Wait, do you need this?

It’s time to write an offer!? Do you ask the seller to pay for a Residential Service Contract?? That depends….

A Residential Service Contract is known more commonly as a Home Warranty.? Although in Texas, our TREC promulgated form has a blank for the amount a buyer requests a seller to pay towards a residential service contract, it’s not a guarantee in all transactions.? Home warranties are defined as “a service where, for a fee and for a specified period of time, a company agrees to repair or replace major appliances or systems in a residential property.”? So what does that amount to exactly?? I’m so glad you asked!

While there is really no need for a residential service contract when purchasing a newly built home, the request that a seller purchases one for a buyer is a very common practice in traditional resales of homes.? This then becomes a line item in the seller’s closing cost at closing.? Most of us have heard of these companies, Old Republic Home Warranty, American Home Shield, Home Warranty of America….the list goes on.? The average cost of a year’s policy ranges from $300-$600 for a basic coverage package.? Of course, there are always upgrades to make and extended coverage of other items such as washers, dryers, or hot tubs if you want to up your coverage. And once the year is up, a buyer can always pay themselves to extend the home warranty longer.?

Even though the amount requested by a buyer for the home warranty is typically part of an initial offer, it’s definitely a negotiable item.? If a buyer wants to make a very competitive offer, they may opt to not ask for any amount towards a home warranty.? Additionally, in a seller’s market, sellers can refuse to pay for a request of money towards a home warranty.? If we are in a buyer's market (maybe one day, lol), the buyer can ask for a larger amount to add on additional coverages if desired.? The amount I typically see requested by a buyer is a reasonable amount to cover a basic annual policy.? Now, once the buyer informs the title company of what home warranty company they want to use, then some fine-tuning has to be done.? Let’s say the buyer has requested the seller pay $500 for a home warranty, but the basic coverage package for the company the buyer wants to use is $550.? The buyer would then be charged the extra $50 as part of their closing cost to make up the difference.? But what if the basic coverage package is $450?? Then the seller only has to pay $450 unless the buyer wishes to upgrade or add on additional items for coverage to get the full allocation of $500.? Keep in mind though, many additional coverage add-ons tend to be $25 to $100, so a buyer may have to pay the overage at closing if they are making sure they use the full amount of payment from the seller.??

So how does it work?? Once you have a “home warranty” in place at your closing, you can start to use it.? For example, it’s week two of living in your new home and right when you put in that pot roast for your family meal the oven decides to kick the bucket (total. bummer.)? That’s when you would call your home warranty company.? They will send out a technician to fix (or in some cases replace) the oven.? You are on the hook for what we refer to as a “call-out fee”.? This the is amount of money set by your home warranty company that they charge to send someone out for repairs.? With the home warranty though, this should be the only fee you pay regardless of how bad the issue may be and even if it needs total replacement.? The call out fee usually ranges between $75 and $125 depending on the home warranty company.? One nice pro tip I’ve learned is that the call-out is by trade.? So if you are calling the home warranty company to have them send a plumber to fix a leak, go ahead and include the other plumbing items in your request for service that maybe you let go because they weren't so major.? This can save you an additional call-out fee.??

Home warranties are commonplace because they give the buyer some peace of mind that, post-move-in, if anything stops working they do have some coverage.? It’s always best to “shop” the right home warranty for your new home needs or ask the experts (ahem, me!).? They can also be a great tool to use during negotiations and/or after inspections.? If a home warranty is not part of the contract and many potential upcoming repairs show up on the inspection report, a seller may offer to then pay for a warranty instead of doing preemptive repairs or offering larger monetary concessions.? Keep in mind though, home warranty companies do have limits.? If you buy a house with a 35-year-old HVAC system that’s on its last leg, don’t expect the home warranty company to not take age into account when offering compensation or replacement coverage.? They are meant to cover “normal wear and tear” and it’s important to read the fine print in the coverage package.??

Whether you are the seller or the buyer, understanding the role a home warranty (residential service contract) can play in your offer and negotiations is important.? I’m here to guide you through the process and always happy to help a buyer pick out the right company and coverage for them.? With so much at stake, it’s always important to have a professional on your side.??

Oh, and here’s the cheese………

Ossau-Iraty: pasteurized or raw sheep’s milk, semi-firm, tomme style

SUPPLE | NUTTY | ROASTED | SWEET

In the mountainous borderlands of France and Spain, sheep reign supreme.? Perhaps the most famous of sheep cheeses (brebis) in France, the name is a nod to the fertile Ossau Valley of Bearn and the Iraty Forest of the Basque region.? Made exclusively from the local breeds of Manech and Basco-Bearnaise sheep, this cheese is aged a minimum of 60 days.? Exceptionally rich, the interior is ivory-white and has an almost almond-butter-like sweetness.? Each wheel bears the distinct impression of a ewe’s head to indicate whether it is a farmstead or industrial producer.??

Pair with rustic reds and Bordeaux blends.? Serve with cherry preserves and almonds or melt over asparagus.??