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| Home Warranty Considerations |
When considering the purchase of an older home, consideration
should be given to the overall condition and age of the
structure, roof, heating & cooling systems, plumbing, electrical
systems and appliances. Costly repairs or replacement of
expensive systems may loom on the horizon and become budget
busters.
To help alleviate some of the non-structural concerns many
sellers and/or real estate agents will provide a home warranty
as part of the sale price for a home. Warranties are offered by
a number of companies and typically cover the first 12 months
following the closing date and are usually renewable. Annual
costs for home warranties vary by company but many range from
$350 to $450.
Before going forward with a sales and purchase agreement to
purchase a home being offered with a home warranty, be aware of
exactly what components the warranty covers, the exclusions and
the terms and conditions of the warranty contract. Most
non-builder home warranties will come with a deductible for any
service call. Deductibles vary by company but most will range
from $50 to $85. Some appliances such as washers and dryers, |
hot
tubs and others may be excluded and can be added for an
additional annual cost. Obtain a sample copy of the warranty
contract and read it. Don't rely on the company sales brochure
or oral representations being made by the owner or real estate
agent.
Considerations:
1. Who will provide the actual service? Most home
warranty companies sub-contract the repair work to various local
service providers but the warranty company will choose what firm
will come to your home.
2. Who determines whether a component is repaired or
replaced? Generally speaking, the service provider will be
working with the warranty company's guidelines. For low cost
items like garbage disposals and other difficult to service
items, replacement is typical on the initial service call. For
more costly items, repairs will typically be attempted and
replacement made only as a last resort.
3. For replacement parts, will new parts be used or are
used parts allowed? Many home warranty companies have a contract
provision that permits used replacement |
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parts.
4. For replacement systems, will the replacement be made
with the same model and manufacturer? Home warranty companies
may have a provision to replace with similar capacity components
but not the same model or manufacturer.
5. For major component replacement, what is the home
warranty process for approval? Most home warranty companies will
have a rigorous process prior to approving major component
replacement. Depending on the component, the determination may
be made the same day or may take much longer. Replacement
systems may be provided by the home warranty company and not the
service provider causing delays in replacement.
6. Can the home warranty company deny approval for
replacement systems? Most home warranty companies will have
contract provisions requiring normal homeowner and/or service
company maintenance for certain systems. Central air
conditioning systems for example, if determined to be dirty due
to homeowner negligence may not be covered or the home warranty
company may offer to provide a reduced amount to be used against
the cost of the replacement. Or |
the home warranty company may
determine that the particular system installed in your home to
be undersized for the house and deny coverage beyond a reduced
offer to partially cover a replacement.
Once the extent of coverage is understood for the home warranty
being offered a more informed decision can be made on next
steps. Negotiating the repair or replacement of questionable
appliances and/or systems with the seller prior to closing may
be advisable. In lieu of repair or replacement, a reduction in
offering price to reflect the risk may be prudent. Consider
asking the seller or real estate agent to upgrade the home
warranty being offered to include more covered
appliances/systems and to provide a warranty with a lower per
call deductible.
About the author:
Carol Lorenc & Richard Lorenc (http://www.homeinstaugustine.com)
sell condos and single-family homes for Watson Realty Corp., and
live in St. Augustine. The Lorenc's have lived and worked around
the world in Asia, Europe and Latin America and specialize in
working with foreign real estate buyers.
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