Home Warranty Sales Up

August 12, 2008

Sales of home warranty contracts (sometimes called home service contracts) are on the increase, despite their rising cost. These contracts offer homeowners some protection against unexpected, costly repair and service bills, usually during their first year of ownership of their home. Generally, the plans cover the property’s operating systems (electrical, plumbing, heating, etc.) and appliances - breakdowns caused by normal wear-and-tear. The coverage is paid by one up-front fee, plus a service fee for each contractor visit.

A key reason for the current upswing in warranty sales is that the protection makes a home more salable, and today’s home sellers and Realtors need all the help they can muster. A listed home that offers a year of warranty coverage has added appeal to prospective buyers. It provides peace of mind during for the buyer during their transition period. The fee is usually paid by the home seller, sometimes shared with their Realtor.

Another reason for increased warranty sales: After paying all the other costs of acquiring a home, the last thing the buyer wants is to pay out big bucks for breakdowns in the home’s systems or appliances soon after moving in. In some cases, the buyers pay the fee themselves for a year of warranty protection. The initial fee (or one-time premium) normally ranges from $300 to $500. Each in-home service fee typically ranges from $50 to $100.

It’s important to shop around for the best warranty plan for meeting your needs. Different plans vary in items covered, and in price. Ask for references from your Realtor or friends and relatives who have purchased a warranty plan in the past. Also, study the contract wordage in any plan being considered. Ask the providing firm’s representative about any provision you don’t fully understand. And be sure to retain all maintenance reports and receipts.

Posted in Real Estate, Things of Interest