Home Warranty and its Benefits
A home warranty is a contractual agreement provided to an owner of a house by home builders, realtors, risk management groups etc. The home warranty industry was founded in the year 1971 by American Home Shield. Home warranty is not a warranty at all but rather a home service contract provided by home builders to protect owners home and their interest. It actually covers repairs, replacements of home, appliances and other major systems.
Whether you are buying or selling, a home warranty is a great investment that provides many benefits. In fact, a warranty on your home can act as a safety net, protecting you from unexpected repairs on certain aspects of your home. These warranties can be purchased when you buy your home as well as anytime afterward. Keep in mind, however, that not every problem that occurs will be covered under the warranty. Despite this possible downside, there are several reasons why buyers, sellers and real estate professionals should learn more about warranties for homes.
Homeowners Insurance versus Warranty
A warranty is not the same thing as homeowners insurance and it should never be used as a replacement. Homeowners insurance covers major pitfalls including fires, failing objects and theft. A warranty, however, only covers certain components of your house. The warranty is a signed contract between you the homeowner and a warranty company. The warranty company provides discounted replacement and repair services on major components of your home such as plumbing, electrical, furnace and air conditioning. The warranty may also cover refrigerators, washers, dryers, dishwashers, ceiling fans, garbage disposals and swimming pools.
Benefits for Home Buyers and Current Owners
Having a warranty for your home provides many benefits to current homeowners as well as homebuyers. Simply knowing that your home is protected against expensive and unexpected replacement or repair costs provides you with peace of mind. This also means your budget is protected if a costly repair is required for your home. If a repair or replacement is needed, simply contact the company that holds the warranty and they have a qualified service technician in your area contact you.
Benefits for Home Sellers
According to a Gallup Poll, eight out of ten home buyers prefer homes that are covered by a warranty. This gives your home the competitive edge over others in the market, which results in a faster sale. It also attracts quality offers from serious buyers. Once you have sold and moved out of the home, the warranty gives you protection that any repair problems with be covered.
Benefits for Real Estate Professionals
Selling homes with warranties helps real estate professionals build a strong reputation. It reassures potential clients that you’re honest and fair. It also helps you sell the homes faster at top market value and decreases the possibility of after-sale disputes. Once the transaction has ended, you are left with satisfied clients that are more than happy to refer you to their family and friends.
Note for Home Builders
The New home warranty and builders’ Registration Act was enacted in the year 1977 to provide a scope for the warranty of a new home and standards for construction, quality of the structural elements and components of new homes. Basically this law requires a builder to register with the state of his residence before he can start construction of any new home and also before offering a warranty on any new home bought or sold in the state. The rules and regulations provide a limited ten year warranty coverage against material defects, workmanship and systems in a new home. The builder must be responsible for the house warranty for the house which he builds.
The registration process includes all builders of owner occupied new homes, including single family, townhouse, duplex, co-operative, factory built and other types to register with the home warranty program. A builder is anyone who is involved in constructing homes for business. Each home building business is required to register separately. The name of the company which is transferring title to the new home is the entity which must register and avail warranty.
Registration must be renewed every two years. Renewal requirements are the same for new registrations. A nonrefundable fee of 200 USD must be paid along with the registration application. A builder’s registration can be revoked or denied for fraud if it’s found out to be a fraud or a misrepresentation.
During the first year of a new home’s warranty, warranty covers to defective systems, materials and other appliances. From the commencement date of warranty up to 2 years from that date the mechanical, plumbing, electrical and other major structural defects are covered. The builder is responsible for the warranty coverage during the first 2 years. During the 3rd to 10th years of coverage only major structural defects are covered.