What is a home warranty and why do you need one. : Rooftop Views

Rooftop Views

What is a home warranty and why do you need one.

In these days of Sellers just about breaking even or having to bring money to the table, few have the extra funds to fix up their property for sale. Some are having to void the contract because they just can't do anything about the inspection items the buyer wants to have repaired or replaced. In Denver, it is a negotiation between Buyer and Seller as to what, if anything, gets fixed. But the Buyer can walk if there is no agreement on inspection items.

Enter the home warranty. This is basically an insurance policy with a term of 12-13 months. It protects the Buyer in case any of the main components of the home - the furnace, hot water heater or appliances - need repair or replacement during the life of the warranty. If purchased at the time of listing, the protection applies while the Seller still owns the home until it closes.

We recently went on an inspection where the Buyer we represented was very concerned about the age and condition of both the furnace and the hot water heater. She asked that both be replaced. The Seller just did not have the funds to comply. The solution for everyone was a home warranty policy provided by the Seller to the Buyer. So if the furnace or hot water heater should fail during the next year, the warranty company will replace them. We also agreed that the Seller would have these items cleaned and certified - which would also have been a requirement of the warranty company. The Buyer thought this was a good compromise and we are continuing the transaction.

There is one caveat. We have had warranty policies in the past where the appliances were replaced with like appliances. So when the 1980's era refrigerator finally died, the warranty company wanted to replace it with another 1980's era refrigerator. It took much discussion with the warranty company before they decided the thing to do was replace it with a new refrigerator.

The cost of the home warranty varies by company but typically runs between $275 and $350 in the Denver area. We think it's money well spent by the Seller and represents real peace of mind for the Buyer.