Essentially, a home warranty is a way of protecting yourself from expensive, unexpected repair bills. The cost of a home warranty is generally not too high, often between $350 and $600, depending on the coverage. The payment must be made one year in advance. Depending on the local market as well as on the deal, the home warranty can be paid either by the seller or by the buyer. A home warranty paid for by the seller can be a negotiation point or inducement offering to protect the buyer fromhaving to do any additional, expensive repairs to the house after the deal is closed. So how does it work? When there’s a problem, the owner calls the warranty company, which then appoints the service provider who will be fixing it. The provider will call the owner to schedule an appointment and fix the problem while the insurance company will pay the service bill. There are many different types of coverage available, so be careful and take your time when choosing a plan. Pay special attention when reading the fine print relating to the conditions for coverage and the reasons claims may be denied. The secret to getting a good insurance plan lies in dealing with a reputable company and knowing all the details. STEP 5: ORDER A HOME AND PEST INSPECTION We discussed at length in Chapter 11 about the importance of buyers ordering home inspections as part of the closing process. It is absolutely worth the short-term fee of a home and pest inspection to make absolutely sure that there are no major problems with the home — anything from falling shingles, leaky pipes, a broken furnace, an outdated and unsafe electrical system, to termite, spider, or even rodent infestations, to structural integrity issues.
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