So, what exactly is a home warranty?
A home warranty is a service agreement that provides financial compensation for mechanical failures that result from routine use of your home and the items in your home (HVAC, Dishwasher, Water heater, Etc). Typically, home warranties range in price depending on the amount of coverage desired. The most affordable plan is generally around $600 and can be as much as around $1,300 for a year and is renewable. Here is an example of a Home Protection Plan.
New construction home warranties are available to homeowners as well. After the first year, the builder’s warranty is expired, and the homeowner becomes 100% responsible for the wear and tear of a home. In the past couple years, homeowners have been working from home. Homeowners now spend more time opening the refrigerator, utilizing the stove, using their plumbing and heating items up in the microwave. Being home more often even causes homeowners to adjust their comfortable temp levels with their heating and cooling systems more than before. – all of which utilize electricity or gas and wears out the units faster. These are all items that fall under a home warranty plan!
Using Home Warranty is easy
Let’s talk about a realistic scenario. Bob moves into his 2010 single family home. After 3 weeks of living in his home without any problems, he witnesses water in his drip pan from his water heater for the first time. Bob connects with Home Warranty to start the claim process. The technician arrives and says he needs to replace the water heater. We cover the failed part (water heater) + labor at fair market value and a homeowner pays $100.00 instead of the total bill of $995.00. That’s $895.00 worth of savings!
I often compare a home to the human body. The skeletal bone frame is framework of a home to give it shape and size. The veins and arteries function as the water supply pipes, the electrical is the brain telling to connect light and power to generate the other components. The ductwork is the lungs of a body while the HVAC system reflects our sweat glands. The door is the mouth and the appliances process as our organs. All are important the human body as are the components in a home to keep it habitable.
When we reflect our mindset to that comparison, we realize how important it is to protect our budget when items fail because they are unpredictable, unavoidable, and present unknown costs until the diagnosis is received. When you provide yourself a home warranty you are giving yourself many advantages:
- Peace of mind
- Budget protection
- Time Savings
Working with a professional will make or break a homeowner experience. A professional homebuyer, real estate agent/investor and full-time Home Warranty district representative will help provide the options necessary for a homeowner to feel comfortable with their choices based on their specific property and the education received.
Reach out your real estate professional to get connected with special offers, discounts, etc.
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For more real estate articles like this, visit our main blog page.
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Sharing a rental property with your tenants
Things you need to know before buying your first investment property
Selling your house as a “rent-to-own”
Great article! I think the main issue is finding a reliable home warranty company. Some deny every claim that you bring to them.
Most companies will have client review to look up (company page, google or Bing listing). Better Business Bureau is one source, though not many people use BBB as a critique board.