Advantage of a “Home Warranty”

Talking Points:

  • Some sellers wonder whether it is necessary to offer a home warranty, especially when inventory is low like it is currently.
  • The biggest advantage of a home warranty – which covers breakdowns in major systems – is that it is an incentive many buyers value, particularly if they are stretching to buy and don’t have a lot of money left over for repairs.
  • Home warranties have limitations. They don’t cover static elements like the roof or siding, but do cover operating systems that often fail, like major appliances including garbage disposals, electrical wiring, plumbing, and heating and air conditioning. Some companies allow the homeowner to add riders to cover extras like the mechanical elements of a pool system or hot tub.
  • Costs and exclusions vary widely, as do caps on what the warranty company will pay. Some companies also offer less coverage for systems that are near the end of their useful life. As in medical insurance, pre-existing conditions are usually exempted from coverage – and the warranty company makes the call as to whether the condition was pre-existing, as well as to whether the particular system should be replaced or just patched up.

Foreclosure Buyers: “Don’t be Tempted by Price Alone”

Buyers may be swayed by the big bargain prices that foreclosures often offer. But before they jump in, some housing experts say they need to be warned that it may not be as big of bargain as they believe. 

For example, often times, foreclosed homes are sold “as-is,” but if the homes have been left vacant for awhile it may have lots of maintenance and damage issues that might not make it such a great bargain after all. Housing experts recommend getting a home inspector to look at the property before submitting an offer—regardless of it being sold in “as-is” condition—so that buyers can know what they’re getting into and the potential price tag for any needed repairs. In our Sierra Foothills region of Placerville California, we also recommend buyers obtain a home warranty if possible.  

Buyers should also be aware that closing costs may be more expensive when buying a foreclosed property since banks will not absorb some of the costs.

Source: “Focusing on Foreclosures; Buyers Are Warned to do their Homework Before Closing a Deal,” Buffalo News (Nov. 27, 2011)