Better Read the Fine Print — and Take Good Notes

Along with the proliferation of home warranties in home sales — the option to include such a warranty is now baked into Minnesota’s standard Purchase Agreement — has come (at least to fine printthis practitioner) a spike in complexity as well.

Here’s just a partial list of issues to carefully address before purchasing such a policy — frequently, by the Seller to address the Buyer’s concerns about old-but-still-functioning mechanicals and appliances:

–Who does the policy cover:  just the Buyer, post-closing; or both the Buyer and the Seller while the home is on the market?
–If the latter, how does the policy mesh with any current coverage the Seller has in place? (for example, CenterPoint Energy’s “Service Plus” plan).
–What is included in “basic coverage?”
–How much is “extended coverage,” and what items does it cover?
–Are there any ceilings (maximums) on coverage?  (trust me, there are; what matters are the amounts).
–Are there any “aggregate limits” on coverage? (such as a maximum for all appliances, plumbing, or other sub-categories).
–What is the deductible?
–What is the discount for adding a second year of coverage? (smart move for many Buyers).

Which gives rises to perhaps the most important question of all:  “what is the cellphone number of the home warranty sales rep?”  🙂

P.S.:  One of the biggest distinctions between policies is whether they cover just repairs, or repairs and replacement (if repair isn’t feasible).   If the latter, consumers then need to ask if replacement value is discounted for depreciation.

The distinction is critical, because a 75 year-old boiler that fails may cost $4k to replace, but — given its age — only have a depreciated value of a few hundred dollars.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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