Home Warranty When Buying a House: Who Pays For It & What Else You Should Know
Key takeaways:
Buying a house can bring lots of surprises. One thing that you don’t want to be faced with is the need to repair or replace your home’s major appliances out of your own pocket. This is something that can kill the excitement of home ownership. Once you go through your closing process and finally have your new dream home, your level of responsibility increases. Thankfully, there are options that can keep you protected.
Many people make the costly mistake of believing that the seller will cover these types of repair costs or replacements. However, this is not always the case. This is where a home warranty comes into play.
Homeowners insurance pays for losses or damages incurred from unforeseen occurrences. The buyer is responsible for a home warranty when buying a house. Whether you are looking for a 1-year home warranty when buying your home or want ongoing home warranty coverage, it is important to have the right coverage to fit your needs.
The onus for paying for a home warranty when buying a house can fall on the home buyer in some cases. If you find yourself in this situation, it is important to ask questions like “What does a home warranty cover when buying a house?” so you can be sure that you have the level of coverage that your home and your budget require.
A home warranty (also known as a home protection plan), actually complements homeowners insurance by providing the most comprehensive coverage to limit your exposure to out-of-pocket expenses. A home warranty is meant to cover things like normal wear and tear that homeowners insurance doesn’t cover.
Let’s review for clarity before we continue. Homeowners insurance protects the items in your home in the event of things like floods, theft and fires. A home warranty plan repairs or replaces your appliances and systems from normal wear and tear (no catastrophic event required).
Okay, now that we’ve cleared that up, we can continue.
Even if you’re familiar with what a home warranty is when buying a house, it’s important to do your research first.
Benefits of getting a home warranty when buying a house
If you’re a first-time home buyer, one of the questions you might have is “What does a home warranty cover when buying a house?” Simply put, a home warranty for new buyers is meant to cover essential appliances and home systems from damage that occurs over time. A home warranty plan generally covers the cost of repairing or replacing appliances and home systems when they break down unexpectedly. However, all plans are different, so when buying a home warranty, it is important that you investigate the specifics of what is covered in your home buyer warranty so you can be sure you have the right coverage to fit the needs of your household. Here at Cinch Home Services, you’ll be able to choose from three different plans to decide what fits your needs.
If you are wondering how home warranties work when buying a house, don’t be afraid to ask questions before committing to a home warranty plan. Reading the fine print and understanding the terms of your contract is important.
This is especially true if you are purchasing an older home. When it comes to systems that have over a decade of wear and tear, you want to look into how to buy a home warranty to protect your budget. For advice on coverage for an older home and appliances, read our deep dive on the subject here.
Although home warranty protection does not transfer with homeownership, as part of the home-buying process, the current owner of the property may offer to cover the cost of a home warranty as an incentive for purchasing their home. However, if you find that they do not, it is important to understand how to get a home warranty when buying a house so that you have the coverage you need. Sign up for a Cinch home protection plan to make sure you’re covered.
What does a home warranty cover?
A home warranty covers the mechanical parts and components of the major appliances and systems in your home. This can include your water heater, HVAC system, refrigerator, stove and more depending on the coverage that you select. If you decide to spend a bit more on your plan, you will receive even more comprehensive coverage. Other mechanical components of your home including pools, septic systems and spas may be covered, depending upon your service contract and the needs of your home.
Cosmetic issues will not be covered by your service contract. Additionally, unusual wear and tear, improper installation or issues prior to your coverage period will not be covered. Cinch Home Services lays out your coverage in their terms and conditions. Don’t be fooled into thinking that your homeowners insurance is the same as purchasing a home warranty.
Your homeowners insurance ensures the value of your house is protected against natural disasters. Your home’s structure and your personal belongings are covered by your homeowners insurance. As a homeowner, homeowners insurance is required by your mortgage lender. Make sure that when you are figuring out your coverage, you don’t get confused by homeowners insurance. A warranty and insurance are two different types of coverage, so be sure you know what you have so you can add what you need.
What is considered normal wear and tear?
Homeowners use a variety of systems and appliances every day, including refrigerators, plumbing, air conditioners and more. Over time, these items deteriorate naturally with normal use or aging, which is usually referred to as “wear and tear.”
A home warranty covers systems and appliances that break down due to normal wear and tear. It is designed to cover those items when they become unusable from everyday use and aging, including rust, corrosion, and chemical or sediment buildup if they occur. Failures caused by accidents, damage or abuse are different from normal wear and tear and are not covered by a home warranty.
