Is A Home Warranty Worth It?
I get a lot of home warranty questions from current and past clients. Buyers are wondering if there is value in purchasing (or asking the seller to purchase) a home warranty, and past clients are wondering if they should renew.
What exactly is a home warranty?
An annual service contract that can cover the cost to replace or repair home appliances or systems that may break down at some point.
You can choose the amount of coverage you want - similar to an insurance policy - only this is only for your appliances and systems.
How much is a home warranty?
Packages typically range from $500-$800 with service charges from $50-$75. There are also add-ons for things like septic systems and pool that can be well worth it. Many times the seller will pay for some or all of the home warranty to cover the first year for the buyer, but this is a negotiable term in the contract. (I’ll do another post on contracts and negotiable terms).
What is covered with a home warranty?
Basic Plans
Central Air Conditioning, Heating, Electrical system, Ductwork, Garage Door Openers, Plumbing System, Attic, Water Heater, Built-In Microwave, Dishwasher, Oven/Range/Cooktop
Deluxe Plans
Washing Machine and Dryer, Code Violation, Refrigerator, Upgrades for HVAC and Kitchen Appliances, Improper Installation, Repair Modifications, Permits/Haul Away, Deluxe Enhancements
Add-Ons
Pool/Spa, Above Ground Pool, Geothermal Heating System, Central Vacuum, Roof Leak, Ice Maker, Well Pump, Additional Refrigerator
How Does It Work?
Service Request: Contact the claims department, explain what’s going on, and request service.
Appointment: A local service technician will coordinate a time that works for you.
Service Fee: Most companies charge $50-$75 for the service fee and you will likely pay the technician directly
Item will be repaired or replaced: The technician will determine if the item can be repaired or if it will need to be replaced. If it needs to be replaced, the warranty company will determine coverage eligibility and see if it's a complete replacement of the item or explore a claim buyout. For example, they might cut you a check for the item and you go get another one. This can cause frustration because not every situation or company is the same and if they were to cut you a check, it might not cover the cost of the new item.
Do You Really Need One?
This is the million dollar question. It really depends on the buyer and their situation. If you’re a first time home buyer or you’re relocating to a new city and you don’t have a network of trusted professionals you can call to service any item that breaks, it’s nice to know that your home warranty company will direct you to a licensed and you know upfront what that service fee will look like. It’s definitely more beneficial on the bigger ticket items like HVAC.
It can be frustrating when they come out only to say that they can’t cover what you need or that the replacement cost will be more than they can cover.
I do have a number of clients who never touch their home warranty…including myself, but for me I like the peace of mind in knowing that if something major happens, there’s a pretty good chance a home warranty will come in handy.
Overall, it can be comforting to know that you have a little protection if something breaks, so I say it’s worth it.
Let me know if you want to talk more about this or would like some recommendations on home warranty companies that me and my clients have had success with. Always here to be a resource!
I also LOVE to answer questions and offer guidance, so please contact me if I can help!
One more thing…if you’re looking to buy or sell, I’m offering a rebate to new clients at closing. Ask me for details if you’re interested!