By Patrick McCarran
Real Estate Broker
I am often asked if a home warranty is a good deal or worth the money. I highly recommend them. Considering that the average water heater runs about $1300, and a new furnace and A/C can run over $10,000 with the new SEER laws, a home warranty can save you thousands of dollars on a repair that pops up after you purchase a home.
I think it is important to understand that a home warranty is not an end all be all warranty and you should be aware of exactly what the home warranty covers. It does not cover everything that may go wrong but does cover a great many items. The warranty brochure will spell out exactly what is covered and what is NOT covered. It has been my experience that the major warranty providers do not try to “wiggle out” of paying, if it is covered and not obviously a preexisting condition then they will repair of replace. In general the warranty will cover items not covered by your home owners insurance. For example if a pipe leaks the home owners policy will cover the damage caused by the leak but not repair the pipe, the home warranty will cover the pipe but not the damage.
Be aware that if the warranty is generally only for basic coverage, if you need extended coverage, such as for pool equipment, air conditioning, or even the refrigerator, you may be able to negotiate that extra cost with the seller, or consider paying the difference yourself. It is important to note that you must file a claim with the warranty company and use their service provider, if you have a problem you can request a new vendor but you cannot generally call your own contractor and expect the warranty to pay them. Remember that although most home warranties provide coverage only for one year, but you can always for more upfront or most plans are renewable after the first year, one of my clients kept their home warranty for the 22 years they owned the home.
Take note of what the deductible or per visit cost for repairs? What’s the maximum dollar amount for repairs and what are the policy limitations such as new fittings or SEER inspections or permits? Also the warranty company will buy out the claim, sometimes this may work out better for the home owner.
A warranty is not a blanket protection form defects and no buyer should forgo a home inspection. An inspection may uncover defects or potential problems that may not be covered by the warranty—and may give you the opportunity to request the seller to make any major repairs before the closing.
But, warranties definitely have a place when it comes to protection and peace of mind. For sellers they can act as “insurance” that you won’t get an angry call about the bad water heater in the house you sold and for buyers you don’t have to worry about dealing with the added expense of replacing a major system or appliance after you move in.
Give me a call or email for more information or any questions on home warranties and providers. Know your options.