Who pays for a home warranty and when?
A buyer, seller or real estate agent can pay for a home warranty. It sometimes depends on where you live.
A buyer may purchase one to protect themselves from systems or appliances breakdowns, regardless of the age of the home’s systems and appliances.
A seller might purchase one prior to listing and then transfer it to a buyer as an incentive to buy. In fact, home warranties are the most used incentive that sellers offer buyers at closing.
A listing agent may provide seller coverage to their clients free of charge where allowed by law during listing (in Florida, it’s $60). This can protect the seller against common breakdowns during listing, which can speed up the sales process.
A buyers agent may purchase one for their client at closing. Many agents do this to protect the transaction and their clients.
Is the cost included in the closing fees?
A home warranty may be rolled into closing costs if the buyer purchases it at closing. Buyers and sellers may negotiate payment with each other in these situations.
In certain states, home warranty fees are not required as part of the closing costs. For example, a seller may purchase one prior to listing, then transfer coverage to the buyer as an incentive. This likely won’t show up on closing costs. Likewise, if an agent purchases one for a buyer as a gift, it wouldn’t show up in closing costs.
How much is it?
Basic plans can range from $400 to $600 per year, with options to enhance coverage at additional costs. The most comprehensive plans may range from $700 to $1,000 a year.
Costs largely depend on location and whether you choose to enhance your coverage with options.
You can get a free quote from 2-10 Home Buyers Warranty (2-10 HBW) to help you determine how much your coverage will be.
What does a home warranty cover?
A typical home warranty covers the following systems and appliances from breakdowns caused by routine use.
- HVAC systems (furnaces, A/C units, etc.)
- Plumbing systems (water heaters, pipe leaks, etc.)
- Electrical systems (wiring, switches, etc.)
- Refrigerators located in the kitchen
- Oven ranges and cooktops
- Garbage disposals
Your coverage depends on the kind of Service Agreement you purchase. Additionally, you can enhance your home warranty with optional coverage for things like roof leaks, hot tubs and extra refrigerators.
What do I look for in a home warranty contract?
Always read your coverage documents when purchasing a Service Agreement. Be sure to know what’s included and what’s excluded. Home warranties can be comprehensive, but they are not all inclusive.
For example, say you have 2 refrigerators: 1 in your kitchen and 1 in your basement. You also have standard coverage. In this case, if your kitchen refrigerator broke down from routine use, your standard coverage would cover that refrigerator. However, if your basement refrigerator broke down from routine use, your standard coverage would not cover it. If you had purchased the additional refrigerator option, your home warranty would cover both.
Look also for any dollar limits that apply to your Service Agreement. Fortunately, 2-10 HBW provides terms, exclusions and dollar limits up front and transparently, so you always have access to what’s covered.
Is a home warranty worth it when buying a home?
It protects your home’s major systems and appliances from routine breakdowns. This is especially useful after you put a large chunk of money down for a down payment. Most people struggle to save up for a down payment. The last thing they need after finally achieving that goal is for a major system or appliance to break down. A home warranty can protect budgets in these situations.
Additionally, consider the fact that 40% of Americans couldn’t afford an unexpected $400 expense without borrowing. The average cost to repair major systems and appliances is usually higher than $400, and replacements can range from $600 to $6,400. Home warranties can reduce the costs of unexpected breakdowns dramatically.
Finally, a home warranty gives you a single point of contact for when a covered system or appliance breaks down. With a 2-10 HBW home warranty, a solution for your covered system/appliance break down is just a quick call or click away.
2-10 HBW offers the most comprehensive home warranty coverage for homeowners. Let us help you protect your home.