Tag: real estate blog post

Home Warranties Explained: Pros, Cons, and Everything You Need to Know

Posted on by Will Sing

When buying a home, one of the considerations you might encounter is whether to invest in a home warranty. In this blog post, we’ll dive into what home warranties are, their benefits, potential drawbacks, and why you might need one.

As a local real estate agent in Portland, Oregon, I often get questions about home warranties. If you have more questions or need specific advice, feel free to reach out. My contact information is below.

What is a Home Warranty?

A home warranty is essentially an additional insurance policy for your home. It provides an extra layer of protection on top of your homeowner’s insurance. Typically, a home warranty covers things like the water heater, HVAC system, and major appliances.

When buying a home, you can ask for a home warranty as part of the deal. Either the buyer or the seller can pay for it, depending on the negotiation. Usually, a home warranty lasts for about a year, but it can be renewed annually.

Cost of Home Warranties

The cost of a home warranty varies, but it usually ranges from $400 to $650 per year. This cost can sometimes be financed by the seller for the first year, and after that, it’s up to you to renew it.

One thing to note is the service fee. When you call for a repair, you’ll pay a fee for the service technician to come out and assess the issue. This fee typically ranges from $80 to $100.

Pros of Home Warranties

  1. Financial Protection: Home warranties cover unforeseen repairs, which can be a lifesaver if you don’t have a lot of cash reserves. For example, if your water heater, which costs about $1,300, breaks down, you might only have to pay a $85 service fee for a replacement.
  2. Convenience: Home warranties provide access to a network of professionals. Instead of searching for a plumber or an electrician, you make one call, and the warranty company handles the rest.

Cons of Home Warranties

  1. Unused Benefits: If you don’t need any repairs, you might feel like you’ve wasted money on the warranty.
  2. Service Fees: You’ll have to pay a service fee each time you request a repair. While common for some services, it can add up over time.
  3. Limited Control: You don’t get to choose the service professional. The warranty company decides who handles the repairs.

When to Consider a Home Warranty

Deciding whether to get a home warranty depends on your risk tolerance and financial situation.

  1. Get a Home Warranty If: You don’t have a lot of cash reserves. A home warranty can help cover significant expenses, giving you peace of mind and financial protection.
  2. Skip the Home Warranty If: You have substantial savings and can handle unexpected repairs out-of-pocket. Also, if you’re buying a new construction home with a builder’s warranty, an additional home warranty might be unnecessary.

Doing Your Due Diligence

It’s essential to do your due diligence when considering a home warranty. Review example plans and understand what each warranty covers. Make sure you know where your homeowner’s insurance overlaps with the home warranty to get the best value for your needs.

Conclusion

Home warranties can provide peace of mind and financial protection for homeowners, especially those without significant cash reserves. However, they may not be necessary for everyone. Ultimately, the decision to get a home warranty depends on your financial situation and risk tolerance.

For more personalized advice, feel free to connect with me on YouTube, Instagram, or Facebook. If you’re looking for more in-depth assistance, you can schedule a free strategy session with me here.

Also, check out my Free Buyer’s Guide to navigate the home buying process with confidence.

Thank you for reading, and I look forward to helping you on your real estate journey!

What You Need to Know About HOAs: A Homebuyer’s Guide

Posted on by Will Sing

What is an HOA?

An HOA, or Homeowners Association, is an organization in a subdivision, planned community, or condominium building that makes and enforces rules for the properties and residents. When you purchase a property within an HOA’s jurisdiction, you automatically become a member and are required to pay dues, commonly known as HOA fees. These fees contribute to the upkeep and maintenance of common areas and sometimes cover utilities like water, sewer, and trash.

The Benefits and Drawbacks of HOAs

Benefits:

  • Reduced Risk Profile: By joining a larger group of homeowners, you’re contributing to the maintenance and exterior updates, which can reduce your individual risk.
  • Community Standards: HOAs help maintain property values by enforcing community standards and ensuring properties are well-maintained.

Drawbacks:

  • Cost: HOA fees can range from as low as $60 to over $500+ per month, depending on the age of the property, size of unit, and the reserve funds available for repairs and maintenance.
  • Control: You may have less control over certain aspects of your property, as the HOA will have rules and regulations that you must follow.

What Do HOAs Cover?

HOAs typically cover the maintenance of common areas, which can include landscaping, pools, and recreational centers. They may also cover certain utilities, though this can vary. For example, in the Mountain Park area, there are separate HOAs for specific building complexes and an overarching HOA for the entire area, providing amenities like a pool and a rec center.

Special Assessments

Special assessments are additional fees that can arise when the HOA’s reserve funds are insufficient to cover major repairs or improvements. These assessments are usually paid on top of your regular HOA fees and can significantly impact your budget. It’s crucial to be aware of potential special assessments, especially if the property is older and may require more extensive maintenance.

HOA Transfer Fees

When purchasing a property with an HOA, be prepared for an HOA transfer fee, typically ranging from $200 to $1,000. This fee can vary widely depending on the specific HOA.

Reviewing HOA Documents

In Oregon, there isn’t a large governing body overseeing HOAs, so it’s essential to thoroughly review all HOA documents. Here are the five key documents you need to examine:

  1. Reserve Study: This document details the HOA’s reserve funds and planned improvements.
  2. Financial Reports: Ensure the HOA is financially stable and can cover future expenses without needing special assessments.
  3. Meeting Minutes: Understand ongoing and upcoming issues, potential rule changes, and financial health.
  4. Governing Documents: These include the rules and regulations, such as pet policies and property use restrictions.
  5. Insurance Certificate: Verify that the HOA has adequate insurance coverage.

Getting Expert Help

While reviewing these documents, consider hiring a company like CID Analytics. They offer a service similar to a home inspection but for HOAs, providing a detailed report on the HOA’s health and potential issues. This service costs around $600 and takes about five business days to complete.

Conclusion

Understanding the role and impact of an HOA is crucial when buying a home. By reviewing the necessary documents and considering both the benefits and drawbacks, you can make an informed decision that suits your needs and lifestyle.

For personalized advice, you can schedule a free strategy session here. Also, check out my Free Buyer’s Guide to help you navigate the home buying process.

Watch the full video on Understanding HOAs: What Every Homebuyer Needs to Know.

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