Why Would I Need a Warranty?
If you were to spend hundreds or thousands of dollars to buy a new HD TV, and 8 months after your purchase, it stopped working due to a defect, would you expect the manufacturer to repair it? Most savvy consumers would say, “Yes.” In fact, most large appliances come with an Express Written Warranty, which assures you that the manufacturer will restore the appliance if a defect is encountered. Reputable appliance manufacturers provide these Express Written Warranties because they are confident that they have produced a reliable product, and because they desire to maintain their excellent credibility in the appliance industry.
Today’s consumers are more sophisticated than in years past, due to the expansion of the marketplace’s options and the ability to extend their knowledge base online. Because of these factors, a consumer who is spending a hundred times the cost of a TV to construct or remodel a house, will likely shop around for the contractor who instills the most confidence in excellent construction. Contemporary homebuyers and homeowners expect that if they are going to expend hundreds of thousands of dollars for a new house or the remodeling of an existing house, their contractor is going to provide some written assurance that the home or project was constructed with the utmost care and professionalism.
New Construction and Remodeling Warranties help contractors provide this necessary reassurance to homebuyers. In fact, the U.S. Department of Housing and Urban Development has recognized the importance of New Construction Warranties and recommends them for homebuyers who use FHA and VA financing. Additionally, some U.S. states require a new home to come with a New Construction Warranty from the contractor as protection for the homebuyer.
Why Should Homebuyers or Homeowners Expect an Express Written Warranty from their Contractor?
Constructing a new house or remodeling an existing house can be a complicated and expensive enterprise. As your contractor creates your new home or remodels your existing one, you trust that he or she is laying the foundation, pouring the load-bearing walls, framing the house, installing the electrical system, connecting the plumbing, hanging the drywall, and performing a myriad of other important duties correctly and without defects. Wise homebuyers and homeowners realize that a contractor’s verbal guarantee to come back to address any issues that they may experience is too often an empty promise due to the contractor’s busy schedule, their inability to bill for the extra work, or disagreements arising over what is “guaranteed.” Having an Express Written Warranty from the contractor removes all of these obstacles and provides clarity regarding the expectations and responsibilities of all the parties. An Express Written Warranty clearly enumerates, for all parties, what is and what is not warranted, how long something is warranted and who is responsible to restore the home to the published standards in the warranty. An Express Written Warranty offers homeowners peace of mind, because they know exactly what items or conditions are warranted, and exactly what to do if they encounter a defect.
What Does a Homebuyer Receive In a 10-Year New Home Warranty?
In the standard 10-year New Home Warranty, during the 1st year of homeownership, the contractor agrees to correct the defects in workmanship and materials listed in the warranty. Such items include issues with: drainage, concrete floors, basement walls, carpentry, siding, doors, windows, paint, roofs, subflooring, floor covering, grout, drywall, plumbing, sewer, electricity, HVAC, countertops, and cabinetry. During the 2nd year of homeownership, the contractor continues to warranty certain defects in the major systems of the home, including plumbing, septic, electrical, and HVAC. For years 3-10 of homeownership, an Insurance Company warrants specific load-bearing structural components in the home – concrete, masonry, wood, and metal components, from defects. In addition to these coverages, homebuyers also find comfort in the warranty’s arbitration provision. If an impasse arises between a homebuyer and a contractor, this dispute settlement provision brings in a third party arbitrator to hear the parties’ respective positions and resolve the impasse without protracted litigation and its associated expense.
What is a 5-Year Remodeler’s Warranty?
A standard 5-Year Remodeling and Addition Warranty covers many of the same things as a new home warranty, although for a shorter period of time. This type of warranty is for an older home which is having remodeling work done or is having an addition, such as a sunroom, installed. A Remodeling and Addition Warranty only covers the new portion of a home, not the pre-existing structure. During the 1st year, the contractor warrants issues with workmanship or materials. For years 2 through 5, an Insurance Company warrants specified load-bearing structural components. A Remodeling and Addition Warranty can be tailored to cover the specific work a homeowner is having performed.
What is the cost of a New Home Warranty?
A one-time premium for 10 years of coverage typically costs less than 1 year of a homeowners’ insurance premium or about the same cost as the front door on a house. Presently, homebuyers are not permitted to purchase a warranty themselves. Respected contractors provide the warranty as part of their superior service. If your contractor is a member of the American eWarranty family, he or she orders and pays for the warranty online and delivers it to you at Closing. If your contractor is not currently a member of a warranty program, you may simply ask your contractor to provide the warranty. Compared to the cost of an unexpected repair, a warranty is a great investment. The one-time premium for the warranty, based on the sales price of the home, typically ranges in price from $300-$800.
What if I sell my home before the Warranty expires?
10-Year Structural Warranties and 5-Year Remodeling Warranties are normally transferrable. Since the warranty covers the structure at a specific street address, if you sell your home during the warranty term, the new owners still have access to all the benefits of the warranty. This transferability of the warranty makes a house more marketable when it comes time to sell.
Homebuyers and homeowners definitely benefit from the protection and support New Construction Warranties and Remodeling Warranties afford. These warranties help the homeowner and homebuyer manage the risk of having to pay costly repairs out of their own budget, and New Construction Warranties and Remodeling Warranties increase the likelihood that the homebuyer or homeowner will have a positive experience in purchasing a home.
Susan J. Loncar