The home warranty
has at some points been a bit confusing for buyers. They wonder what it is and
what does it cover? How is it different from homeowner's insurance? Some feel
the home warranty may be a waste of money and others end up using it right away
and were thrilled they got one. Essentially, it is similar to an auto warranty
you get with your new car. The policy will cover some items that break in your
home, but not others. Deductibles generally apply.
The Real Estate
Purchase Contract has a spot right in the contract that spells out whether you
wish to have a home warranty as part of your closing package. The Home Warranty
section in the Utah approved Real Estate Purchase Contract is section 10.1.
Most agents
representing a buyer will recommend asking for a policy to be bought for the
buyers and paid for by the sellers. As a buyer’s agent, I have not always
recommended this to be the case. If the buyer wants to get aggressive for any
reason and place the best offer forward (especially in a bid war), they may not
ask for a home warranty. Each situation is different.
I would recommend
that you ask your agent to give you a few reputable companies to review. Get a
copy of their policy and see what items they cover, what their deductable is,
and how long the policy will last. Most policies last a year from date of
purchase. The companies will generally send you a form to renew your policy at
the end of the year if you wish.
You can buy extra
coverage for certain items like hot tubs, pools, HVAC systems, etc. Make sure
you review the policy against the home you are buying to get the most efficient
coverage possible.
Next post –
Flood zones and flood insurance
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