Home Owner Warranty

Cincinnati Area Board of Realtors®

Although written disclosure of known property defects by home sellers is required by law in Ohio, disclosure itself does not guarantee that problems will not arise after the sale is closed. If problems do arise after a sale is final, the buyer may become frustrated and even feel that the seller and/or his/her real estate agent should be liable for any repair or replacement costs incurred. Thus, the benefit of a home warranty policy.

Sellers and real estate professionals are responding to buyer concerns relating to breakdowns through the purchase of home warranties. Typically, these are one-year service contracts that cover the repair or replacement of major home systems and appliances that break down due to normal wear and tear. A good home warranty policy provides buyers with protection from high repair costs, while it provides sellers with a sense of security that they will not be held liable if a system fails after the home is purchased. However, you should not expect a home warranty to cover small repairs and damages. They are not designed to replace broken glass or fix dripping faucets. Also, home warranty policies can help obtain potentially faster sales.

While home warranty policies are popular as selling tools in today's real estate market, just how much protection they can actually provide often depends on a number of factors consumers need to consider. To be sure the home warranty you choose is right for your needs, be sure to understand exactly what the policy covers. The coverage provided is spelled out in the contract portion of the agreement and should be read carefully.

A home warranty may be purchased by a buyer or seller for a one-time premium that usually ranges from $300 to $500. The policy generally covers major home systems, such as electrical, air conditioning, heating and plumbing. It also covers most built-in appliances. Under most policies, the only additional cost to the homeowner is a service charge, to cover the cost of the repair visit.

Before purchasing a home warranty, consumers should consider the following:

l Rules and regulations that govern home warranty policies and what the policy can and does cover have been set by the Ohio Department of Insurance. Information on these laws can be obtained by calling the Consumer Services Division Property Casualty at (800) 686-1526.

l Check the financial status and service record of the home warranty company. Especially important--try to obtain recommendations from other consumers and real estate professionals who have worked with the firm.

l Make sure the policy covers the home systems that you are concerned about.

l Understand that all warranty repairs are performed by contractors selected by the warranty company.

Keep in mind that home warranties are not a catch-all tool to cover problems existing prior to the time a warranty is placed on a home. Since selecting a reputable home warranty company is crucial to ensuring good service, consumers should check with their REALTOR® for recommended names of home warranty companies.

While a home warranty has benefits, consumers should not consider it a replacement for a pre-sale home inspection, even if such inspection is not required by the terms of the warranty.