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Have you ever seen a for sale sign with a “home warranty protection plan included” rider? If so, you may wonder what a home warranty is and whether it’s worth it.
There often needs to be clarity surrounding a home warranty and how it works. A home warranty protection plan is a service contract rather than an insurance policy. Standard home warranties typically cover some or all of a home’s major systems, such as electrical, plumbing, heating, and air conditioning. However, coverage of home appliances and other components will vary depending on the company from which you purchase the warranty.
It’s not uncommon for sellers to offer a home warranty when they list their Pittsburgh home for sale, as these warranties have become a popular inclusion in property sales. However, if a seller refuses to include a home warranty with the sale, buyers can purchase one themselves within a certain time frame after closing.
Home warranty protection plans are not just for newly purchased homes; existing homeowners can also purchase them.
What is the difference between a home warranty protection plan and a homeowner’s insurance policy?
Homeowner’s insurance typically covers your home and personal belongings from significant dangers like fires, storms, and theft. It also covers liability for injuries of people who do not reside in your home if something happens while they’re on your property. In contrast, a home warranty provides reduced rates for repairs or replacements of the systems and appliances defined in the policy coverage.
In this previous blog post, you can learn more about homeowner’s insurance. Although mortgage lenders require home insurance, a home warranty is optional.
How does a home warranty work?
There are benefits to having a home warranty, but it’s essential to understand how it works. Contacting the warranty company is required before calling a service provider. The warranty company will approve the repair and provide the service technician’s contact information. The homeowner pays a predetermined service fee.
Coverage varies by company, so you must thoroughly evaluate what is covered and what is not before deciding whether it’s the right home warranty protection plan. Consider looking at several different warranty companies before deciding.
There are several reasons why a seller might want to purchase a home warranty when they list their Pittsburgh home for sale:
- They will receive limited coverage during the listing period.
- The seller is responsible for maintaining the property in its current condition until closing.
- The service fee may be their only expense if a covered item needs repairing before closing.
- A home warranty can incentivize a buyer, who will likely ask for one in their offer.
Buyers also have several reasons why they want to have a home warranty protection plan included in their home purchase:
- It provides buyers peace of mind that unexpected qualified repair costs are limited to the service fee.
- After paying closing costs, they may have to restore their savings before they can begin home repairs.
- They can access vetted service providers with one call if they are new to an area.
- Depending on their DIY experience, they may be unable to do the repairs themselves.
According to SoFi Learn, the average costs to repair are:
- Electrical – $141 – $419 for minor repairs, $2,000 – $6,000 for full electrical wiring
- Roof Repair – $300 – $2,000 for partial repair
- HVAC – up to $577 for A/C repair, $5,000 – $12,500 for replacement
An average home warranty costs between $300 – $800. One significant repair can cover the cost of the warranty.
Evaluating your needs, comparing various plans, and understanding the coverage before purchasing a home warranty protection plan is crucial. Then, with the right coverage in place, you can protect your Pittsburgh home and save on unexpected repairs during the coverage period.
With over 19 years of experience in the Pittsburgh real estate market, I can help you through the home-buying or selling process. Contact me by phone at 412-848-3907 or email Kim.Esposito1@pittsburghmoves.com to schedule a free consultation to discuss your real estate needs.
