Do you ever wonder if you need to pay your real estate agent when you buy a home?If not, then how do they make money?Or, do you know they get paid somehow...but just aren't sure how?Well, you're not
Home Warranty Or Home Insurance
When I first started my pre-licensing class, I began to learn a whole new language. I thought to myself, and may have said it to a few people, "I'm too old to learn all this." With God's help, lots of studying, great teaching, & huge amounts of encouragement, I passed my first class, my state exam on my first attempt, and understood most of the new terms. Now that I've been in the real estate business for a while, I have found myself being able to explain terms & concepts to people who don't understand the real estate jargon. It came to my attention the other day that not everyone understands the differences between home insurance & home warranty.
A home warranty, generally, covers the major appliances, AC/heat system,duct work, & electrical. You can also purchase a warranty for the septic system, pool, roof leak, etc. The specific systems covered vary between companies & plans. For the price of a service call or other fee, you can have a specialist come repair your item. In our area, most realtors working for buyer clients ask that the sellers provide & pay for a home warranty. This gives the new homeowner a year that they don't have to worry so much about the appliances & systems tearing up. We all know that mechanical things break, tear up, or just quit working. No one can say how long any one item will last. As the policy is about to expire, the company will let you know that you can renew it. This is now completely up to the newest homeowner. Do you have a savings account that you could pull money from to fix or replace one of these items? That is something you need to decide on before your policy runs out. It is good to understand what this covers & to compare prices, especially if you decide to renew your coverage. I can provide you the websites of the most common home warranty companies here in Alabama.
Home insurance is generally paid on a monthly basis by the homeowner, as it is combined with your mortgage payment. This policy will cover the structure of your home, your belongings, liability protection, & additional living expenses. If your home is structurally damaged (say by a tree), you would call your insurance agent. If the tree damaged your home & you couldn't live in your home until repairs were made, the additional living expenses come into play. Liability protection is covers someone getting hurt in your home or on your property. If the tree damaged your home during a thunderstorm & you had to replace furniture (or whatever else may be unusable), it would cover that as your belongings. For home insurance, you will have a number to call if you ever have to file a claim. You will also have a deductible that you have to pay. If your deductible is $1,000 but your home only sustained $899 worth of damage, you would pay the total amount. The insurance company would pay for a claim that costs more than $1,000. Flood insurance & earthquake insurance are separate policies, which not everyone is required to have. But neither of those disasters would be covered by your regular home owner's insurance. As you are ready to choose a home insurance policy, you need to ask many questions & make sure you get information in writing. I have many names & numbers of insurance agents that you can call.
Hopefully, if you didn't completely understand the differences, this article helped. If you have more questions, please give me a call.
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