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Are Home Warranties Worth It?

If you’ve bought a house recently, you might have purchased or received a home warranty. However, consumers frequently expect more from these plans than they deliver, giving new house buyers the question of “are home warranties worth the money?”

Home warranties aren’t insurance policies. Instead, they are service contracts. Like a service contract that covers repairs to your computer, a home warranty is a company’s agreement to pay money for fixing — and, if necessary, replacing — specified home components. They can give you peace of mind as a homeowner. However, in some cases it maybe it’s better to save for a rainy day.

We are going to share with you some tips today to decide..

1. How much is a Home Warranty?

· A basic home warranty costs about $350 to $500 a year or more. A warranty typically covers items like kitchen appliances, plumbing, water heater, heating and electrical system components, sump pump, whirlpool tub, and ceiling and exhaust fans,

“Enhanced” plans, purchased for another $100 to $300, provide added coverage for such things as a washer and dryer, air conditioning system, refrigerator and garage door opener. Optional coverage can be added, including for pools and septic systems.

2. You may be covered already

· If someone gives you a home warranty, accept it — at least while it’s free. But understand that, even with someone else paying the premiums, you’ll likely pay a service fee — typically $50 or $75 — each time you need a repair.

· Before asking the question, “Should I get a home warranty?”, learn what coverage you may already have. For example, if you’re buying a newly built home, know that:

  • New appliances and systems typically have one-year warranties.

  • Also, our state requires new construction home builders to offer a one year limited warranty and up to 10 years on the home’s structural elements.

  • Also, when you buy new furnishings and appliances, use a credit card that extends the product’s warranty. That can add as much as an extra year of protection.

3. How long does a home warranty run?

· Sellers may offer a year of coverage. Or you can purchase one yourself.

· Some buyers of older homes find that a warranty gives them confidence.

· A home warranty can be renewed annually.

· Other homeowners decide they’re better off setting aside savings to cover home repairs and replacements. Some consider homeowners insurance in addition to or instead of a home warranty.

· One way to think about your needs: Compare the age of each covered item with its average life span.

· With expensive components near or past their life expectancy, a home warranty might be a good idea. Components that have pre-existing problems, however, typically are excluded from protection.

· Be sure to vet any company before purchasing a home warranty.

4. Pros of home warranties

· Buyers who purchase a previously owned home inherit used appliances and home systems with wear and tear. A home warranty can help cover the cost if things break down.

· For example, I had a buyer that purchase a home with a Radiant Floor heating System – as a Welcome to your new home gift I provided them with a Home Warranty that covered this system since this was my Buyers first home with Radiant Heat and the home was 10 years old. That system failed within the first year and it was a $10,000 cost to replace. We were all so grateful for that Home warranty. My Buyer still talks about it 3 years later..

5. Cons of home warranties

· For many homeowners, there is a wide gap between what the customer expects and what the plans deliver. Before buying a home warranty, read the contract and understand exactly what it does and does not cover. For example, some contracts will not provide coverage if:

  • You didn’t maintain the appliance.

  • The appliance was installed incorrectly.

  • The appliance had too much wear and tear.

If you haven’t read the agreement carefully, be prepared for surprises. Don’t assume:

  • Your policy will replace a faulty component. The warranty company might insist on repairing it instead.

  • You can call your favorite service provider. Home warranties usually require you to use a contracted servicer.

  • The warranty will cover the entire cost. You usually have to pay for a service call

Learn who will perform the repair work. Also, find out if you can cancel the policy, and whether there is a period — such as 30 days — when you can get a “free look” at the program.

We are happy to recommend some great home warranty companies that we work and have had great experience with so if you want more info just email or call us at Powell Team.com


© 2021 Powell Team a division of Fred Real Estate Group

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