condos to $350.00 for an average Coachella Valley home with air conditioning. The term of the home warranty policy is one year from the date of purchase (usually the close of escrow). There are several companies that offer home warranties and coverage can vary. These basic policies generally cover the appliances, HVAC, garbage disposal, most mechanical systems, electrical and plumbing systems. Each policy may include optional coverage for an additional cost like a pool and spa, refrigerator, washer and dryer, and even limited roof coverage. Your trusted real estate agent should be able to provide you with several brochures from different home warranty companies for your review. Take advantage of this opportunity to review what is covered and what is not covered before deciding which policy to purchase.
Here is how a home warranty policy works. Should something go wrong, let’s say the water heater stops working, instead of calling a plumber, the homeowner calls the home warranty company. The home warranty company calls a plumber who then calls the homeowner to make an appointment to inspect the water heater. The plumber will either fix or replace the water heater provided that the repair is not for a pre-existing condition (was broken before the policy was purchased) and the water heater has been properly maintained. It also wouldn’t be covered if your ex took an axe to it in a fit of rage. By now you know that I mention stuff like this because this actually happened with one of my clients! Instead of paying for the service call and the repair or replacement of the water heater, the homeowner pays only the set service call fee, usually $50.00 to $75.00, depending upon the terms of the policy purchased. This is all the homeowner pays each time something covered in the policy breaks down during the course of the year.
So who pays for the home warranty policy and how do you get one? Home warranty policies are optional and as such are subject to negotiation as to who will pay for them. Everyone wants a smooth transaction that results in happy buyers, happy sellers and happy agents or as Phil Robertson says, “happy, happy, happy!” Usually the selling (buyer’s) agent will request that the cost of the home warranty policy be paid for by the Seller in the original offer. If the price is right, the seller will usually cover the cost. However, this is not always the case and so the buyer can purchase their own policy, offer to split the cost with the seller or the agents, or in some cases, if the agent feels strongly enough about it (as I do), the agent or agents can purchase the policy for the new homeowner.
Most agents will make their clients (both buyers and sellers) aware that home warranty policies exist and share with them the benefits that these policies can provide. If they do not, make sure that you ask your agent about them and insist that one be purchased as part of your transaction!
This week’s real estate tip: Buyers make sure you keep a copy of your home inspection report and any invoices for repairs made to the home prior to closing so that you can demonstrate that your appliances and systems were all operational at the time you closed escrow on your home. In addition, properly maintain your appliances and systems to make sure that your home warranty company will not deny any claims that you may need to make.
Bruce Cathcart is the Broker/Co-Owner of La Quinta Palms Realty, “Your Friendly Professionals” and can be reached by email at laquintapalms@dc.rr.com or visit his website at www.laquintapalmsrealty.com.
