The housing market recovery has boosted sales of home warranties for resale properties, but buyers and sellers should weigh the pros and cons of these plans.
The Service Contract Industry Council says the policies give sellers a competitive edge and can increase the sales price, attracting buyers worried about the costs of unanticipated repairs. However, some experts believe that unless the house is a fixer-upper, there is no need to spend $400 to $500 per year on these warranties; instead, they recommend placing that money in an interest-bearing, home-maintenance savings account.
Moreover, home warranties do not cover pre-existing conditions or components that were improperly installed; and homeowners are at the mercy of the warranty company as to what is covered and whether an item will be repaired or replaced. According to Consumer Reports, warranty companies contract with local service companies, so homeowners may not be reimbursed if they need emergency service and a designated service company does not provide it. Experts add that warranties generally are unnecessary if the home’s major appliances are new and still under warranty; but if buyers do opt for a home warranty, they should understand what is covered and their responsibilities beforehand.
Source: “Home Warranties Useful for Some, Not All,” Realty Times