Is buying a home warranty worth it for repairs? Here’s what you need to know before committing

Home Warranties:  Cons, pro’s and….Cons

Home warranties from reputable companies can play a positive role in real estate transactions in limited circumstances.  But for a host of reasons more often than not you are better off putting money in the deal elsewhere.  On an older home where most of the major subsystems are reaching the end of their useful life but are still working they have practical value, and some policies will provide limited coverage to the seller during the listing period and transfer to the buyers upon settlement.  They can also sometimes provide a sense of security to purchasers even if the property is newer and in excellent shape.  They range in cost anywhere from $500 for a basic plan to $800 or more depending on options.  If you are asking a seller to pay for one in the contract that’s money they could give you in a closing credit or in a price reduction.  If you are buying it yourself you have to set the cost of the policy plus the service deductible against the chance of you having a claim during the year.  That is why I always recommend to my buyer clients to wait until after the home inspection to assess and decide if one makes sense at that point.  Also remember that this is an insurance policy with all it’s attendant restrictions and inherent desire to minimize outlays.  You are limited to their contractor list and their availabilities.  And if you want control over the models and materials used for the replacement you’ll be disappointed.  If your high efficiency Trane furnace dies you may not have to shell out thousands at that point to replace it, but you’ll be getting a generic brand, not a Trane in it’s stead.  Here’s a good article that lays out some of these topics in addition to a few more.  If you are debating whether to get a warranty or renew one vs saving for repairs and replacements give me a holler and I’ll give you some guidance.

It’s a good life.