What Is a Home Warranty? Peace of Mind for Home Buyers

What is a home warranty? In a nutshell, it’s a policy a homeowner pays for that covers the cost of repairing many home appliances if they break down.

After all, lots of things you buy come with a warranty in case they break down, from cars to smartphones. But what about homes? It turns out you can get a home warranty plan, too.

“Home warranties provide financial protection from a service provider for homeowners who might be faced with unexpected problems with their appliances,” explains Shawna Bell of Landmark Home Warranty.

Many people buy a one-year home warranty plan right when they close on a home, since such protections can provide some much-needed peace of mind that you won’t get hit with unexpected, out-of-pocket expenses soon after moving in. Imagine what a bummer it would be, after all, to wake up one morning to a broken boiler, knocking appliances, a leaking water heater, dripping plumbing, or malfunctioning fridge in your new home.

A home warranty plan can lessen those homeowner and appliance worries, which for many is worth every penny. A couple of warranty plans to consider: Choice Home Warranty and TotalProtect.

What does a home warranty, like one from Choice Home Warranty, cover?

Don’t mistake a warranty for homeowners insurance, which covers your home’s structure and belongings in the event of a fire, storm, flood, or other accident. Home warranty companies, in comparison, will cover repairs and replacements on home systems, including electrical systems, plumbing, water heater, washer, and kitchen appliances due to normal wear and tear—no calamities required.

Home warranty companies, including Choice Home Warranty and Home Service Club, generally set up a service contract to cover the following items (you can read a sample contract to find out):

  • Basic home systems such as plumbing and electrical
  • Heating and cooling systems, including the water heater
  • Appliances such as the washer and dryer
  • Kitchen appliances such as the oven, range, built-in microwave, and garbage disposal

How much do home warranty companies charge?

While homeowners are often required to get homeowners insurance along with their mortgage, home warranties are a fully optional purchase. Basic coverage starts at about $300 and goes up to $600 for more comprehensive plans, says Bell.

A homeowner can include add-ons to a service contract if needed (e.g., coverage for a swimming pool, various appliances, or an external well).

Although many home warranty companies offer plans to homeowners at any point, the best deals can often be snagged if purchased when you become a first-time homeowner. You’re eligible for these plans whether you’re buying a condo or single-family home. And some warranty plans are the “build-your-own” type, which means you can customize a basic plan to cover particular systems (like plumbing) and appliances, or you might include optional add-ons like a tuneup for your HVAC.

“The home warranty offered at the time of the real estate transaction typically offers the most comprehensive coverage and price points, so that’s why it’s the ideal time to lock it in,” Bell says.

At the end of the first year, you usually have the option to renew your home warranty or bail with your service provider.

Benefits of home warranties for home buyers and sellers

A home warranty benefits homeowners by providing reassurance that they can move in without worrying about shelling out even more for add-on or surprise repairs.

A home warranty can also benefit home sellers (if they don’t have it already), since it can cover these elements during the listing period; some home warranty companies even offer free seller’s coverage during this time with the hopes that the buyer will decide to continue the coverage. Often, home sellers will offer to pay for the first year of a buyer’s home warranty to entice buyers to bite.

But not everyone thinks home warranty companies are worth the cost. Typically a warranty isn’t necessary with new homes, since most of the appliances are already covered under manufacturers’ warranties. But in general, the older your home, the greater the odds that something’s bound to break, and the wiser it is to get a home warranty. Best of all? Not all home warranty companies differentiate between newer and older homes in terms of cost, making a warranty an especially cost-effective option if you are purchasing an older home.

Be sure to read the fine print on the contracts from a warranty company such as Home Service Club and Select Home Warranty. And remember, this type of warranty doesn’t usually cover pre-existing conditions and you may have to pay a deductible if something breaks.