Who typically pays for a home warranty during a real estate sale?
A first-time home buyer is especially vulnerable to mounting repair expenses. With depleted savings, no knowledge of the age of the appliances in their new home, and being new to home ownership, a new home buyer will benefit from a good, comprehensive home warranty.
When deciding on the level of coverage that your home and appliances need, it is important to know who pays for a home warranty, the buyer or the seller. It is common for a seller to purchase a home warranty and add it as part of their closing checklist for a new homeowner as an incentive, so knowing the market and trends is important in deciding on coverage needs.
This becomes an additional incentive for potential buyers, but it also ensures that the former owner does not receive any complaints from the new homeowner if anything goes wrong after the closing date.
Real estate agents may also provide a home warranty as part of a thank you for the sale and to welcome the new owners to the house. Although a great incentive, they also don’t have the same investment in your home needs as you will, so make sure that you look into your coverage even if the seller is paying for your warranty plan.
Buying or selling a home brings many hidden costs that can add up over time. It can be especially tough to determine who pays for what, such as closing costs, the appraisal or the inspection. Providing a new homeowner with a home warranty plan gives them less to consider when first moving into a new home. When negotiating for your home, it is possible to request a home warranty be included in the closing costs.
Finding a home protection plan that ensures the repair process is simple and easy to understand is helpful to both the buyer and the seller. At Cinch Home Services, we provide the most straightforward home warranty* contract services — perfect for first-time home buyers or sellers trying to provide a great closing incentive.
First-time home buyers
Buying your first home is an incredibly exciting life milestone for most. As with most exciting new steps in life, there is usually information that could make the process better. In the newness of the buying process, many first-time home buyers neglect to purchase a home warranty plan. A home warranty for new buyers is crucial to make sure they have protection to cover possible repairs and replacements.
One of the important things to consider in making your first home buyers warranty purchase is to know what a home warranty covers when buying a house. Simple warranty plans can cover normal wear and tear on appliances and systems like your HVAC. However, since this is your first home buyers warranty purchase, it is important to dig into what is covered in a home buyers warranty to make sure you have the coverage you need.
Once you know what coverage you need for your new home, it is important you know how to get a home warranty when buying a house. Home warranty plans are not automatically transferred with the purchase of a home, so once you take over ownership, make sure that you have already looked into coverage options and know the policy that you need. If you want a more detailed look at all of the information you need as a first-time home buyer, check out our First-time Home Buyer’s Guide.
Best times to purchase a home warranty
You may choose to purchase a home warranty at any time. When choosing when to buy a home warranty, it is important to know how home warranties work when buying a house. People are usually prompted to purchase warranty coverage at the approach of a new season, but the longer you wait, the more you risk one of your essential appliances failing. Because of this fact, it is most common for people to purchase a home warranty when buying a house to prevent any lapse in coverage.
When thinking about when and how to buy a home warranty, it is important to assess the wear and tear of your systems and appliances. Although it is recommended to have a home warranty when buying a home, it is even more essential if your appliances and systems in your home are older. If you are concerned about any of your appliances breaking down, or you are worried you will not be able to afford future repairs to your appliances, a Cinch home protection plan provides warranty coverage so you may only have to pay a small service fee to have a technician repair or replace your appliances.
Keep in mind there may be a waiting period of up to 45 days before your plan is in effect. Your home warranty company wants to ensure they are not covering past breakdowns. This waiting period is expressly outlined in the terms of your service contract. So, when you are closing, take this stipulation of a home warranty for buyers into account and examine home appliances carefully.
Cinch Home Services
We offer the most straightforward terms of service and provide a great customer experience. Contact us for your home warranty needs or if you want additional clarity on what a home buyers warranty covers. We look forward to helping you protect your budget.
about the different plans* you can choose from, click here.
* Subject to plan terms and conditions.
*The information in this blog library is intended to provide general guidance on home warranties, and on the proper maintenance and care of systems and appliances in the home. Not all of the topics mentioned are covered by our home warranty or maintenance plans. Please review your home warranty contract carefully to understand your coverage.
*Our blog library may link to third-party sites that offer products, services, coaches, consultants, and/or experts. Any such link is provided for reference only and not intended as an endorsement or statement that the information provided by the other party is accurate. We are not compensated for any products or services purchased from these third-party links.