Lee Morof's Real Estate Blog

There are a lot of homeowners who are thinking about carrying out a home remodel during the current era; however, it is important to understand what goes into a home remodel contract. Even though it can be expensive to get the contract reviewed by an attorney, it is critical to take a close look at the contract to make sure the language is correct.

What are some of the most important points that homeowners should keep in mind when it comes to a contract for a home remodel?

Understand The Basics Of A Home Remodel Contract

First, it is important to understand the basics. The home remodel contract will have a lot of numbers and it can be challenging to understand. In general, the home remodel contract must state that the contractor is going to secure any and all necessary permits and approvals, the payment schedule, when the project will start, and when the project will end. Any home remodel contract should also contact the license number of the contractor and include a few days to rescind the contract without penalty should the homeowner change his or her mind.

Review The Payment Schedule

In addition to understanding the start and end dates, read the payment schedule carefully. The first payment should never be any more than 10 percent of the total cost of the job while the final payment should be approximately a third of the total cost of the project to ensure the contractor actually comes back to fix any issues should something go wrong with the project. The final details of a home remodel are important.

Don’t Jump On The Warranty

Finally, do not jump on the warranty even if it sounds great. A warranty for a home remodel is usually packed with a punch of exclusions that are instituted in favor of the contractor and not the homeowner. There are probably state statutes in place that provide much better protection than any warranty that is offered by a contractor. Furthermore, accepting the warranty will remove this protection from the state. Unless a lawyer says to take the warranty, it is better to turn this down and go with state regulations.

When you buy a new house, the first thing you want to do is protect your investment. You already have property insurance. Should you also buy a home warranty?

What Is A Home Warranty?

A home warranty is not the same thing as insurance. Home warranties are service contracts. If a covered item breaks down and it is covered in the terms of the warranty, the home warranty company will pay to fix or replace that item.

What is Covered Under A Home Warranty?

Every home warranty contract is different but generally, a home warranty may cover items like major kitchen appliances, HVAC components, sump pump, in-home sauna or spa tub, and/or ceiling and exhaust fans.

Often, a homeowner can get an extended warranty contract that covers items like the washer and dryer, garage door opener, septic system and swimming pool components.

Understand The Costs

A basic home warranty costs between $350 and $500 annually, depending on what coverage you get. However, if something does break, you will also be on the hook for incidentals like service call fees or a deductible.

Know The Benefits

There are considerable benefits to having a home warranty contract in place, especially when something expensive breaks down, like a furnace. There is a lot of peace of mind knowing that you will be able to quickly get something fixed in your home.

You Might Already Be Covered

Your homeowner’s insurance policy might cover some of the same things that are covered with a home warranty. So you could be paying for duplicate coverage on some items. However, your homeowner’s insurance likely will not cover a dishwasher that needs to be replaced or a fridge that suddenly goes out.

There Are Alternatives

Finally, before you pay for a home warranty, remember that there are alternatives. For example, most HVAC companies offer financing options to buy a new furnace. Most appliance stores also offer financing on major purchases like refrigerators and dishwashers. You could save your $500 or so a year and put it in a savings account for a rainy day instead of gambling that you might have a major repair or purchase that year.

There are pros and cons to home warranty plans. Just be sure you fully understand both sides of the issue before you sign on the dotted line.