What if something breaks under a home warranty

Home repairs are a big headache, so you’re probably wondering if that broken appliance, leaky plumbing, ductwork, or HVAC is a covered item under your home warranty. To find out whether you may have to pay a deductible, call your provider or customer service to connect with a qualified contractor in your area.

One thing to remember is that a home warranty does not mean you’re off scot-free for a certain “covered item.” Typically you’ll have to pay for a service call, service fee, or part of the bill up to your home warranty deductible first.

While not everyone will think a home warranty is worth it, it is a good idea for people who lean toward being better safe than sorry when buying a home. Consider the appliances you own and how reliable your plumbing is. Speak with your real estate agent for advice, and then check out the home warranty companies in your area (try Select Home Warranty and TotalProtect). This way, you can read a few sample contracts and decide for yourself.

7 Common HOA Rule Violations—and How to Avoid Getting Fined

Living in a community managed by a homeowners association (HOA) means that you’re obligated to follow certain rules and regulations. Depending upon your HOA, these rules can be very particular—so particular that you may not even know you’re doing something wrong! And if you disobey your community’s covenants, conditions, and restrictions (CC&Rs), you could get fined.


“Fines are a tool to gain compliance, and it is not uncommon for them to be reduced or waived once compliance is achieved,” says Dawn Bauman, senior vice president, government and public affairs, for the Community Associations Institute in Falls Church, VA. She says some rule violations could yield one-time fines of anywhere from $25 to $100, or daily fines of around $10 per day.

The best way to avoid fines is to stay in the loop with your community. Familiarize yourself with the CC&Rs, read community documents, attend community board meetings, pay attention to community updates, and ask questions when you think you might be in violation.

Curious which requirements tend to trip up homeowners the most? Here are some of the most common HOA rule violations.

1. House design changes

Making any changes to the appearance or structure of your home—such as adding a new mailbox or paint job—requires getting permission from your HOA.

David Berman, an attorney for Barry Miller Law, a business and real estate law firm in Orlando, FL, says the most common violations he hears about involve compliance with architectural design standards and covenants. This includes changes made to the exterior of a home without the association’s approval. Why? A good portion of the rules in most HOA CC&Rs have to do with the appearance of your home.

2. Smoking near neighbors

Other common violations are those that inconvenience other residents at the association, says David Swedelson, a community association attorney and a founding partner of SwedelsonGottlieb in Los Angeles.

“This would include smoking that creates a nuisance, whether it be cigarettes, cigars, or marijuana,” Swedelson says.

Owners may have authorization to use marijuana for medical purposes, but that does not necessarily include the right to smoke in their unit if the smoke affects their neighbors.

3. Pets

HOAs may impose limits on pets in the community, including the number of pets you own; the specific breeds allowed; where pets can be walked; and whether or not they must be kept on a leash.

“We are seeing a lot of owners claim that their dog is a service animal, so they can get around a weight restriction or other rules in the CC&Rs,” says Swedelson.

If you’re a pet owner interested in buying in an HOA community, be sure to ask about the rules on pets. And if you already live in an HOA community and are considering adopting, make sure you’re familiar with the rules on pets before bringing a new four-legged friend home with you.

4. Illegal Rentals

Thinking of renting out your home on Airbnb? Many HOAs require written permission to allow rental of your home, since renters may not be aware of the association rules. Given the popularity of short-term rentals, Swedelson says his firm is increasingly seeing violations surrounding this issue.

Making a little cash on the side is great, but be sure you’re in compliance with your community’s rules before renting out your place.

5. Landscaping, decorations, and other exterior upkeep

Overgrown weeds and lawns are a big no-no in an HOA community. Thinking about adding tall sunflowers to your garden? How about chopping down that huge tree on your front lawn? These are also situations in which you’d need to check with the HOA. Some boards even limit the types of trees and plants that are acceptable and where they can be located on your property.

Most HOAs also prohibit clutter outside your home. This includes outside storage. An HOA may take issue with things like bicycles or kayaks being stored outside in plain sight.

