With each transaction, whether working with a Buyer or Seller, the discussion of a home warranty is addressed (our Keller Williams Realty office and Errors & Ommissions policy requires), as real estate agents want to educate the public to allow them to make a most educated decision.
Depending on your situation and the property you are buying or selling, a home warranty may or may not be right for you. First things first, a home warranty can be purchased by a Seller (in most cases to attract a Buyer to their home and ease their mind about having an issue down the road) or by a Buyer purchasing a home who may not have the financial ability should an appliance, heating system, or other large component of the home that is covered by the home warranty policy fail within a year of their purchase.
Yes, the home warranty, like an extended warranty on vehicles or electronics has a set window for expiration, typically a year. The cost varies though generally ranges between $400-$700 depending on the coverage. You begin with a basic coverage plan and can add optional coverages depending on the property type and additional features of the home. Remember, you are simply buying a product designed to help offset the often high costs associated with replacing or repairing the major components of a home, like a heating system.
However, like an insurance policy, a home warranty comes with some "fine print" and restrictions that you may want to read very carefully to understand what is and what is not covered. First, when you make a claim, a service fee is paid to the home warranty company, which is typically around $100 per visit to determine whether an issue is covered and from there whether to repair or replace.
Note that the serviceman's review of the situation can determine, for example, that because the home owner did not regularly maintain a heating system that the home warranty will not cover the repair or replacement, and you're on your own now and out $100. Another example being that a previous defect could be causing the issue, which might also not be covered. Again, be sure to read the fine print and understand the policy you are buying.
Keep in mind too that the home warranty company makes the determination about repair or replacement as well, and they may even choose who performs the work and when, leaving you with the hassle of not being able to use your handyman and work around your schedule. Would you want a brand new heating system or one where new components are added to operate again?
In summary, a home warranty can and has saved a number of home buyers and sellers substantial amount of money over the years, but certainly is not for everyone or for every property. Use your judgment in determining whether it's right for you, and have that discussion with your real estate agent about your options.
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