What is a home service contract?
The typical home service contract is a one-year contract that protects a homebuyer or current homeowner against the cost of unexpected repairs or replacement of major systems and appliances that breakdown due to normal usage or defects in materials or workmanship. A home service contract can:
- lessen the risk of costs and delays if a system, system component or appliance malfunctions during the selling process;
- help to resolve issues discovered during the home inspection stage;
- reduce any after-sale liability by a seller;
- add value and improve marketability of homes; and
- increase a buyer’s confidence in their home investment.
Who sells home service contracts?
Realtors, builders and independent providers sell home service contracts. A home service contract can be purchased at any time, including at the time of purchase, and is usually transferable to a new owner, although a small transfer fee may apply.
What is the difference between a home service contract and homeowner’s insurance?
- Home service contracts typically cover the major systems in your home in the event of breakdown or malfunction including electrical, plumbing, heating and air conditioning systems, and built-in appliances such as ranges, washers and whirlpool baths.
- Homeowner’s insurance covers the structure of a home and personal belongings in case of a fire or natural disaster such as hurricanes and lightning, and provides liability coverage in case someone is injured on the property.
- Home service contracts are optional in real estate transactions.
- Homeowner’s insurance is almost always required, especially if the buyer has a mortgage.
- A home service contract is not a substitute for a homeowner’s insurance policy. A home service contract is a beneficial supplement to a homeowner’s insurance policy as homeowner’s policies generally do not cover items for breakdowns or malfunctions due to normal wear and tear or defects in materials or workmanship.
Read more at: http://www.prnewswire.com/news-releases/guidelines-for-purchasing-a-home-warranty-143978026.html
Disclaimer: for information and entertainment purposes only
Green Real Estate Appraiser 