And during the holidays, HOA rules may limit how long before and after a holiday you can decorate the home’s exterior, including the size and type of decoration.

6. Motor Vehicles

Many HOAs have rules on the number and types of vehicles (and boats, RVs, etc.) that can be parked in your driveway or on the street.

Having guests over for a dinner party? You may have to clear guest car parking with the HOA first. The same goes for out-of-town guests who are bringing a car; your HOA may require you to tell them how many days your guests plan on staying.

7. Garbage

Most HOAs are strict about putting trash cans out too early or not bringing them in on time. Be careful about bulky items you throw out, such as furniture items or boxes that haven’t been broken down—your board might have a problem with them being left on the curb.

Millionaire To Millennials: Don’t Get Stuck Renting A Home… Buy One!

In a CNBC article, self-made millionaire David Bach explained that: “The biggest mistake millennials are making is not buying their first home.” He goes on to say that, “If you want to build real financial security, real wealth for your lifetime, then you need to buy a home.”

Bach went on to explain:

“Homeowners are worth 40 times more than renters. Now, that first home doesn’t need to be a dream home, it can be a very small home. You might literally have to buy a small studio apartment, but that’s how you get started.” 

Then he explains the secret to buying that home!

“Don’t do a 30-year mortgage. You want to take that 30-year mortgage and instead pay it off early, do a 15-year mortgage. What happens if you do a 15-year mortgage? Well, one, you pay the mortgage off 15-years sooner, that means you’ll be able to retire in your fifties. Number two, you’ll save a fortune (on potentially hundreds of thousands of dollars in interest payments).”

What will it cost to pay your mortgage in fifteen years? He explains further:

“For fifteen years, you got to brownbag your lunch. Think about that! Brownbag your lunch literally for fifteen years. You can retire ten years sooner than your friends. You’ll have real wealth, because you bought a home – you’re not a renter. And you’ll be financially secure for life.”

Bottom Line

Whenever a well-respected millionaire gives investment advice, people usually clamor to hear it. This millionaire gave simple advice – if you don’t yet live in your own home, go buy one.

Who is David Bach?

Bach is a self-made millionaire who has written nine consecutive New York Times bestsellers. His book, “The Automatic Millionaire,” spent 31 weeks on the New York Times bestseller list. He is one of the only business authors in history to have four books simultaneously on the New York Times, Wall Street Journal, BusinessWeek and USA Today bestseller lists.

He has been a contributor to NBC’s Today Show, appearing more than 100 times, as well as a regular on ABC, CBS, Fox, CNBC, CNN, Yahoo, The View, and PBS. He has also been profiled in many major publications, including the New York Times, BusinessWeek, USA Today, People, Reader’s Digest, Time, Financial Times, Washington Post, the Wall Street Journal, Working Woman, Glamour, Family Circle, Redbook, Huffington Post, Business Insider, Investors’ Business Daily, and Forbes.

24% of Renters Believe Winter is the Best Time to Buy a Home

In real estate, the spring is often seen as the ideal time to buy or sell a house. The term “Spring Buyer’s Season” exists for a reason, as renters and those looking to move on from their current home thaw out from the winter and hit the market ready to buy.

According to Bank of America’s annual Home Buyer Insights Report, 41% of renters surveyed agree that spring is the best time to buy a home. The surprising result, however, is that when ranking the seasons, winter comes in second at 24%.

In many areas of the country, the spring and summer are the most competitive seasons for buyers. Families with children often want to move over the summer to make sure that their kids are ready for school in the fall. This often leads those families who haven’t found homes to buy to push pause on their search in the fall and winter months.

This creates a great environment for buyers to find a home with less competition. According to moving.com, scheduling a move during the winter months also comes with the best price.

If you define ‘best’ by cost then, generally speaking, you are more likely to save on a move during the late September to April window. Demand for movers usually slows down during this time frame and rates are low.

