My Real Estate Blog

What is a home warranty?

A home warranty is a residential service contract giving the homeowner repair and replacement coverage for major operating systems (electrical, plumbing, HVAC) and appliances (including smoke detectors and ceiling fans) in a home.

How can you benefit from a home warranty?

Repairs to homes are inevitable. And while homeowners cross their fingers in hopes that these repairs are relatively inexpensive, what if an entire system needs replaced, and you are left staring at a bill with a few too many zeros? A home warranty can offer you some level of protection.

Your home warranty plan also provides you with a selected network of professionals from which to choose. Many homeowners prefer having a list to choose from instead of taking a guess at which repair company will be reliable.

What are the average costs of a home warranty?

MSN Money says you will be looking to spend somewhere from $250 to $600. The average cost in the DC area is about $450 with a $100 service call.  That means whether if the repairman fixes the problem, it will cost the homeowner $100.  If it's a covered replacement, it will cost the homeowner $100. 

What isn't covered?

According to The Home Warranty Review, you should make sure you get any repairs approved by your warranty company prior to calling a repair company. This will help to ensure you are reimbursed. Keep in mind that pre-existing conditions, improperly installed or mismatched equipment, and poorly maintained systems may not be covered.  This will vary from company to company.  The company I use has changed this policy to take into consideration the foreclosure and bank owned properties.

Warranties also do not cover "acts of God." 

How have home warranties changed in our current economy?

There was a significant increase in home warranty contract renewals in 2009. Existing homeowners fueled the increase over the previous year, while sales by real estate professionals to home sellers and buyers held nearly steady.

How do I choose a company?

Read carefully. A warranty is a contractual agreement, and like all contracts, you should know what you are signing. Warranties can vary in price and coverage depending on the company you choose, so be sure to shop around before signing on the dotted line.