Should You Buy a Home Warranty?

By
Real Estate Broker/Owner with Hamm Homes

Should You Buy a Home Warranty?

"I'm buying a house. Should I buy a home warranty?" Seems like a relatively tame question, right? But post it on Facebook or Nextdoor and watch the impassioned responses roll in. You might as well ask, "What political party should I belong to?"

Everyone has their own experience, so expect to hear a few people call them "a scam" or at the very least a waste of money. Others will regale you with their tale of how having a warranty saved them from a freezing winter because they couldn't afford to fix their furnace without it.

In the end, the decision is personal and largely based on how comfortable you are paying out of pocket if one of the more expensive items in your home, like the furnace or hot water heater, needs to be replaced. Here are some things to consider when making your decision.

Know the cost

"A basic home warranty costs about $350 to $500 a year or more," says Money Talks News. A warranty typically covers plumbing, hot water heaters, and heating/electrical system components. More expensive, 'enhanced' plans can provide added coverage for things like your washer/dryer, air conditioning system, refrigerator, septic tank, and garage door openers.

You can typically break down the annual cost into more manageable monthly payments, but the cost of the warranty itself isn't the only thing you're responsible for paying. Most home warranties include either a service call fee or a deductible, so it's important to consider those factors in addition to the home warranty plan itself.

Consider your peace of mind

Many homeowners opt for a home warranty for major "just-in-case" scenarios. Just in case the air conditioning unit crashes and burns. Just in case the hot water heater dies. With the cost of some of these items running into the thousands—the average cost for a new air conditioning unit and installation, per HomeAdvisor, is $5,413!—the peace of mind factor is huge. "For a homeowner who doesn't have an emergency fund, or who wants to protect their emergency fund, a home warranty can act as a buffer," says Investopedia. Home warranties also make sense for people who aren't handy or don't want to deal with finding a contractor.

Understand that not everything is covered

There's always a chance that the item you need repaired is not covered under your warranty for one reason or another. Some problems simply won't be covered by a warranty, and most home warranties won't cover components that haven't been properly maintained." The lesson here: Read the fine print, so you're prepared.

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Rainmaker
1,578,746
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co. Notary Services, retired Realtor

Great post on home warranties Will Hamm .

Apr 24, 2019 07:09 AM #1
Rainer
412,539
Rose Mary Justice
Synergy Realty Pros - Dandridge, TN
Synergy Realty Pros

I personally think they are well worth the cost.  Have had good and bad experiences but overall the good outweighs the bad.  

Apr 24, 2019 07:12 AM #2
Rainmaker
3,543,851
Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good morning Will. It is a personal thing and there is a great difference from one company to the next. TY       Sheila

Apr 24, 2019 07:37 AM #3
Ambassador
1,821,708
Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

I'm with you, read the fine print. Home warranties vary in their value.  It's common in our market for sellers of older homes to offer a home warranty to give the buyers peace of mind...

Apr 24, 2019 07:46 AM #4
Rainmaker
3,015,145
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

I've carried a home warranty on my home since it turned 8 years old and it's paid off multiple times in big ways. Every buyer contract I write requests a seller-paid warranty and ever listing contract I have offers one up-front.

Apr 24, 2019 08:07 AM #5
Rainmaker
5,308,832
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

This is good information to share with prospective home buyers.

Apr 24, 2019 08:27 AM #6
Rainmaker
1,870,779
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good morning Will - you covered the topic well because it depends on people's tolerance for sudden expense.

Apr 24, 2019 08:59 AM #7
Rainmaker
1,174,802
Sheri Sperry - MCNE®
Coldwell Banker Residential Brokerage - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Great post, Will Hamm,

 I recommend to all of my clients to get a home warranty.  I take a similar path that Nina Hollander takes with her buyers and sellers. I get feedback when clients use it so it helps me with recommendations. 

Apr 24, 2019 11:53 AM #8
Rainer
402,115
Dan Hopper
Keller Williams Realty Downtown LLC - Denver, CO
Denver Realtor / Author / Advocate/Short Sale

I just keep it simple ... for the last few years I have made a business decision to include a home warranty for the sellers and the buyers;  and it is an upgrade warranty, not the basic plans.  Why not?  Kind of takes the "what kind of closing gifts" out of the equation, when you are paying $350-$650 for your client's warranty.

Apr 24, 2019 03:54 PM #9
Rainmaker
3,270,790
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Will - as you learned this is not a simple topic and it's worthy of discussion by both prospective buyers and sellers. Study quickly. 

Apr 24, 2019 04:44 PM #10
Ambassador
3,804,880
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi Will- I have had friends who love them but you do have to do your homework to make sure that you know what you're getting. 

Apr 24, 2019 05:40 PM #11
Rainmaker
2,855,074
James Dray
Fathom Realty - Bentonville, AR
Exceptional Agents, Outstanding Results

Morning Will.

I always get a home warranty, I also encourage all of my clients to get one

Apr 25, 2019 02:12 AM #12
Rainmaker
2,479,951
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

I don't encourage home warranties as much as I used to.  The reps talk a good game, but then I get to hear complaints from my clients that purchase them about bad service and non-coverage.  I give them some choices and let them make their own decision.

Apr 25, 2019 07:28 AM #13
Rainmaker
3,079,801
Kristin Johnston - REALTOR®
RE/MAX Realty Center - Waukesha, WI
Giving Back With Each Home Sold!

Good info...in todays market here, I would say if a buyer can avoid adding contingencies in the offer, do it!

Apr 28, 2019 07:30 AM #14
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"Where There's a Will, There's a Way!"
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