There are also many benefits to listing your house for sale during the winter months as well!

As we recently mentioned, buyers who are out in the winter are serious about wanting to find a home, and there is traditionally less competition on the market which gives you greater exposure to those buyers.

Bottom Line

As always, the best time to buy or move all depends on each individual buyer or seller’s goals and needs. If you are one of the many who would like to make a move this winter, let’s get together to create a plan to make it happen!

Are Homeowners Renovating to Sell or to Stay?

Over the past few years, two trends have emerged in the housing market:

  1. Home renovations have shot up
  2. Inventory of homes available for sale on the market has dropped

A ‘normal’ housing market is defined by having a 6-month supply of homes for sale. According to the latest Existing Home Sales Report from the National Association of Realtors, we are currently at a 4.4-month supply.

This low inventory environment has many current homeowners worried that they would be unable to find a home to buy if they were to list and sell their current houses, which is causing many homeowners to instead renovate their homes in an attempt to fit their needs.

According to Home Advisorhomeowners spent an average of $6,649 on home improvements over the last 12 months. If that number seems high, it also includes homeowners who recently bought fixer-uppers.

A new study from Zillow asked the question,

“Given a choice between spending a fixed amount of money on a down payment for a new home or fixing up their current home, what would you do?”

Seventy-six percent of those surveyed said that they would rather renovate their current homes than move. The results are broken down by generation below.

Renovation Percentages

More and more studies are coming out about the intention that many Americans have to ‘age in place’ (or retire in the area in which they live). Among retirees, 91% would prefer to renovate than spend their available funds on a down payment on a new home.

If their current house fits their needs as far as space and accessibility are concerned, then a renovation could make sense. But if renovations will end up changing the identity of the home and impacting resale value, then the renovations may end up costing them more in the long run.

With home prices increasing steadily for the last 6.5 years, homeowners have naturally gained equity that they may not even be aware of. Listing your house for sale in this low-competition environment could net you more money than your renovations otherwise would.

Bottom Line

If you are one of the many homeowners who is thinking about remodeling instead of selling, let’s get together to help you make the right decision for you based on the demand for your house in today’s market.

Mortgage Interest Rates are Still Going Up… Should You Wait to Buy?

Mortgage Rates Up
Mortgage interest rates, as reported by Freddie Mac, have increased by close to a quarter of a percent over the last several weeks. Freddie Mac, Fannie Mae, the Mortgage Bankers Association, and the National Association of Realtors are all calling for mortgage rates to rise another quarter of a percent by next year.In addition to the predictions from the four major reporting agencies mentioned above, the Federal Open Market Committee recently voted “unanimously to approve a 1/4 percentage point increase in the primary credit rate to 2.75 percent.”Historically, an increase in the primary credit rate has translated to an overall jump in mortgage interest rates as well.This has caused some purchasers to lament the fact that they may no longer be able to get a rate below 4%. However, we must realize that current rates are still at historic lows.Here is a chart showing the average mortgage interest rate over the last several decades:Historic Mortgage Rates

Bottom Line

Though you may have missed the lowest mortgage rate ever offered, you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago.The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

Why Has Housing Supply Increased as Sales Have Slowed Down?

Housing Supply Increase - Sales Decrease

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), the inventory of homes for sale this year compared to last year has increased for the last four months, all while sales of existing homes have slowed compared to last year’s numbers.

For over three years leading up to this point, the exact opposite was true; Inventory dropped as sales soared.

NAR’s Chief Economist Lawrence Yun shed some light on what could be contributing to this shift,

“This is the lowest existing home sales level since November 2015. A decade’s high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country.”

Let’s take a deeper look:

Interest Rates

Since January, 30-year fixed mortgage interest rates have increased nearly a full percentage point (from 3.95% to 4.9%). Fannie Mae, Freddie Mac, the National Association of Realtors, and the Mortgage Bankers Association are all in agreement that rates will continue to increase to about 5.2% over the next 12 months.

