Tag: Home Buying

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Home Warranty 101: What Buyers Should Know

Many homebuyers have the choice of whether to purchase a home warranty with the home itself. While not required, it can be a helpful way to ensure that your new home is well cared for. It can also have some downsides and may not be right for everyone. Here we’ll go over the basics of home warranties to help you understand whether it’s something you should consider.

How Do Home Warranties Work?

A home warranty differs from home insurance. Home insurance offers financial protection in the case of unexpected damage from major issues like fires or storms. Home warranties protect and pay for the appliances in your home. You pay for your home warranty similarly to paying for insurance: an annual premium priced based on the size of your home. If an appliance breaks, you pay a deductible and the warranty provider will send somebody to help with maintenance or replace the appliance entirely. The deductible amount varies depending on the warranty terms, so it’s something you should look into carefully when considering your options.

Why Get a Home Warranty?

Home warranties offer major peace of mind. With a home warranty, you know that if an important appliance breaks that you have access to a professional who can fix it. This can provide you the extra support you need if you’re not very handy or are a brand new homeowner. A home warranty also allows you to budget more accurately by avoiding unexpected repair costs. You’ll always know the regular premium cost and any deductibles for repairs ahead of time.

The pricing on home warranties varies from one company to the next, but has low upfront costs. Even with the deductible, they can help you save hundreds of dollars on major repairs or even replacements. You’ll have professional backup in the event of catastrophic plumbing or electrical failure which are often impossible and unsafe to DIY repair.

Why Not Get a Home Warranty?

The main issue with home warranties is that not everything is covered. It’s crucial to read the specific terms of the warranty and note which appliances it does not include in the coverage. This can help you weigh your options and determine whether it’s worth it for your situation. A problem many homeowners run into with home warranties is that even with a covered appliance, it can become ineligible for coverage if not properly maintained. Unfortunately, “properly maintained” is different for every provider and can cause conflicts and confusion. It also might not cover you if a previous owner neglected basic maintenance on an appliance before you moved in, leaving you paying full price for somebody else’s mistake.

Home warranties are definitely worth it for some buyers and superfluous for others. They can provide some added comfort in knowing you have resources available for emergency maintenance when something breaks, but it won’t cover everything in your home. It’s important to research different warranty offerings carefully before deciding. This way you’ll know what risks and benefits to expect.

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The First Questions to Ask About a New Neighborhood

Buying the house itself is only part of home buying. When you buy a new home, you choose a brand new place to live. In some cases, that place might be unfamiliar or far away from where you lived before. So, it’s important to keep the local area in mind during your search. But how can you determine whether a neighborhood is right for you? Here are some basic questions to ask to learn more about your new neighborhood:

Is it Safe?

It’s quicker than ever to find an area’s crime statistics on the internet or through local law enforcement, but that will only tell you so much. When trying to determine how safe a neighborhood might be, you can ask questions like:

  • Are there “neighborhood watch” signs or official neighborhood security?
  • Is there enough street lighting at night?
  • Do the home’s exteriors seem generally well kept?
  • Are there a lot of other properties for sale or rent?

These are only a few of the details to consider, but a great place to begin when trying to learn about neighborhood safety. If possible, try visiting your new neighborhood a few times to get an in-person feel of the area.

What Schools Will I Have Access To?

If you have children in your household or are planning to in the future, school districts will make a big difference. The quality and choices of schools nearby is a great thing to research to see where your new neighborhood would fit among the options. Try comparing statistics like dropout rates, test scores and reviews from both parents and students.

If you’re interested in adult education or specialist training, check to see what options your new neighborhood provides. While you won’t be restricted by districts in the same way as primary schools, ease of access can make a significant difference in your education and overall quality of life.

These are only a few things to keep in mind when researching a potential new neighborhood. The more you can learn about an area before you move, the more likely you are to feel at-home.

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A Beginner’s Guide to Fair Market Value

Fair market value is an important real estate metric for investors, buyers and sellers. It can help you determine the best possible asking price for a home sale or whether a home you want to buy is a good deal. However, unlike many other pieces of the real estate puzzle, fair market value can be complicated to find. Here are the basics of fair market value to help you get a better understanding of this important term.

What Is Fair Market Value?

The fair market value of any property equals the price that a buyer would pay in the current market climate. It’s an estimate based on multiple fluctuating factors. Rather than the intrinsic value of the property in any market, the fair market value can be affected by economic trends, such as supply and demand. Therefore, the fair market value of the same property might be different in two different places or at two different times.

How Is Fair Market Value Calculated?

You can find the fair market value of a property in several ways:

  • Buyer & Seller Agreement – As long as both the buyer and seller are knowledgeable about the current real estate market, they can agree on a fair market value for the property themselves. Both would require knowledge about local trends and details about the property itself to decide on a fair value.

  • Comparative Market Analysis – The buyer and seller can work with a real estate agent to get a comparative market analysis. By evaluating comparative properties nearby, real estate agents can help calculate the fair market value.

  • Appraisal – While appraisals won’t tell you everything about trends or market behavior, an appraiser can help you determine fair market value by providing an extensive report on the property itself. Most mortgage lenders require having an appraisal done regardless, so you can use this knowledge to your advantage.

  • Relative Price Per Square Foot – Another approach to calculating fair market value is to figure out the approximate price per square foot of your property. You can do this by comparing it to other similar properties. Once you have the dollar amount per square foot, multiply it by the number of total square feet to find an estimate of fair market value.

Real estate transactions have many metrics and variables. While it’s tricky to determine, fair market value is crucial in making sure you get the best possible price for your property.