Buying a home is an expensive undertaking, and it is getting more expensive every day.

With such a large investment, care and maintenance must be the top priority. One way to ensure that your systems and devices are protected is to purchase a home warranty. But how do you know if it's the right choice for you?

What is a home guarantee?

Household insurance is not synonymous with household insurance and does not replace it. Household contents insurance usually covers the structure and belongings of your home in the event of a fire, storm, flood or other accidents. A home warranty, on the other hand, is a service contract that covers repairs and replacements due to normal wear and tear on your home systems.

"Both protect your investment, but offer different types of protection," said Ray Stark, area sales manager for West Michigan with America's Preferred Home Warranty. "We use the acronym PEACH – sanitary, electrical, household appliances, central air and heat for a general explanation of the guarantee services at home."

What are the benefits for buyers?

A warranty can provide reassurance to buyers, especially first-time buyers who may spend most of their savings on buying a home. If your water heater breaks down shortly after you move in and you don't have a solid emergency fund, you can look forward to the extra protection.

While a home inspection should alert you to potential problems with your new home's systems and components, it is not a guarantee that something won't break in the future. And Stark says that one should keep in mind that new homeowners are likely to put different stresses on the home's systems.

"If the previous owners were empty nests and the new owners are a family of five, the home will be used differently and the systems will be pushed much more than before," he said. "Statistically speaking, 70 percent of new buyers will experience some kind of mechanical failure within the first year due to increased wear and tear."

What are the benefits for sellers?

REALTOR® Terry Frewen, Broker / Owner of Coldwell Banker Frewen Realty, says guarantees are a great marketing tool for sellers and a popular incentive in many real estate transactions.

"When a seller offers a guarantee, it sends the message that they are behind their house," he said. "Offering a warranty can increase buyer confidence, help a home sell faster – sometimes for more money – and it can prevent buyer requests to replace aging systems."

When a seller purchases a guarantee, it typically covers the property during the listing period and then transfers to the buyer for one year from the closing date of the sale.

"I bought a guarantee when I sold my last property and the dishwasher stopped working while it was on the market," said Frewen. "It would cost more to repair than replace it, so I made a quote, the warranty company sent a check for a new dishwasher, and I was able to replace it myself. The last thing a seller wants to worry about is unexpected repair costs. So when you buy a guarantee, both parties have this security. "

What else should I watch out for?

While a home warranty can offer many benefits, it doesn't mean you never have to pay for repairs or replacements. Some problems are not covered by your warranty … either because the item was not included in the contract or because the fault was not due to normal wear and tear.

If consumers are dissatisfied with their warranty experience, it is usually because they felt that certain items were covered. Most home warranty companies do a good job of detailing exactly what is included, so it's important that homeowners thoroughly review their warranty contract, read the terms, and ask questions.

Also, be sure to do your due diligence when choosing a home guarantee company. Ask about the service experience. Do you need to use your preferred contractor? How long do the providers have to contact you? How will the scheduling work?

"When a system fails, some companies require you to use their network of contractors, but we give homeowners a choice of who to use as long as that person is a licensed contractor," said Stark. "Most homeowners prefer this because it allows them to get an unbiased opinion from third parties."

According to the National Home Service Contract Association (NHSCA), two-thirds of home warranties sold in the United States are purchased in connection with a home purchase. However, regardless of the age of your home, you can always purchase a policy directly from a home guarantee company.

Buyers and sellers should speak to their REALTOR® for more information. Current homeowners can find a list of local home warranty providers by visiting the Greater Lansing Association of REALTOR® website at http://www.lansing-realestate.com.

source https://seapointrealtors.com/2021/07/27/what-to-know-about-buying-a-home-warranty/

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