While buying a home remains one of the biggest investments a person will make in his or her life, there’s always a lingering fear that something may go wrong soon after the purchase. Though home inspections may catch most of these problems before they occur, what happens if a major system or appliance goes haywire shortly after closing? This is where home warranties come into play. With a home warranty in place, buyers, sellers and the agents involved can rest assured that if there’s a mechanical failure of a major system, the system will have potential coverage under the warranty contract. And who wouldn’t want a home warranty as a safety net, alleviating potential stress and making sure the new home is ready for new, positive memories?
A home warranty helps to reduce the buyer’s exposure to possible unknown expenses and this is important especially for first-time buyers who often stretch to provide the down payment and closing costs necessary to purchase their home. In circumstances such as these, limiting and reducing the risk of unforeseen future expenses is important.
Generally referred to as Residential Service Contracts but what exactly are they? And why the name change?
When a pre-owned (existing) home is bought & sold in Columbus, Ohio, a Home Warranty or Residential Service Contract is often put in place. These policies generally cover household systems for one year from the date of home sale. The coverage varies from appliances (dishwasher, hot water heater, A/C, etc.) to plumbing stoppages, leaky roofs and more. The extent of the coverage, and quality of service, varies greatly among the various service providers and the particulars of the policy you choose.
So why the name change? Many felt that Home Warranty implied that everything was covered (like a new car or new home warranty). In fact, items that are deemed to have been improperly cared for or maintained are frequently not covered. An important note: This determination is often left up to the provider. This is why the name changed to Residential Service Contract and why some providers are now offering No Fault coverage (coverage includes items which have been improperly maintained as well as those with previously unknown issues). Of course, such coverage is usually an upgrade or add-on to the basic coverage. Ultimately, a good real estate agent should be familiar with a number of service providers and more importantly those which offer the best coverage and service. An example of a company offering Residential Service Contracts (or RSCs) is www.hwahomewarranty.com.
So who pays for this coverage, what does it cost, and who does it cover?
Sometimes this coverage is paid for by the Buyers, more often the Sellers provide at least basic coverage. The price for a RSC (basic coverage) usually runs between $300 and $600. Of course, this can vary widely especially once you start adding on optional coverages (like for a pool or spa, HVAC or washer/dryer, etc.). While many warranties only cover the home AFTER the sale, some providers, including HWA provide free Seller coverage that protection during the listing period. Why would a Seller even consider paying for it? Well imagine that your home has been sold, and that the dishwasher breaks a week later. Not your problem, right? After all, you sold the home. Be careful, the Buyer may try to make a case that you knew about the faulty dishwasher and didn’t tell them. Guess what’s coming next? You guessed it, they want YOU to pay for the repair and suggest the issue was a pre-existing condition that you were aware of and failed to disclose. While you might win in a court of law, wouldn’t it be great if it never came to that? With a RSC in place, more often than not, the Buyers tend to call the provider, pay a small Trade Call or Service Call fee (generally $50-$100) and get the dishwasher fixed without ever bugging the Seller. Ultimately, you can see that the coverage of a Residential Service Contract can help protect both parties. Also, some companies offer coverage that includes a gas line warranty. covers the home while it is listed for sale.
If you, or someone you know is considering Buying or Selling a Home in Columbus, Ohio please contact The Opland Group. We offer professional real estate advice and look forward to helping you achieve your real estate goals!
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