Residential Home Warranties

Home warranties are a wonderful safety net to have when buying a resale home. Regardless of whether one is a first time homebuyer or not, one pours a lot of money into the purchase of a home. With such a major investment, it is always nice to know that there is recourse for the homeowner in the event a major appliance fails to function.

The cost and coverage of warranties can vary depending on the company one chooses to go with, and there is often additional coverage available in addition to the “basic” coverage offered by these companies. In Texas, the option for residential service contracts is available in the “1-4 Family Residential Contract” (Resale Texas Association of REALTORS® 1601). The paragraph in the contract states that the buyer “may purchase a residential service contract from a residential service company licensed by TREC (Texas Real Estate Commission)… seller shall reimburse buyer at closing for the cost…” up to maximum amount as stated in the contract (Resale Texas Association of REALTORS® 1601).

There is no requirement for a seller to provide this coverage for a buyer, but it is the most cost effective way to show good faith in a home for a new buyer and avoid potential litigation. This is also a great way to avoid issues that can arise from a water heater that suddenly breaks after the new homeowner moves in. This is not to say that the seller knew something was wrong with the water heater, but it is an action of good faith, that, in the event of an issue with a major appliance, the new homeowner doesn’t have to bear a large expense.

Most home warranty companies have a small deductable per service call to come out and either fix or repair the item. The warranty is typically for one year’s coverage from the date of closing and can be renewed by the new homeowner at their cost.

If you have just put your home on the market, you may wish to consider adding a home warranty plan to cover the home you have for sale. This makes your home more marketable since you are offering the warranty, and in the event of the need for a repair, you will also be covered.

One doesn’t have to be a seller or a buyer to buy the residential warranty coverage; in fact, many home owners with older homes buy this coverage to protect themselves from large costly repairs of older appliances. It is even a good idea to have a residential home warranty if you purchased a new home and your builder, electrical, or mechanical warranties have expired. It would be one’s luck that an air-condition unit breaks at the end of a manufactures’ warranty.

Read the coverage available in the warranty you are thinking of buying, especially the fine print which may have exclusions to coverage, such as the cost of replacement of older air condition units that may need to be installed to the new construction code. Take care of your home; it’s one of the largest investments one can make.

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