Last Updated on October 2, 2020 by HortonTeam
One of the most common questions we hear is whether or not a seller or someone looking for Newburgh and Evansville homes for sale should purchase a home warranty for the home. To help you decide which route to go, the Horton Team has prepared some information that may help make your decision easier.
What is a Home Warranty?
A home warranty is a protection plan that covers major systems and appliances in your home that may malfunction or break due to normal wear and tear. A home warranty protects the homeowner from costly repairs to items like air conditioning and heating units, plumbing, electrical wiring, hot water heaters, refrigerators, and more. If you experience an issue with one of these systems, the home warranty provider will generally send out a licensed contractor or employee of their choosing to assess and fix the issue. A small service fee or deductible is usually charged for each visit.
What are the Benefits of a Home Warranty?
A home warranty can be a great tool for buyers. Peace of mind is hard to come by, but with a home warranty you can rest knowing most of your appliances will be covered if they decide to stop working. Using this protective service will also save you money in the long run. According to America’s Preferred Home Warranty, Inc. (APHW), the average homeowner spends more than $900 per year on home repairs. With a warranty in place, you’ll still pay service fees or a deductible, but it will be much less than the cost of repairing or buying a new appliance. There are usually different plans to choose from, but the life of the warranty can last as long as the buyer is willing to pay for it.
Sellers may think they can’t reap the benefits of a home warranty, but they’re wrong. A home warranty generally travels with the home, so a seller equipped with a home warranty will definitely catch the interest of potential buyers. According to the Service Contract Industry Council (SCIC)’s recent observation of national home sales prices, homes sold with a protection plan included with the sale spent an average of eleven days fewer on the market than those sold without a protection plan in place. The findings also revealed that homes with a warranty sold for around $2,300 more when equipped with a home warranty. Since it’s relatively easy to transfer the warranty to new homeowners, potential buyers will see your included warranty as a huge plus.
What are the Downsides of a Home Warranty?
Although there are many benefits of purchasing a home warranty, there are still some risks involved for the buyer. For instance, not all homes are covered by home warranties, so it’s important to check with a provider before purchasing one. There’s also no guarantee that an appliance or system will be replaced rather than repaired. In some situations, a buyer may have an appliance that is severely outdated, and the provider may decide to repair the old system instead of replacing it altogether. It’s also standard practice for the provider to choose their own contractors, meaning the homeowner must wait for the provider to select a contractor and time for the repairs to take place. Along with these issues, a warranty may also have a coverage limit and leave the buyer vulnerable to out-of-pocket expenses.
There really aren’t any major disadvantages of purchasing a home warranty as a seller. The initial cost is probably relatively low to the price of your home for sale, and usually homes with a warranty included will more than make up that cost. The one thing to consider is if there are any other areas of your home where that money would be better spent. If you need to repair or replace any significant items or attractions of your home, it would probably be more worthwhile to spend your money in that area and avoid the added home warranty.
Should I Get a Home Warranty?
As we said before, it’s ultimately up to the buyer or seller to weigh the advantages and disadvantages of purchasing a home warranty. There is a possibility that you’ll buy a home and not experience any appliance or system malfunctions, just like there’s a chance you’ll be able to quickly sell a home without a home warranty attached to it. However, it’s important to study the cost of such protection plans and compare them with the costs associated with repairing or replacing equipment on your own as well as the costs associated with selling your home.
What Do You Recommend?
Like most forms of insurance, a home warranty can be a blessing when it comes into play. However, there are many consumers who pay for warranties without ever really using them. The Horton Team doesn’t require any of our buyers or sellers to purchase a home warranty, mostly because doing so is gambling on the chance of your appliances or systems failing. We often suggest buyers and sellers put their money to better use on something that will make selling their home easier, such as installing a new roof or applying paint to the bedroom walls.
However, when our buyers or sellers want to purchase a home warranty, we always recommend America’s Preferred Home Warranty (APHW). APHW has two major benefits over competitors: a lower price and the ability of the homeowner to select their own contractors. This second benefit is rare across the industry, so buyers and sellers are always happy to hear they can find their own contractors. We recommend APHW so that buyers and sellers can receive a great protection service for less money while still being able to interact, plan, and schedule a contractor of their own choosing for repairs or replacements.
Do you prefer to have a home warranty? Get in touch with the Horton Team if you’d like to discuss home warranties further or need help getting in contact with a home warranty provider.