Choosing a Home Warranty

tools of the trade for home warranty

Home Warranty aka
Residential Service Contract

Many home warranties offer coverage for Sellers during the listing period, and Buyers for one year after closing.

A Home Warranty (also known as a residential service contract or a home protection plan) is an annual service agreement that covers the repair or replacement of certain appliances and system components that break down due to normal wear and tear.

Happy or Unhappy Homeowner

Understand the value and limitations of coverage, and you’ll be a happy homeowner.

This is a form of insurance and like all insurance policies, it has limitations. This is not a catch-all-get-out-of-jail-free card, for poor or deferred maintenance history or to replace items that are DOA. You must know the providers’ position on pre-existing conditions, or you could find yourself very unhappy. 🙁

Home Warranty for Buyers & Sellers.

man fixing exhaust hood

Not all repairs are covered. Check the details of your coverage based on the provider and the plan you choose.

Home Warranties send service pros to do home repairs. Not all repairs are covered. Check the details of your coverage based on the provider and the plan you choose.

It’s a good idea to get a home warranty when you buy a pre-owned home. That is certainly true for first-time homebuyers with little experience in maintaining a home.

As a seller, you should evaluate your options for coverage during the listing period. If you sign up for a home service contract at the time you list your home for sale, it may cover certain repairs going forward. Also, confirm with the provider before making the decision to purchase!

Do your homework.

With a home warranty, you always have to pay a service fee for each service call. But normally you don’t have to pay the full cost of repairing or replacing items that are covered. Therefore, exclusions and limits to policy coverage and all providers are NOT the same.

You’re in Texas. Air conditioning is a giant repair issue, and probably the least understood area of coverage. Before you pick a provider, be sure you understand how they handle pre-existing conditions. That includes items found during a general home inspection and what they DO NOT COVER, especially during the first 90 days. Don’t take a short-cut in making a decision about your provider. Do your homework!

Texas Contract Provisions ref Home Warranty

There is a provision in the Texas One to Four Family Residential Contract (Resale) that addresses the policy. This provides a platform to negotiate the payment of the policy, which must be prepaid for a year in advance.

7.H. RESIDENTIAL SERVICE CONTRACTS: Buyer may purchase a residential service contract from a residential service company licensed by TREC. If Buyer purchases a residential service contract, Seller shall reimburse Buyer at closing for the cost of the residential service contract in an amount not exceeding $___________ Buyer should review any residential service contract for the scope of coverage, exclusions, and limitations. The purchase of a residential service contract is optional. Similar coverage may be purchased from various companies authorized to do business in Texas.

You can normally renew service contracts in future years, at a slightly higher cost.

Buying, selling or both, talk to your North Point real estate professional and the warranty company about the value, cost, and coverage.
Do your due diligence – this is your decision.

Conclusion

YOU SHOULD EVALUATE THE COVERAGE, COST, AND EXCLUSIONS BEFORE SELECTING A PROVIDER.

Here are some companies for your review (yes, there are many to choose from):

AMERICAN HOME SHIELD

NATIONS HOME WARRANTY

FIXD HOME WARRANTY

FIDELITY NATIONAL HOME WARRANTY

ONE GUARD HOME WARRANTY

FIRST AMERICAN HOME BUYERS PROTECTION

HOME WARRANTY OF AMERICA

OLD REPUBLIC HOME PROTECTION

BFS HOME WARRANTY COMPANY

2-10 HOME WARRANTY

AMERICAN HOME GUARDIAN

LANDMARK HOME WARRANTY

This is a partial list of providers. It is not a recommendation of any company, and it is listed in no particular order.

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