Is a home warranty right for you?

Now that you understand the intricacies of homeowners insurance and the various types of policies, let’s dive into home warranties to determine if this is something you need. If you’re buying a new home, ask yourself these questions before signing up for a home warranty.

What’s the point of a home warranty? 

Purchasing a house or a condo is no easy feat, so of course you want to protect your investment that you worked hard for. That’s where a home warranty can come in handy. A home warranty is a service contract that helps cover high, unexpected costs for repairing or replacing appliances and building systems. These can include plumbing systems, HVAC units and the hot water heater. However, a home warranty does not cover structural systems like doors and windows.

What’s the difference between a warranty and homeowners insurance?

Homeowners insurance is often applied to cover costs for property damages from fires and weather, as well as loss of possessions due to theft. Insurance does not cover a failed air conditioning unit. Warranties, on the other hand, can offset costs for those items that are in good working condition on closing day and then fail to normal wear and tear. 

Is buying a home warranty necessary?

Just like every transaction in real estate, the quick answer is: It depends. 

My advice is if you’re a buyer, closely read the findings of your home inspection. If you’re purchasing a previously owned home and the inspector finds several appliances are nearing the end of their shelf lives, then consider purchasing a warranty. (Check out my guide for determining the typical lifespans of common appliances.)

Without a home warranty, you could potentially spend lots of money outside your monthly budget for an unexpected project. If you can’t afford an emergency fund for these expenses, a home warranty is well worth the investment and could even pay for itself. The downside is that there’s the possibility that no appliances ever fail and you didn’t have to use your warranty, but that’s a similar risk and decision you have to make when acquiring homeowners insurance.

If you’re buying a new construction, don’t waste your money on a home warranty. Oftentimes, the home builders offer their own warranty for building systems, so you won’t benefit from a separate one. Also to note, the builder usually doesn’t cover warranties for appliances, as those items have warranties through the manufacturer.

A home warranty is simply another piece of the puzzle to consider before obtaining a new home. Like any other policy or contract you sign, always read the fine print! Some terms and conditions may limit the types of appliances or systems that can receive coverage under a warranty, as well as have a preferred list of service companies to hire for repairing items. 

Ask your Realtor for advice on selecting a home warranty before closing day. If you’re on the other side of the table and selling your home, offering a home warranty can be an effective strategy to attract serious buyers. A trusted Realtor should advise you on this decision based on market demand.

If you’re buying or selling a home and are unsure about a home warranty, call or text me today at 941-225-1500.