A home warranty is a one-year service contract that can help to protect your budget against the high cost of unexpected covered repairs or replacements of major components of your home’s systems and appliances. This warranty eliminates the task of finding a service company. When a covered breakdown occurs, you must contact your warranty first and they will refer you to their qualified, licensed service provider.
What are the Benefits for Home Buyers?
Purchasing a home is one of the biggest investments you’ll make. There’s comfort of having protection that a home warranty provides. You can rest easier knowing that you have budget protection for covered repairs to your home systems and appliances. There’s also the convenience of service: Instead of calling different companies for estimates and repairs, you make one call to the warranty program- Your warrantty program will arrange for a diagnosis from a qualified, licensed service provider.
What are the Benefits for Home Sellers?
By purchasing a warranty during your home’s listing period, you can help cover common out-of-pocket expenses that sellers often face due to mechanical failures. Most warranties offer seller coverage during your listing term. It can also be a marketing tool, an added incentive that can set your listing apart from the rest.
How does the warranty work?
For an annual fee, the warranties cover repair or replacement of basic home systems such as plumbing and heating, plus major appliances.
Additional items such air conditioning, pools, spas, wells, etc can typically be added to the basic policy for an extra fee. The warranty company contracts with local repair companies to provide service. If something breaks, the homeowner calls the warranty company, which arranges with the local company to dispatch a repair technician. If the repair or replacement is covered by the contract, the homeowner just pays for the service visit — typically $75, $100, or $150 trade fee depending on the plan selected.
Are home warranties a good idea?
There are some client who report positive results. For one client, the warranty paid for a $1200 compressor for air conditioning unit and then a $3,500 replacement of the A/C system itself — more than paying for the cost of his policy.
There are some clients who have been disappointed, with less than stellar results. Another client reported that he struggled to schedule a service call and find it all but impossible to get aging systems repaired or replaced.
What’s covered? You must read the service agreement
To discover what is covered, start with your home warranty’s service agreement. Read it carefully to determine what is and isn’t covered. Coverage for plumbing, for example, typically ends at your home’s foundation, so leaks or breakages beyond that would be your responsibility. “Pre-existing” problems typically aren’t covered. Breakdowns that result from poor maintenance or improper installation will not be covered either. The contract also may require that a system be upgraded to current building code standards — at the homeowner’s expense — before it agrees to repairs.
How many warranty programs are there?
There are many programs and companies that offer home warranties. When buying a resale home, our brokerage’s clients have selected warranty from 2-10 Home Warranty, HSA, FirstAm, as well as others. When buying new construction, the builder will select and pay for the warranty (in accordance with Kentucky law).
What do the experts say?
Clark Howard on Home Warranties: https://clark.com/homes-real-estate/home-warranties-not-worth-paper-theyre-written/
Dave Ramsey on Home Warranties: https://www.daveramsey.com/askdave/mortgage/never-buy-a-home-warranty
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Tony Clark Realtors | 2934 Frederica Street Owensboro, Kentucky | (270) 683-SOLD