Is a Home Warranty Worth It?
By Lorraine Ryall
Associate Broker, CDPE, CSSN, CNE
Whether it’s worth getting a home warranty depends on your individual circumstances and preferences. It’s also one of those topics where people either
love them or hate them.
Some people love having a home warranty buying a home, have had great experiences with them and renew it every year while others think they are a total waste of money or have had a bad experience with them.
The reason I am writing this article is because I received an email from a long-time client, Phil, who just purchased another home. He had an issue with the AC unit, called the home warranty company I recommended — which is also a brand new home warranty company — and it was fixed and up and running again within 24 hours.
Home Warranty — When Buying a Home
The one time I always recommend getting a home warranty is on the purchase of a home (with the exception of a new build). You are buying a used home and don’t know anything about the condition of appliances and systems other than what you found out during the home inspection and on the seller’s disclosure.
You have just put a lot of cash into this purchase so the last thing you need is an
unexpected expensive repair.
The best part of getting a home warranty when you are buying a home is you can ask the seller to pay for it. You still get to pick the home warranty company of your choosing and unless you are in a bidding war, the seller usually agrees to pay for it as part of the contract and you get a free home warranty for the first year.
Home Warranty — On Your Existing Home
A home warranty is a protection for if and when things break down. You may be paying for years and not have any issues or may be using it several times on big- ticket items and get your investment back in the first few months.
It’s also peace of mind that if you do have a costly repair you won’t have to pay out of pocket. You don’t have to search for a local repair contractor, you just contact the warranty company, and they will take care of it for you.
Here are some factors to consider when deciding on whether to purchase an annual home warranty on your existing home.
1. Age and Condition of Your Home: If you have an older home or older appliances and systems that are more prone to breakdowns, a home warranty
might provide added peace of mind.
2. Budget and Finances: Home warranties come with annual premiums and a service fee for each claim. Consider whether you have the financial means to
cover unexpected repairs without a warranty and if the cost of the warranty fits within your budget.
3. Risk Tolerance: Some homeowners prefer the certainty of knowing that they have coverage for potential repairs, while others might be comfortable
taking their chances and dealing with repairs as they come.
4. Homeowner’s Skill Level: If you’re handy and capable of doing minor repairs yourself, you might not need a home warranty as much as someone who prefers to hire professionals for all repairs.
What to Consider When Choosing a Home Warranty Company
Home warranties can vary in terms of coverage so it’s essential to review the contract carefully to understand what is included and excluded. Be aware of any
limitations and exclusions, or caps on repair costs and replacements.
There are several plan levels and add-ons and each home warranty company is different. While one may include the kitchen refrigerator in their basic plan another doesn’t and it’s an add-on. I have had clients who think their refrigerator was included only to find out it wasn’t when they needed to have it repaired.
One of the biggest expenses, if not the biggest living in Arizona, is the HVAC system. This alone can make a home warranty worth the annual premium, to know if your AC breaks down in the middle of the summer the repair will be covered. If the unit cannot be repaired and you have the right plan, the home warranty will replace the unit for you. Ensure whichever plan you get has good coverage for your AC repairs and replacement and check what the maximum limit is. Some plans will include the refrigerant while others don’t and that can add up if you need to add more.
If you have high-end appliances there will be an extra fee for like-for-like replacement, so make sure you compare companies and plans as well as the
Consider the service provider’s reputation as well. Research the reputation and customer reviews of the home warranty company you are considering, ensuring they provide timely and reliable service.
If you are considering a home warranty company, ask your friends and family how they like the company they use. Also, one of your best resources is a Realtor. Realtors refer their clients to home warranty companies and get to know which ones offer the best plans and service plus we get great feedback from our clients, both good and bad. We also know the local reps and can help if our clients have an issue that they are unable to resolve with the warranty company directly.
If you would like information on the top three home warranty companies I refer to my clients, have any questions on getting a home warranty, or how to ask the seller to pay for it, please do not hesitate to contact me.
Lorraine is a Multi-Million Dollar producing agent, has been a full-time Realtor for over 14 years, is an Associate Broker of KOR Properties, a Certified
Negotiation Specialist, and is on the Professional Standards Board. You can reach Lorraine at (602) 571-6799.