The Home Warrantee
(When you make a significant purchase of any kind, it is accompanied with a warrantee.) While it definitely has a purpose and function, the warrantee makes the buyer or seller of the product feel safe and secure. Most people would never buy a used vehicle without a warranty because without it, the vehicle could be damaged and repairs would become out-of-pocket expenses.
The same can be said with a home warranty. The article, "Facts About Home Warranties" written by Janet Wickell and posted on homebuying.about.com, explains how the home warranty is most beneficial for buyers and sellers when they know exactly what it protects and performs.
"Home warranties cover repair and replacement costs when appliances and other systems in your home quit working properly. A home warranty can be purchased by either a home buyer or seller, and they are often paid for at closing when they are part of a sales contract."
While most homes come with a warranty, they are not legally required. If your new or pre-existing home does have a warranty, you should buy one; they usually range from about $350 to $450.
The first thing you should know about home warranties is that they are not hazard insurance. A warranty replaces items that fail to work properly on their own without any influences, while hazard insurance covers items damaged by wind, fire and flood water.
Like every document in the world, a home warranty will be different for each property although the basic coverage should be universal.
"Many standard home warranties pay repair or replacement costs for plumbing systems, appliances and the heating and cooling units."
"Warranty coverage for a private well, septic system and other items can often be purchased by paying an additional fee when you purchase the policy."
You will also want to check to see if your roof is covered by your warrantee since it is most commonly damaged by wind and rain.
"A typical home warranty policy is effective for one year with an option to renew coverage upon expiration. The renewal cost might be higher than the fee paid for the initial policy."
Home warranties are beneficial for both home buyers and sellers. The warrantee provides the buyer a sense of security especially after paying the numerous taxes and fees during the closing. The buyer now knows that with the exception of replacing the refrigerator, major damages should be financially covered by the warrantee.
On the other hand, a warrantee provides the seller some marketability. Telling a potential buyer that you have a warranty included in the house basically says, "If things break, you don't have to pay for them."
"There are no rules that state who must pay for a home warranty. A seller can offer it as part of a marketing package. A buyer can purchase it or ask the seller to pay for the policy. Both parties can agree to share in the cost at closing."
The warrantee is an essential piece included in the emotional process of buying a home. The buyer's primary fear when buying a home is that they spent all their money on a "lemon" of a house. The warrantee protects them from this occurring.