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Home Warranty - Waste Or Worth It?

Reblogger
Real Estate Broker/Owner with KGC Properties LLC, Tucson Property Management & Real Estate

The home warranty issue is always a topic of debate for agents, as well as clients.  Sometimes, I think they are not worth the money - but in some cases, I have seen them pay off and be a true benefit to the home owner!  You decide after reading Dan's post - waste or worth it?!

Original content by Dan and Amy Schuman

 home warranties cover applicances

 

 

There are some who think home warranties are a waste of money, just another way for brokerages to profit off of consumers.  However, given the benefits to both buyers and sellers, perhaps they are a wise investment.

 

WARRANTY BASICS AND BENEFITS

I'll be honest, when I first got into real estate, I thought warranties were a waste of money. Over the years, I have started to have a new found respect for them as my clients have really seen beneftis.

In a basic sense, a home warranty covers you in the event appliances or major systems break down. In most cases, a warranty will cover things that your typical home owners insurance policy does not. Having both a comprehensive home owner's insurance policy and a home warranty will provide you will excellent coverage.

Most homes experience issues pertaining to mechanical systems and appliances on a regular basis. It could be once a year or every few years, you just never know when something will happen. That is why having the protection of a home warranty is a smart thing to do for both buyers and sellers.

FOR BUYERS

1. CONVENIENCE  - When covered by a warranty, you will have access to qualified contractors simply by calling an 800 #. This is especially nice if you are new to the area.

2. LONG-TERM PROTECTION - While a seller will typically pay for the first year of a buyer's home warranty, the buyer has the option of renewing every year. As your home ages, the likelihood of a problem increases. So for the long term, having a warranty can be a huge help.

3. PEACE OF MIND - There is a tremendous feeling of knowing you will be covered if certain problems arise.

FOR SELLERS

1. COVERAGE WHILE ON THE MARKET - You will get covered during the listing period and NOT have to pay for the policy until closing.

2. STAND OUT FROM COMPETITION - Offering a home warranty may entice a buyer to purchase your home over another that is not offering one.

3. ELIMINATES PROBLEMS AFTER CLOSING - If a problem arises after title transfer, it is better for the buyer to contact the warranty company instead of you.

 

DO YOU REALLY NEED ONE?

 

home warranty claims

 

We are not here to tell you what to do, but based on the chart above, claims are certainly a common occurrence. In fact, we get emailed every time one of our clients has a claim paid by the warranty company, and it seems like it happens all the time. From an agent's perspective, I do feel it provides tremendous value to both buyers and sellers.

When it comes to buying or selling a home that costs hundreds of thousands of dollars, spending $350-450 on a home warranty seems pretty minimal. If you think of a warranty as more of an investment than an expense, it will hopefully make  more sense.

 

If you liked this post, please subscribe to our blog. We always appreciate having new readers and more importantly, enjoy making new friends.

 

Here are some of our others posts that may interest you as well:

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5 Reasons Why Using A Local Agent Is Better

Cool Virtual Tool To Help Pick Out Paint Color

Is Social Media Killing Confidentiality?

Real Estate Agents Are Not Just Door Openers

 

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About The Authors:

Dan and Amy Schuman are agents with Howard Hanna, the area's largest real estate company. They live in Solon Ohio and specialize in Cleveland Luxury Homes, working with buyers relocating to Cleveland, and first-time buyers.

 

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Home Warranty - Waste Or Worth It? is the property of The Schuman Team and may not be duplicated or used without their written consent. ©February 2013

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Buying or selling Tucson real estate, Mt Lemmon, Tucson bank-owned homes, Tucson rental homes, or Tucson lease option homes? Visit www.KGCPropertiesLLC.com .

                                                 

 

This blog is written with my opinions and my opinions are  presented with accuracy but not guarantees. Please talk to a professional before making any real estate, financial or agency decisions.    Gabrielle Kamahele Rhind - 2014. If you want to reprint parts of this - just email me for my permission: KGCProperties@gmail.com .

 

Comments (6)

Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi Gabrielle, in the end it is a gamble.  We prefer to self insure.

Mar 03, 2013 06:59 PM
Paul S. Henderson, REALTOR®, CRS
Fathom Realty Washington LLC - Tacoma, WA
South Puget Sound Washington Agent/Broker!

I used to be a big fan of home warranties until such time as they started charging huge deductibles. Factor this in with a large upfront cost and it is a sucker deal... 

Mar 04, 2013 01:36 AM
Rob Thomas
Prestige Homes of The Tri Cities, Inc. CALL....423-341-6954 - Bristol, TN
Bristol TN-VA & Tri Cities Agent, ABR, GRI, e-Pro

Gabrielle ...I think it can be a great thing in some situations! Nice re-post!

Have a great day!

Mar 04, 2013 05:10 AM
Scott Larson
BHHS/Utah Properties - Park City, UT
Park City, Utah Real Estate News

I am inclined to think a good home warranty is a good investment.  We all know that our expected value for paying for any insurance is negative or insurance companies would not be in business.  They make money because all insurance is a "bad bet".  But just like any other form of insurance, a small amount of money for a home warranty can bring peace of mind and save a potentially much larger payout.

Mar 04, 2013 06:03 AM
Carla Freund
Keller Williams Preferred Realty - Raleigh, NC
NC Real Estate Transition & Relocation 919-602-848

I think it is a gamble but, when you're purchasing an older home the odds are in your favor. I've seen home warranty companies pay for several things.

Mar 06, 2013 02:58 AM
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
850-476-4494 - Pensacola, Pace or Gulf Breeze, Fl.

Thanks for the repost as I would have missed this. We use old republic and it is the salesperson IMHO that makes the difference. He goes to bat when we have issues and if our sellers don't offerit we will usually buy it

Mar 08, 2013 07:05 AM