“The rise in [mortgage] rates paired with this very strong price appreciation absolutely is slowing housing,” said Fannie Mae’s Chief Economist Doug Duncan.

Even though rates are higher than they’ve been in a decade, they still remain below the average for the 1970s, 80s, 90s, and 2000s!

Mismatch of Inventory

Elizabeth Mendenhall, President of NAR, said it best, “Despite small month over month increases, the share of first-time buyers in the market continues to underwhelm because there are simply not enough listings in their price range.”

Prices of starter and trade-up homes have appreciated faster than their higher-priced counterparts. Over the last 5 years, the lowest-priced homes have appreciated by 47% while the highest-priced homes have appreciated by only 24%.

According to the Institute of Luxury Home Market’s Luxury Market Report, the $1M-and-up price range is now experiencing a buyer’s market. This means that supply (inventory) has finally caught up with demand and buyers are in the driver’s seat when it comes to negotiations. Additionally, many listings in this price range have experienced price cuts in order to entice buyers to put in offers.

Natural Disasters

Although not fully to blame for the national shortage in sales and inventory, natural disasters like Hurricane Florence, Hurricane Michael, and the wildfires on the West Coast have certainly had an impact.

Bottom Line

Additional inventory coming to market could help normalize the housing market and allow incomes to catch up to home prices. For more information about sales and inventory in our area, let’s get together so we can help you make the best decision for you and your family.

5 Tips When Buying a Newly Constructed Home

Buying New Construction Home

The lack of existing inventory for sale has forced many homebuyers to begin looking at new construction. When you buy a newly constructed home instead of an existing home, there are many extra steps that must take place.

To ensure a hassle-free process, here are 5 tips to keep in mind if you are considering new construction:

1. Hire an Inspector

Despite the fact that builders must comply with town and city regulations, a home inspector will have your best interests in mind! When buying new construction, you will have between 1-3 inspections, depending on your preference (the foundation inspection, the pre-drywall inspection, and a final inspection).

These inspections are important because the inspector will often notice something that the builder missed. If possible, attend the inspection so that you can ask questions about your new home and make sure the builder fixes any problems found by the inspector.

2. Maintain good communication with your builder

Starting with the pre-construction meeting (where you will go over all the details of your home with your project manager), establish a line of communication. For example, will the builder email you every Friday with progress updates? If you are an out-of-state buyer, will you receive weekly pictures of the progress via email? Can you call the builder and if so, how often? How often can you visit the site?

3. Look for builder’s incentives

The good thing about buying a new home is that you can add the countertop you need, the mudroom you want, or an extra porch off the back of your home! However, there is always a price for such additions, and they add up quickly!

Some builders offer incentives that can help reduce the amount you spend on your home. Do your homework and see what sort of incentives the builders in your area are offering.

4. Schedule extra time into the process

There are many things that can impact the progress on your home. One of these things is the weather, especially if you are building in the fall and winter. Rain can delay the pouring of a foundation as well as other necessary steps at the beginning of construction, while snow can freeze pipes and slow your timeline.

Most builders already have a one-to-two-week buffer added into their timelines, but if you are also in the process of selling your current home, you must keep that in mind! Nobody wants to be between homes for a couple of weeks.

5. Visit the site often

As we mentioned earlier, be sure to schedule time with your project manager at least once a week to see the progress on your home. It’s easy for someone who is not there all the time to notice little details that the builder may have forgotten or overlooked. Additionally, don’t forget to take pictures! You might need them later to see exactly where that pipe is or where those electrical connections are once they’re covered up with drywall!

Bottom Line

Watching your home come to life is a wonderful experience that can sometimes come with hassles. To avoid some of these headaches, keep these tips in mind!

If you are ready to put your current home on the market and find out what new construction is available in your area, let’s get together to discuss your options!

FROM THE ARG BLOG