A home warranty is a type of insurance policy that covers certain items in your home such as appliances, water heater and furnaces among others. As a real estate investor who concentrates on distressed properties you may not encounter a home home warrantywarranty offer from the seller but home warranties are almost a standard part of the process when a seller lists a non-distressed home for sale.

The seller will typically offer a home protection plan as part of the listing agreement. But that doesn’t mean you shouldn’t consider purchasing one for your properties on your own.

A home warranty covers specific items and is a policy that is paid in advance and covers a predetermined period, such as one or two years. The protection offered replaces or repairs things that break down after you’ve purchased the house.

Common coverage includes air conditioners, dishwashers, trash compactors, garbage disposals and the like. Should any of these items fail, your home warranty covers them. For example, say your electric range stops working and is covered by your warranty. You contact the home warranty provider who then relays your claim to a local contractor who works with the home warranty company. The contractor visits your home and determines that the range is indeed “kaput” and needs to be replaced. You pay a small deductible, say $100 or so, and the range is replaced with a brand new one. Not a bad deal, especially if the unit you’re buying is an older home and the appliances look a bit dated.

To get a home warranty, contact a home warranty rep who will visit your property and provide you with a quote, identify what is covered and how long the warranty is good for. Most home warranties are in the $200 to $400 range and relatively inexpensive compared to the cost of a new appliance plus the labor required installing it.