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Participating in Spring Homebuying Season?

Here’s What You Need to Know About Home Service Contracts

The spring homebuying season is in full swing, with reports showing low inventory but extremely high demand from buyers. Whether you’re looking to profit in this seller’s market or hoping to find a home within your budget, you should know how a home service contract fits into your plan:


A home service contract (sometimes referred to as “home warranty”) provides repair, replacement, or service of home appliances and systems that break from normal wear and use, or from defects in materials or workmanship. These contracts can cover anything from garbage disposals and microwaves to ovens, dishwashers, and water heaters; and plumbing, electrical, and heating and air conditioning systems. The typical contract is a one-year, renewable deal. For a seller, providing a home service contract can help lessen the risk of costs and delays if a home system, system component, or appliance malfunctions during the selling process; it can also reduce any after-sale liability and add value and improve marketability of your home.


The joys of home ownership also come with the responsibility of footing the bill for unexpected service, repairs, and replacement of appliances and home systems when they break. In 2016, 62 percent of people said they spent money replacing or repairing broken home appliances. To be prepared, ask the seller if they have a home service contract – most home service contracts are transferable and offer the option to allow you to change or upgrade it. If not, you can always negotiate a home service contract into your contract with the seller or buy one yourself; many are now offered on monthly terms.

Both sellers and buyers can work with their real estate agent to obtain a home service contract, or they can purchase one through a direct sale.

“In any case, make sure you are purchasing from a reputable company and that you have read and understand the coverage and limitations of your home service contract and save the documents for later,” advises Tim Meenan, executive director of the Service Contract Industry Council.

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