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July 26, 2017

Do Buyers Need a Home Warranty?

By Mark Hite, President

Greater Chattanooga Association of REALTORS®

In the home purchase process, the question of a home warranty and what is covered often comes up. Today we will examine key points to consider.

Even when you purchase a new construction home, things can go wrong; therefore, a builder’s warranty often is requested. A builder may back the warranty themselves, or they may purchase a warranty from a third-party company, which assumes responsibility for specific types of claims as they arise. Depending on your loan type and local county ordinances, a lender may require builders to purchase a third-party warranty to protect buyers of newly built homes. So investigate this with your lender at the beginning of your home search process.

For existing homes, there are a variety of third-party companies that provide home warranties. Such contracts generally are for one year with the option to renew annually. Items typically covered include built-in kitchen appliances, hot water heaters, heating/air systems, and plumbing/electrical systems. There may be opportunities to upgrade and add pool/spa equipment, refrigerators, septic tanks and limited roof repair. Understanding what is covered and any related deductible as part of a claim are key to avoid disappointments and misunderstandings at the time of a claim.

At times, sellers will offer a home warranty as an incentive to potential buyers. These offers are effective, especially if some of the covered systems are approaching the end of their normal lifespan. Such offers can put a buyer at ease when is they can avoid a major replacement/repair expenses early on.

Whether it’s a builder’s warranty or a traditional home warranty, there are key questions to ask. What is and is not covered? What is the process and timeline for filing a claim? How are claim disputes handled? What, if any, liability is on the home owner, should a claim arise. In addition to these questions, you may also ask to see the seller’s past claims and/or check on line for home warranty vendor ratings.

An experienced and educated member of the Greater Chattanooga Association of Realtors can be an excellent resource to help you navigate the  home warranty selection and claims process.


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