Home warranty programs are available through most real estate companies that will provide a year of coverage for the major mechanical systems of a home for the buyer. These programs are designed to insure major home systems, exclusive of structural, in previously occupied homes. These programs are not to be confused with home warranties provided by new home builders, which are a different breed of cat.

Major home mechanical systems typically include the plumbing system, electrical system, heating system, as well as the water heater, range/oven, dishwasher, ductwork, well pump, garbage disposal, trash compactor, and built-in microwave oven. This basic coverage costs about $360. Additional optional coverage (at more cost) may be available.

The home's structure, such as roofs, foundations, walls, etc. are not covered by these policies. In addition, most policies do not cover pre-existing conditions. Obviously if your water heater is leaking, the policy won't buy you a new one... The rule is: if a condition is present and detectable before the policy goes into effect, it won't be covered.

Obviously a homebuyer benefits from a home warranty during the first year of ownership. But the seller benefits too. A home warranty can provide an competitive advantage for a seller in a tough market, and typically, the warranty insures the seller as well during the listing period.

There are a wide variety of companies and warranty programs, so if you are considering one as part of your home marketing plan, read the fine print. If you are buying a home with a warranty plan, make sure you understand what is and isn't covered. Leaky faucets and running toilets are not normally items that are covered.

Moreover, if you do have a problem, each service call will cost the homeowner around $50 for each visit, so trivial problems may not be worth using your warranty to fix them.

A 1994 Illinois law requires homesellers to provide a seller's property disclosure statement that details the condition of each of the major home systems, among other things. The intention of the law is to prevent the seller from hiding or trying to hide major problems from a homebuyer. All of us who have been in the real estate business for long have seen problems develop right after the sale is closed, and frequently the buyers are upset with the seller, and may suspect the seller was trying to hide the problem...

A home warranty policy gives both buyers and sellers a way to avoid this possibility, and potential lawsuits. The buyer has a measure of assurance that they won't be facing unforeseen expenses in their first year of ownership, and both buyers and sellers gain that peace of mind that comes from just one less thing to worry about.

As a seller, you should know that a home warranty is an advantage to your Realtor as well, since it provides an edge in marketing the property, and avoids potential headaches for the Realtor should problems arise after closing.

For sellers, you can make your home more competitive and more likely to elicit a full-price offer. And in this age of litigation, your future potential liability may be reduced if problems develop.

For buyers, you have more security and assurance that the seller has made a good faith effort to protect you from unforeseen expenses. It is good to know that if a problem develops, it can be solved quickly with a relatively inexpensive service charge. For homes over ten years old, a buyer might want to consider buying a warranty themselves if the seller doesn't provide one.

The bottom line is that a home warranty avoids headaches for both sellers and buyers. So think seriously about home warranties - they can be a lifesaver!