Home Warranties

It's pretty much unavoidable; appliances will break down at some point. If you're buying a home and you don't want to pay for costly repairs, you should invest in a home warranty plan. But as a homeowner, do you need to have a plan when trying to sell you home?

Home warranties are commensurate to insurance policies. You pay for them upfront, and when (or if) you need them, they're in place to bail you out financially. A home maintenance plan is ideal for people that aren't particularly handy around the house or those who don't have the money to shell out for costly repairs (or have it but simply don't want to). They usually cover appliances and systems installed in the house that are subject to a manufacturer's warranty. The owner of the home pays a small fee to the service professional that comes to fix the problem, but the rest of the cost is taken care of by the warranty company, up to the coverage amount of the plan.

Home buyers and sellers can negotiate to determine who actually pays for the home warranty. A warranty is not a requirement to sell your home; you do not absolutely need to have one in place when selling your property unless you simply want to ease the buyer's mind both during and after the sale. As such, it can be used as a bargaining chip. If a buyer is not quite offering what you want for the house, you can counter with an offer to pay for a year's contract with a warranty company in exchange for agreeing to a higher price.

Having a home warranty can be a real blessing for a new home owner. Unforeseen occurrences can happen at any time and you might not have $800 just lying around to buy a new part for the furnace or replace the refrigerator. Negotiating a home warranty as part of the sale ensures that the home appliances and systems will be covered from day one.

A good home warranty plan may cost around $400 a year, with upgrades costing a bit more. Plans generally do not cover outdoor items, including pools. If you're a seller and you offer to purchase a plan for your buyer, be sure that it covers refrigerators, electrical wiring and plumbing, and washers/dryers. These things are staples that people use constantly, but not all plans cover them. In good faith, provide the new owners with a suitable plan that will cover all of their needs. If you already have a home warranty, you can terminate it in favor of a better plan for the new owners. However, be sure to check with the home warranty company first to find out what you should do when a policy is already in force for a residence.

The decision is up to you whether or not to offer or provide a home warranty for your property or let the buyer choose their own plan. But, as a further enticement to buy, you can still offer to pay for the first year of coverage when they decide on a policy.