What a Home Warranty Is

For those who have only heard about a home warranty, it’s time to learn the basics. A home warranty is an insurance plan that covers the repairs and replacement of appliances that are in your home, such as the refrigerator and stove, the electrical system and plumbing system. If these appliances and systems should break down during the ownership of the home, they can be repaired or replaced for a small fee. The annual cost of this kind of home warranty plan can vary, but it’s typically around $400 a year – a reasonable price, given the coverage.

What You Need to Keep in Mind with Home Warranties

However, a home warranty isn’t going to save the buyer in every case. If you have the home inspection ahead of time and it’s noted that there are problems in the plumbing or electrical wiring, those areas will need to be fixed at full price. Those repairs will not be covered until a new home warranty is approved. The new buyer in accordance with their particular insurance can deem those repairs a ‘pre existing’ condition, just as a healthy insurance company might do the same when you are applying for a new policy.

The repairs and replacements will also have limited terms, so that’s something to keep in mind when choosing the best policy. Some warranties will not cover basic service calls, though they will cover repairs that are directly related to the problems. It’s a fine line, so be sure to read the terms of the warranty carefully before choosing the right one.

Why Buyers Love Home Warranties

These home warranties give new buyers a sense of peace when they buy a new home. Due to the fact that, in most cases, any problems that arise will be able to be fixed, there is less worry they will need to spend a lot of money when they are first settling into their new home. Instead of spending thousands of dollars, the new owner can focus on other important costs.

As a seller, you can purchase the home warranty while you are selling the home and then transfer this warranty to the buyer when the sale is complete. This provides an additional benefit to the buyer without their having to deal with buying the warranty on their own.

Of course, you will also want to make repairs and do general fixes before you put the house on the market. This will help create the right impression with the buyer in the first place, but the home warranty can turn their head and make them come in for a second look.

With the competitive housing market right now, any little thing can make the difference between a sale and a home that sits on the market for months. To help increase the odds of your home being sold, why not add a home warranty to the deal? In addition to a fresh coat of paint, your home is going to stand out from the rest as the one that should be bought by that seller.

Share on Facebook

The Right Type Of Person

Most home buyers searching for a personal residence do not even look at foreclosure property because of the imagined problems. But they should. It is puzzling in a way. There are many people starting out with little money or credit who buy a “fixer” and spend considerable time and money fixing it up while they are living in it. They then turn around and sell it to move up to a more expensive fixer and start the process all over again.

If this describes you, you should really think about a foreclosure property. But you need to equip yourself with a little knowledge first so you don’t suffer the pain and disappointment common to so many attempting this route. Let’s start with the basics.

Foreclosure or Pre-foreclosure

The term “foreclosure” makes most people think of a scene in which a home is auctioned off on the court house steps and you bid against other interested investors. You do not want to do this. It is virtually impossible to gain the edge on the experienced bidders who have done this many times. What you need is a “pre-foreclosure” property.

A pre-foreclosure home is one on which the bank has begun foreclosure because the owner has missed several mortgage payments but it has not yet reached the auction sale stage. A key to successful pre-foreclosure investing is to gain the trust of the homeowner so that you can gather the information you need and move quickly to put together a deal that everyone will agree to.

Pre-foreclosure Properties Can Be Profitable

Done right, purchasing a pre-foreclosure property can be a profitable experience even for a first time home buyer. You have sufficient time to research them because you can purchase them up until the day of the foreclosure auction. When you purchase a pre-foreclosure, you help save the home owner’s credit by avoiding a foreclosure auction. You should remember this. You are not taking advantage of the homeowner in distress. You are helping him/her to avoid a current and many future credit related problems. Pre-foreclosure investing makes everyone involved a winner.

Lenders typically don’t bother explaining borrowers’ rights and options. They just want to collect their money. You have the opportunity to help homeowners avoid foreclosure, salvage their credit rating, and get on with their lives. And you can gain a home of your own – or resell it and make money by doing it.

You can end up saving tens of thousands of dollars on the purchase of your home by buying a pre-foreclosure property. It can be your opportunity to buy low and sell high, quickly maximizing your equity.

Repairs May Be Needed

It is not all gravy. Many of the best opportunities you uncover will need a lot of tender loving care to get them back in shape. They may need carpeting, up-dated or repaired appliances, electrical or plumbing. Roofs may need to be replaced. Most of them will probably need painting and some landscaping work. If a person is short of money and facing foreclosure, these things simply do not get any attention.

Summary

Buying a pre-foreclosure property can benefit both yourself and the current home owner. It is not always easy but it can be very rewarding. Unless you are an experienced handyman yourself, you need to get an estimate from qualified professionals on what it would take to bring the home up to standard. Don’t rush or get discouraged. Buying a pre-foreclosure home gives you plenty of time to make unrushed decisions.

Share on Facebook