Do you wonder Home Warranty Vs Home Insurance And How Does It Work that’s our topic today? Like this post and share on social media handle.
Are you wondering how do home warranties work? and what’s the difference between a home warranty versus homeowners’ insurance?
When selling a property it’s pretty typical that a buyer will ask for a home warranty.
So, when negotiating an offer the buyers will ask for a home warranty and it’s usually the sellers expense.
But, it’s important that you know that buyers can pay for it, but 90% of the time it’s something that the seller pays for their home buyer.
It is not the insurance that homeowners have on their property.
It’s an insurance policy for one year following the sale of a property and it covers items within the house.
Now those items need to be in good working condition at the time of the sale, so buyers cannot have an inspection, and for instance, the air conditioner is not in working condition.
And then they wait until they close escrow on the house and then ask for it to be repaired by the home warranty company, things need to be in working condition.
Reason Whenever I Sell A House
Now the reason, whenever I sell a house or I do recommend at my home seller go ahead and pay for a home warranty, if the buyer requests it in their purchase agreement, is that it does protect the seller.
It keeps the seller from receiving a phone call three weeks after the sale of the house saying that
“the hot water heater is not working”
And the buyer thinking that the seller knew about it.
So, it really protects the sellers from after-sale concerns about the home.
Now, the average price is about $550, again this is for a one year home warranty.
It’s typically paid at closing, but it can be paid shortly after closing.
It can be paid by the seller, the buyer, the buyer’s agent or anyone who wants to pay for that home warranty for the buyer.
But, like I said earlier it’s typically a seller expense.
What Does It Cover?
It’s good for 12 months, it covers many items within the house.
Within that 12-month period, it can be used multiple times during the year, so if multiple things go on the fritz the buyer will then call the home warranty company will send out a contractor to either repair or replace the item that’s covered in the home warranty.
Now that’s not free!
$65 To Have Them Dispatch The Contractor
The buyers typically pay somewhere around $65 to the home warranty company to have them dispatch that contractor.
Now what typically happens is something stops working, the buyer calls their agent, then their agent calls me, and I let them know to remember the seller paid for the home warranty.
“Things that it covers are the hot water heater, appliances can be covered if they’re listed in that home warranty, air conditioning/heating, plumbing, all types of things like that.”
A buyer can ask for extra things to be covered such as the roof, or perhaps a pool.
Most buyers don’t ask for those types of coverage but a buyer is able to ask for that.
Now I was gonna share with you the difference between a home warranty, and your actual homeowner’s insurance, that’s the homeowner’s insurance than you pay for year after year, and it covers the new home buyer in the case of a loss there’s usually a $500 to $3000 deductible for your home insurance on the actual home.
So, I hope that explains a little bit to you about what a home warranty is.
If you have some more questions just post them below and I look forward to reading your comments and questions have a good week!