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What’s a Home Warranty

Have you ever heard of a home warranty? I’m sure that you’ve been offered an extended warranty when you’ve purchased any large electronic items, such as a TV. A home warranty is the same type of extended warranty, only it’s for your home.

Here’s how a home warranty works.

This extended warrant usually costs between $400 – $500 for one year. And before you ask, it can be renewed. The items protected by the warranty will typically cover all appliances, such as refrigerator, stove, dishwasher, washer, dryer and microwave. Additionally, coverage will be for the hot water heater and the heating and cooling systems. Should any of the covered items cease to function properly within the covered period, simply call the warranty company.The home warranty company will charge you a small copay, which is usually less than $100. A technician will be sent to your home. The technician (repair guy) will either repair or replace the item, at the home warranty company’s discretion.

Cost Effective?

It may not be cost effective to have an extended warranty for many of the covered items at this cost. After all,  a counter top microwave can be bought for under $100. Furthermore, a built in microwave can be found for less than $200. However, a good refrigerator can easily cost more than $2000. The heating or air conditioning systems? Those will cost even more.

The Good

This is an insurance policy. By paying the premium, you can reduce your financial exposure. However, electronics stores push the extended warranty for a reason. And that’s because it’s a money maker for them. Will it cost them to pay for covered repairs? Of course it will. However, the rates are based upon historical data that tells them how much they need to charge. This allows them, on average, the financial earnings they need to survive in this business.

If you’re buying a home, and it has older appliances and / or an aged heating and cooling system, you should consider purchasing a warranty. If the home has newer appliances which are under the manufacturers warranty, a lower cost policy that covers for the heating and cooling is available. Additionally, you can often purchase a service contract through the utility companies.

The Bad

Many people are under the impression that they can use the warranty to replace older appliances with new. Sorry, but that’s not how this works. They’ll fix a broken appliance if possible. They’ll replace if it costs them less than to repair. There are many companies that offer home warranties. Search the web and choose one that seems to be okay. Don’t forget to read reviews. Also, some companies have an initial period where the warranty doesn’t begin coverage until 30 or 60 days after the new owner buys the home.

Bottom Line

A home warranty can be good. When buying a home, many people put all of their available cash into it. And if something expensive fails, it may be a financial hardship. This is a possible way to avoid that dilemma.

However, if you’re willing to take your chances, you can do that also.

Hey – here’s another idea. If you’re purchasing a home, we always try to get the sellers to pay for our client’s home warranty. This is just one of the many ways we try to help our clients. To learn more, contact Bunny and Art Reiman – Realtors.

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Failed Home Purchase

Quite often, buyers are finding that their home purchase has failed. In fact, more than 4% of home sales are not making it to the closing table, for one reason or another. So, as a buyer, how can you protect yourself and get the purchase of your new home completed? Here’s a few ideas.

Prepare For The Inspection

Surprises almost always crop up in the home inspections. The older the home, the more likely there will be inspection issues.And this is more prevalent in homes built between 1959 and 1969. As a matter of fact, 5.2% of these homes failed to close. Go into the process with the mindset that the age of the home will probably reflect the condition – and the price. Remember, it’s not new construction. If you expect everything to be in tip-top shape, you’ll probably be disappointed.

Prepare to Negotiate

We always tell our buyers to not worry about the small stuff. If an electrical outlet cover is cracked, buy a new one for less than $1.00. It’ll take a minute to replace it. However, you should worry about the big ticket items. If the roof, the furnace or the air conditioner are at the end of their life span, don’t be afraid to negotiate through your attorney. After all, you have every right to renegotiate for anything major. Take the advice of your Realtor and your attorney on how to proceed. Any items agreed to under the inspection should be verified at the walk thru. Bring a copy of the letters so you know what to verify.

Watch Your Credit

We’ve seen it happen where, while waiting for the closing, people go on a spending spree. They buy new furniture or a new car. Then, 2 days before the closing their lender pulls a final credit report. And these purchase may affect your debt-to-income ration. This can affect your mortgage. And if you’re relocating an will change jobs, don’t tell your employer that you’re leaving. They may just tell you to leave now. Then, when the lender makes a final employment verification. this could be another cause of a failed home sale..

Paperwork, Paperwork and more Paperwork

Your attorney will supply a list of documents you’re need to bring to the closing. Make sure you bring everything which is required. Typical documents include drivers license and/or passport. proof of homeowners insurance and more.

Bottom Line

If you handle things properly, you’ll greatly reduce the risk of a Failed Home Purchase. When you’re ready to either buy or sell a home, contact us and let us help you.

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Home Inspection

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Seller’s Disclosure

In New Jersey, the seller’s disclosure is a required document in a real estate transaction. Both state and federal laws require the sellers of a home to tell what they know about a home.

Reasons For a Seller’s Disclosure

Bottom Line

You may have the wrong Realtor if your Realtor can’t answer questions about the Seller’s Disclosure. Call me.

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The Home Inspection
Sellers Disclosure
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The Home Appraisal

If you’re buying a home, you need to know about the home appraisal. You see, while confirmation of the home’s value is the main purpose of the appraisal, it’s not an exact science. And that’s because it’s based on past sales. When we have a competitive marketplace, sometimes homes increase in value rapidly. And it’s possible that the home values rise quicker than the comparable sales values. So what happens if the comparable sales don’t support the purchase price?

Prepare For a Larger Down Payment

Should the purchase price not be supported by comparative sales, you may need to put down extra cash as part of the down payment. It you’re looking at 20% cash down conventional financing, and you don’t have much extra cash, this could be an issue. This is relatively easily solved, however, you could end up paying mortgage insurance premiums.

Private Mortgage Insurance or PMI

Appraisal Issues

Before making an offer, look at the home with an eye towards appraisal issues. Especially if this is an FHA or VA loan. Health and safety issues are a primary  focus. Look for items that make common sense, such as handrails in stairwells and bedroom egress to the outside. Broken windows and / or doors can raise issues. Are the home’s mechanical systems in working order? Is the roof leaking or are there foundation issues? It’s better to know about these potential issues beforehand.

Inspections and Appraisals

These are two separate procedures. If the appraiser says a home passes, don’t skip the inspection. After all, the appraisal looks at the home’s condition. But an inspection looks at and tests many other things. Getting a home inspected, and not simply appraised, is the best way to protect what may be the largest investment in any person’t life.

When you’re ready to go ahead with the purchase of a home, please call us. We’ve helped hundreds of people find their new home, and we can help you too.

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