03 Aug Buying and Selling Homes in St. Louis: What Does a Home Warranty Cover?
If you’re looking at a home for sale in St. Louis (or anywhere, for that matter), you may have noticed in some listings the seller is offering a home warranty with the sale. Or maybe your agent has suggested that you ask for one in your purchase offer, or it’s part of the inspection negotiations. At this point, you might even be asking yourself,”What does a home warranty cover?”
Direct from the St. Louis real estate pros at Hermann London, here’s the real deal about home warranties for buyers and sellers:
What is a Home Warranty?
A home warranty can be valuable to buyers, as well as to a homeowner who has lived in their house for a while. It covers problems that arise in home systems that fall under the acronym PEACH: P – plumbing; E – electrical; A – appliances; C – cooling; and H – heating. There are extended coverage policies for items like pools and spas. For repairs to covered systems and appliances, the owner typically pays the cost of the service call (typically $60-75), and the warranty company covers the rest.
Some of the more common systems and appliances covered by a home warranty include:
- Electrical systems
- Sump pump
- Water heater
- Air conditioning unit
- Ceiling/exhaust fans
There can be variations between warranty companies and the coverage provided, however, so it’s a good idea to read the fine print and ask the provider questions before you buy.
How Much Does a Home Warranty Cost?
Costs vary by location. In the St. Louis area and much of the Midwest, a home warranty generally costs $425-500 for a standard plan.
Is a Home Warranty Different Than Home Insurance?
Yes. A home warranty is a contract, not a policy. While a homeowner’s insurance policy covers things like your home’s structure, personal belongings, and certain damage or loss, a home warranty covers repair or replacement of certain systems and appliances due to wear and tear.
What Does a Home Warranty Cover – Every Repair or Replacement?
Warranty companies typically want to know that they aren’t paying to repair or replace a pre-existing condition. For example, if the furnace fails the day after you move into the house, the warranty company may ask for a copy of the inspection report. If the inspector said the furnace was fine, or suggested that you have it checked out by a specialist, and you did so, the warranty company should cover the problem. If, however, the inspector said the furnace was on its last legs, and you accepted it as is, the warranty company may not agree to fix it.
What to Expect: Be advised that the warranty company is almost always going to try to repair a problem rather than replace the entire unit.
If warranty coverage is part of your real estate contract or inspection negotiations, the title company will pay for the coverage shortly after closing, even though it will be ordered earlier. You will receive a confirmation of the purchase before closing; keep that paperwork handy so you have the contract and phone number readily available if you need to make a claim before you receive a full copy of your contract within several weeks.
How to Get a Home Warranty
A home warranty isn’t part of my home purchase. Can I still buy one? Yes! If you didn’t obtain a warranty as part of the purchase process, you can still purchase one on your own. The cost of a warranty is far less than that of replacing the air conditioner, furnace or water heater.
If you decide to buy a home warranty, plan ahead! The warranty company will have an initial waiting period, so don’t wait until the furnace breaks to purchase a warranty and make an immediate service call. Questions on which company to choose? Call your St. Louis real estate agent for a warranty company recommendation.
TALK WITH AN AGENT TODAY
Home Warranties for Sellers
In today’s St. Louis real estate market, many home sellers are offering warranty policies to make their houses more attractive to potential buyers and to separate their properties from other houses for sale in their area. In a buyer’s market, offering a home warranty is often a good way to make your home stand out in a crowded market.
Depending on your situation, you may or may not wish to offer a home warranty. If you’re unsure, talk with your real estate agent.
Stand Out: Selling your house in St. Louis? Check out our post, “7 Ways to Boost Home Value: REALTOR® Secrets Revealed.”
Home Warranties for Buyers
When you buy a house, there are no guarantees — especially when purchasing an older home. A home warranty (usually purchased by the builder and covering the first year) usually covers a new home, but older homes are typically not covered.
A home warranty offers peace of mind, and can be used as a bargaining chip in negotiations. Talk with a local real estate agent about whether or not including a home warranty in your offer or counteroffer makes sense for you.
Selling or buying a home in St. Louis? No one knows St. Louis real estate like the agents at Hermann London. Talk with us about whether or not a home warranty makes sense for you: find an agent.