Kari McCoy's Real Estate Articles
IS A HOME WARRANTY REALLY NEEDED?
When selling or purchasing a home, questions about the home warranty contracts usually pop up. The most common question most homebuyers ask, “Is the coverage really worth the money?”
Most buyers and sellers agree that purchasing a home warranty is a cost-effective expense. More warrants contracts are now sold nationwide than ever before. Homebuyers felt it is a good security blanket, giving them peace of mind. Sellers realize it’s an effective marketing tool that can make a home more attractive when it is time to resell.
Nationally from 35 to 50 percent of home sales now include warranty coverage according to Art Chartrand, regulatory counsel of the recently formed National Home Service Contract (warranty) Association. No definitive study has yet been made to determine the precise percentage. The average fee for a one-year coverage contract is about $350, he said.
Basic home warranty contracts normally cover breakdowns in a home’s mechanical systems and appliances – problems caused by normal wear and tear. The fee is a one time charge paid at the time the sale is closed. The initial coverage is usually for one year after a sale transaction closing, but the active period can be extended for an additional fee. There is a modest and additional charge for each service call. When shopping for a home warranty, it is important to pay close attention to the warranty contract fine print. There are differences offered by the individual warranty companies and the buyers and sellers should consider precisely what is covered and what is not covered.
The number of sold warranty contracts is up in all regions of the country, but the greatest number of statewide sales is in California. Here, nearly 90 percent of existing resale homes includes warranty coverage. Homeowners with this coverage received about $127 million in repairs and replacements during the past year, according to data released by the Home Warranty Association of California.
Kari McCoy is a resident of El Dorado Hills, and owns the Kari McCoy Group, residential real estate of Coldwell Banker. Call her at 933-kari, email her at sold@KariMcCoygroup.com or visit her website at www.TheRealKariMcCoy.com
Copyright© 2010 Kari McCoy