Home Buying in Houston>Question Details

Jeff66, Home Buyer in Houston, TX

Is a home warranty necessary on 3 year old home? Who pays for it?

Asked by Jeff66, Houston, TX Mon May 9, 2011

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You can purchase at any time.....seller can pay, buyer can pay.
It is pretty common to see in most individual buyer/seller contracts with the seller paying for 1 year.
0 votes Thank Flag Link Tue May 10, 2011
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
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In Texas, in terms of who pays for a residential service contract (RSC, aka home warranty), the act of purchasing one is ALWAYS executed by the buyer - either through an independent act by the buyer after closing, or with the title company ordering one for them during the closing as a courtesy upon instructions by the buyer as detailed in the contract. If you are able to negotiate for the seller to contribute an amount equal to the total cost of whatever you as the buyer purchases, then great. Many buyers ask for this "goodie" - some get it, others don't. It just depends on how important it is to you.

Regarding RSC's in general, the question you need to ask yourself is simple - given the age and condition of the property that you are considering buying, what is the likelihood that a major mechanical component will break down? And if it does, will it cause a significant financial hardship on you if you do not have an RSC in place? Given that you are considering a 3 year old home, the chances of the A/C or the hot water heater blowing up are probably fairly small, especially if the previous homeowner has undertaken minimal maintenance. If you DO decide to purchase an RSC, know that if something like the A/C breaks down, it probably won't cover the entire cost of the repair. If you need an entirely new A/C, the total cost might be $6,000 or $7,000 - and the home warranty might cover $4,000 of the expense. Without going into minutiae, just know that there are "related costs" that are not covered in an RSC - hence the difference. But having a policy in place would save you several thousand bucks, so it's not to be sneezed at.
1 vote Thank Flag Link Mon May 9, 2011
I would advise you to get a home warranty no matter how old or new a home is. The truth of the matter is stuff happens, and it is always best to be safe not sorry. The warranty is a negotiable item and can be paid by the buyer or seller. However, in transactions like foreclosures and short sales, typically the banks will not pay for them.
Web Reference: http://www.katy-homes.net
0 votes Thank Flag Link Mon May 30, 2011
Is any warranty or insurance "necessary"? Same thing for a brand new car, would you still want a warranty on it? Accidents happen and things break, thus the idea and concept for insurance. I have seen and heard of many, many new builds that require work a couple of years after being built. FYI during the "boom" houses were thrown up as quickly as some builders could do it, and sometimes corners were cut. I recommend a home warranty for all my buyers and far as "who pays for it", as in most things concerning Real Estate it is negotiable
Best of luck.
Spirit
0 votes Thank Flag Link Fri May 13, 2011
Typically the buyer would ask the seller to pay for it. But it can be purchased by the buyer.

For more buying and selling tips, please visit http://www.RochesterHomeLocator.com

Salafia Sold Team
585-279-8210
http://www.RochesterHomeLocator.com
http://www.FindRochester.com
0 votes Thank Flag Link Fri May 13, 2011
Hi Jeff,

It's always a good idea and the contracts are set up so that typically the seller pays. The home warranty covers lots of different things and you will have options and different levels of coverage. Typically you will see a buyer's purchase offer asking for $400 to $450 and you can get a decent policy within that price range. If you want extra coverage like for the sprinkler system or if you have a pool etc it can go up from there. The warranty will cover your appliances like the dishwasher which is probably out of warranty if the home is 3 years old.

After the first year you can decide if it is something that you want to continue and pay for it monthly or yearly.

Good luck with your purchase.

Don Groff
REALTOR | Mortgage Broker | Consultant
Keller Williams Realty | 360 Lending Group
o.512.669.5599 m.512.633.4157
listings@dongroff.com
0 votes Thank Flag Link Fri May 13, 2011
Your home does not even have to be on the market to get a home warranty.

Is it necessary on a 3 year old home, I do not believe so, reason being, heat, roof, hot water tank are all covered by manufactures warranties. Stove, oven, dishwasher, garbage disposal won't typically have problems for the 1st 5 years. But the warranty programs are cheap enough and if you believe it is a selling tool then by all means provide one.

Louis Wolfson

Representing Greater Boston's finest builders and communities - Brookline, Dover, Needham, Newton, Wellesley and Weston
Web Reference: http://www.LouisWolfson.net
0 votes Thank Flag Link Tue May 10, 2011
I recommend you get one, and get your agent to write in the contract that the seller pays for it.
0 votes Thank Flag Link Tue May 10, 2011
Jeff,

Anyone can pay for a one year home service contract, known as a "home warranty". I have never had one, but many people do get them, typically paid for by the seller for a buyer, at closing of a resale home. After 3 years, a home in Texas only has a structural warranty (good for 10 years) plus what manufacturer warranties might be in place.

They can cost upto $400 for a basic warranty. I've had many clients love them and other hate them as they would not cover what was promised. You need to read the fine print on this policy...an insurance policy basically. Most do not cover pre-existing issue and won't fix and item unless the system is upto code. Your Realtor should be able to send you links of 6-8 popular warranty companies so you can compare policies.

Good Luck!

Mark McNitt
Bernstein Realty
m 832-567-4357
0 votes Thank Flag Link Mon May 9, 2011
I always recommend a home warranty even for clients who think they don't need them because there are times when something totally unexpected goes wrong with the house and you are out of pocket additional monies. The home warranty is negotiable with the seller as to whom pays for it and your current agent can negotiate this for you! Even new homes have issues with A/C or plumbing systems even if the owner has maintained them on a regualr basis. It's better to be safe than sorry!
0 votes Thank Flag Link Mon May 9, 2011
In Texas, we have quite a few HVAC issues (along with hot water heater & plumbing issues). Pools & pool equipment are also important 'upgraded' coverage options.
0 votes Thank Flag Link Mon May 9, 2011
The number 1 call to warranty companies is for plumbing repairs. This could be faucets, water heaters, drains, washers, dishwashers, etc. Who pays for the home warranty is negotiated between buyer and seller.
0 votes Thank Flag Link Mon May 9, 2011
All is based on the executed sales agreement

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Mon May 9, 2011
Most new construction comes with a warranty but the timelines on it vary (i.e. major structural, etc.). In this market, home builders may no longer be in business and you absorb the risk of a warranty that is backed by a company that is no longer in business. The home warranty mentioned in the 1-4 contract in Texas is a very good idea. For the Seller, it helps protect them against unknown problems that inevitably arise after closing - usually the next day! For the Buyer, it's definitely a benefit but it's all part of the negotiation package. According to the 1-4 Residential Contract, the Seller pays for this home warranty and it's worth every penny. (Read the contract.) The companies offering warranties have websites and their coverage is clearly explained and are offered in various levels of coverage. Carefully read EXCLUSIONS and coverage. Ask and you probably will receive! It's an inexpensive way for all Parties to be happy with the transaction.
0 votes Thank Flag Link Mon May 9, 2011
I'm not a fan of home warranties, only because it seems like when something does go wrong, they won't cover it. (frozen pipes, or a backed up sewer line). But, I've heard lots of stories where they can come in really handy.

If you can get a seller to pay for it, then by all means get one. (as far as who pays -- everything is negotiable).
Web Reference: http://www.sallygrenier.com
0 votes Thank Flag Link Mon May 9, 2011
It is always a good idea to have a home warranty. It definately can be a money saver in the event something breaks. Most new homes only have a 1/2/10 warranty. As far as who pays for it, that is a negotiable item in the contract although most of the time the seller will pay for it.
Web Reference: http://www.ourfirstnest.com
0 votes Thank Flag Link Mon May 9, 2011
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