Do You Need a Home Warranty?

home warranty

What is a home warranty?

A home warranty is a contract between the homeowner and a company that states said company will repair or replace broken home appliances or components that are specified in the agreement.

home warranty

Home warranties are perfect for first time home buyers.

Who needs a home warranty?

Home warranties are perfect for first time home buyers.  Whether you’ve purchased an older home, or are simply unfamiliar with the costs of home maintenance and repairs (or perhaps both).

If you’re not a good saver, or don’t have a lot of excess cash readily available, a home warranty gives you a security net to fall back on.   

Questions to ask?

Keep these things in mind when you are identifying a home warranty company to work with.  Your real estate agent will also answer these questions, or help you find the information.

Previous Coverage:  Home warranty companies require that you go through the manufacturer, rather than through them, for appliances with manufacturer warranties. 

Cost: What is the cost of the home warranty package available, and what is covered?  What is offered at lower or higher prices? (Varying prices = Varying coverage)

Clarify/ Fine Print: What exactly does the warranty cover? Clarify the specifics before you sign on the dotted line, so you know exactly what you are paying for. 

Replacement Value: In the event that an item must be replaced, how does the company determine the value of the item?  Some warranty companies only recognize and pay out the depreciated value, leaving the homeowner to pay the difference left.  

Limits: Are there limits to how much the plan will pay out?  

Home Warranty

Ask your real estate agent or neighbors for reviews to help you decide on a home warranty company.

Keep in Mind:

Check with your real estate agent about home warranty companies that use reputable professionals to service repairs.  Ask around locally for others that have experience with home warranties. Ultimately, even a nationwide warranty company will find local professionals to fix the broken appliance/item in your home.  A home warranty company will use a local professional, often the cheapest, rather than one that will do the best job, so definitely do your research on this one.

A home warranty is not homeowners insurance. Warranties cover repairs of appliances like furnaces, hot water heaters, oven, dishwasher, etc.  Insurance covers damage to the home like fire or theft, and injuries sustained in the home due to those events.

Pros and Cons:

Home warranties cover the “unknown”. Needed repairs identified in the initial inspection are “knowns”.  There will be “unknowns” in any home, whether it’s brand new, historic, or somewhere in between.  Appliances break and things happen. 

Everything is not covered under a home warranty that is named an appliance or system.  For instance, not all warranties cover septic systems.  On that note, appliances are complex and come with many different parts.  Your  warranty will cover certain parts of appliances. Home warranties have varying levels of coverage with associated costs. Know what levels are available to you, or what coverage you have chosen.

A Positive Personal Experience:

Rewind to six years ago. — My husband and I receive a home warranty as a result of negotiations when we purchase our first home, and it is a lifesaver.  With inspections, we get documentation that both HVAC systems are functioning properly.  Within 48 hours of move in, the upstairs air conditioning cuts out, and requires a replacement. It’s the weekend of July Fourth in Georgia and a SAUNA outside. 

With the help of our realtor and home warranty, we receive an upstairs Air Conditioning unit replacement.  We save several thousand dollars, a cost that is tight for us as younger, first time homeowners. The only downside is working with the company to send someone out promptly.  Additional time is involved and there are a few extra visits to verify that the air conditioning is indeed broken, as well as underwriting to confirm the warranty coverage. All in all, we have a new AC and we’re not sweltering in July in Georgia.

So, before you sign on the dotted line, know your home warranty company’s policy backwards and forwards.  Talk with your real estate agent and ask them for guidance. Be familiar with the fine print. Keep paperwork and information handy.

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