A home warranty is an insurance policy that covers a variety of mechanical, electrical, and plumbing items, as well as some appliances, inside the home. Coverage is also available for more expensive systems such as air conditioners, refrigerators, pools, and spas. For a moderate premium (usually in the $400 range for a basic policy) payable at closing, you can acquire a policy which protects your home for one full year after closing. You will covered for major repair or replacement bills.
Most policies have a $50 to $100 deductible, and you usually must call through their people for repairs. The age of the home should be a consideration as to purchase a warranty or not - a 15 year old home with original equipment versus a two-year-old home. Several companies offer these policies.
You may purchase a home warranty policy prior to selling to protect against repairs needed during the listing period, and the buyer may be able to assume the policy at the close of escrow.
A home warranty policy may provide these benefits:
v Increase the marketability of your home by reassuring potential buyers.
v Help sell your home faster and at a higher price
v Ward off potential disputes after the sale for repair and/or replacement of covered items.
v Most home warranty policies can be paid for at the close of escrow. A copy of the invoice is presented to the title company and it becomes part of the seller’s closing costs.