If you’re looking to buy a home here in Silicon Valley, you may be wondering whether you need a home warranty to protect it against potential problems. Today I’d like to answer some common questions about home warranties:
1.What is a home warranty? In essence, a home warranty is an insurance policy that protects your home from issues with things like the plumbing, electrical wiring, or appliances after you move in. Even if no problems were spotted during your initial inspection, complications can crop up unexpectedly.
2.How long do home warranties last? Home warranties will generally last one year.
3.How much do home warranties cost? Basic home warranties usually run between $400 and $500. This cost can vary depending on what you’d like to have covered.
4.Who pays for the home warranty? Typically, we can get the seller to pay for the cost of the home warranty as part of our offer; however, if you’re competing with multiple offers on a property, sometimes it’s best not to include it, as the seller is going to look at the total net proceeds of your offer and take that into consideration.
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Potential problems with your home can come up unexpectedly.
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It’s important to note that home warranties are not catch-all insurance policies that will completely cover everything. There will usually be a service fee attached to a claim, which can run anywhere from $60 to $90 per incident. The warranty company will send contractors out to fix any problems, but you will be charged for each incident reported. While a home warranty provides some nice peace of mind for new homeowners, they are not the perfect solution to every problem you may encounter.
I’ve learned this from my own personal experience. My water heater had gone out on my property, and though I was covered by a home warranty, codes had changed between then and the time the house was built. So while the installation and the new water heater were covered, the code upgrades were not. Though I ended up spending about $400 on that, I did end up saving nearly $1,000 on the water heater itself, thanks to the warranty. If you have any specific questions about home warranties, companies that provide them, or different types of coverages, give me a call or send me an email. I’d be happy to talk you through it.
When should you contact your real estate agent? The answer might seem obvious. Most people would say that you should contact your agent when you are thinking of buying or selling a home. However, there are plenty of other times when you should contact your real estate agent.
For instance, did you recently receive a letter from the county assessor saying that your property tax has been assessed? If you don’t agree with your tax assessment, you will need to appeal it. When you appeal, you need supporting evidence and comparable properties. Real estate agents can definitely help with that.
If you are thinking about refinancing, you should also get in touch with your agent. You may want to get rid of mortgage insurance, in which case you would need 20% equity. If you need to pull cash out, you need 25% to 30% equity. You want to make sure you have that equity before you spend $400 to $500 on an appraisal. We can help you with that, too. We can give you an idea of what the value is and how likely it is that the home will appraise.
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We put you in touch with great contractors if you are making home renovations.
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If you’re thinking about doing home improvements and want to know which will increase your resale value, check in with your real estate agent. Even if you already know which renovations you are going to do, we can put you in touch with contractors who will get the job done.
Finally, if you are thinking of moving out of state or picking up an investment property across the country, let us know. We have contacts with real estate agents all over the world, so we can certainly find someone who can help you.
If you have any questions, please give me a call or send me an email. I would be happy to help you!
As we’ve discussed before, Homeowners Associations come with many pros and cons. Before you decide to purchase a property within an HOA, you need to review the financial documents during your contingency period.
You want to make sure you are moving into a community that is financially secure. Obviously, there’s an HOA fee due. Whether that fee is $50 or $350, you need to know what that money is going toward. What are you getting for that fee? The HOA fee covers amenities such as parks, pools, and landscaping, but a portion of that money goes to the reserve fund.
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Pay attention to the reserve fund.
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As time goes on, fences, roofs, and landscaping may need extra repairs. The reserve fund is there for any major repairs. Every year, the HOA conducts a reserve fund study. Look at those studies to see how the reserve fund is doing so you know what is going on in the community in the long run.
If your reserve fund is 50% funded, 100% funded, or 150% funded, you’re in pretty good shape. If the reserve fund is only at 35%, that is a red flag. The HOA may even need to order a special assessment and, depending on the number of homes in the community, that could run a few thousand dollars. They may even plan to raise the dues, so definitely pay attention to the reserve fund and special assessments.
If you have any questions, give us a call or send us an email. We would be happy to help you!
