I finally found an article I liked on Home Warranties:
http://www.bankrate.com/brm/news/real-estate/20060201a1.asp
A Home Warranty is basically an extended warranty on your home when either buying or selling for the electical and mechnanical components of the house (furnace, hot water heater, dishwasher, air conditioning, etc).
A few things you should know:
1. A Home warranty has a deductible and doesn’t cover everything. You cannot use your home warranty to rehab your home:) The warranty typically does not cover items caused by negligence. I recommend that my clients call the customer service number and give the reps specific scenarios to find out what is covered and what isn’t. Most importantly, read over the contract.
Here are two companies to start out with:
2.. Real Estate agents get a small (usually about $50 tops) commission on selling them. I cannot think of many agents that would recommend a warranty just for this reason, but I am sure there are some out there. If you are a real estate agent selling a warranty because of a commission, you should be ashamed of yourself.
A listing agent will typically recommend paying for a home warranty as a selling point. This is not a bad idea if your home is older. They are inexpensive and statistics prove that homes with home warranties sell faster.
3. It’s insurance really. That is what you are buying. Usually after you buy your first house money is tight, so having an extra security blanket can really help. Ask yourself if you can afford the repairs if “x” broke. If you can’t, you should seriously consider a home warranty. On the flip side, if you are buying a newer or recently upgraded home you can probably skip the home warranty.
4. You can buy a warranty before settlement or even after settlement. Did you settle on your house and realize you probably should have given that warranty some more thought? It’s not too late.
5. How long is my warranty good for? Warranties are renewable and are usually good for one-year initially. This one year starts at your settlement date and extends one year out.
Need more information? Feel free to email me at Darryl@PlayBaltimore.com
