What is a Home Warranty?
A home warranty is a one-year agreement that functions much like a warranty for an appliance or car – the difference is, a home warranty generally covers all the major systems in your home, rather than one specific item! There are many different home warranty providers out there, and each home warranty package varies a little bit. Many offer the opportunity to add on additional systems, such as air conditioning systems, or will cover additional scenarios such as malfunction due to mismatched parts/systems.
How Does a Home Warranty Work?
When you have an issue with one of your covered item, you reach out to your home warranty provider using the information for your specific home warranty contract. Depending on the home warranty company, they will either arrange for one a service provider that works with them to come to your home to inspect the item, give you a list of approved service providers for you to schedule with, or let you know to get a service provider of your choosing out to the property. There is usually a low cost associated with these visits in the range of $50-$100 – whatever is set in your warranty at the time of purchase. The home warranty provider covers the rest, either by paying the vendor directly or reimbursing you for any additional costs, depending on your plan. The item/system in question is then repaired or replaced with a like-kind model if repair is not possible.
How Much Does a Home Warranty Cost?
While prices vary by provider, basic home warranty packages typically range from $250-$500. With add-ons they can range up to around $1,000, depending on factors such as the size/type of property (e.g. single family home vs duplex) and again, the specific types of add-ons you desire. Payment for a home warranty can be handled through escrow during the closing of your home purchase, or you can purchase one on your own at any time even after the close of your home purchase.
Should I Buy a Home Warranty?
The decision on whether or not to purchase a home warranty is a personal one. Home warranties can be a great investment if you are purchasing a home with older appliances, or if you are a first time home buyer and are nervous about surprise expenses in the first year of ownership. That being said, much like moving through the process of using an insurance policy, using a home warranty is not always speedy. If the type of home warranty you purchase requires the use of approved service providers, there can sometimes be delays due to availability issues. Additionally, if you live in a more remote area you may find that the home warranty provider does not have many options for service providers that will operate in your area.
Can the Home Seller Purchase a Home Warranty for Me?
Yes! If you are purchasing a home you can definitely request during initial contract negotiations or during the inspection period for seller to purchase you a home warranty. Depending on market conditions (i.e. sellers market vs buyers market), sellers may be more or less amenable to this idea. If you are curious about a home warranty be sure to speak with your broker during the initial offer process to determine if requesting a home warranty from the seller will fit well into your overall offer strategy.
Still Have Questions?
Contact your broker to chat further about their experience with home warranty, and if a home warranty may be the right fit for your new home!