I don't know why more rehabbers do not ask the sellers to provide a home warranty. This costs the seller less than $350 and can save you a ton of money. In fact, I would suggest getting the seller to agree to the sales price, then tell them you will pay $350.00 more but they have to buy a home warranty (stipulated on TREC contract). Why? because if the seller provides the home warranty it is a.) in force immediately, b.) fully transferable during the term (if paid in full). Otherwise, you have to wait for 30 days before your first claim.
How does a Home Warranty work? You/Seller pay the years premium @ closing and then a $55 – $65 service fee when you have a problem. When you are buying houses that do not have electricty turned on this can save you $$$$ on HVAC problems. I bought a house that had electricity turned on when inspected but 2 weeks after close, during rehab, the compressor died. What could have been a $1,700+ repair bill cost me only $55 + $200 for disposal. Savings $1,200.00 including the price of the warranty.
Hopefully this tip can save you some money on your next rehab.