Should I Buy A Home Warranty When I Purchase A Home?
Last Friday, I posted an article defining a home warranty. This week I will answer the question, “Should I buy a home warranty when I purchase my home?” If you asked 10 buyers or real estate agents I’m sure the answer to the question would be split.
When you purchase a home you are spending hundreds of thousands of dollars, if not millions. The cost is relatively cheap, somewhere between $250-$550 depending on the coverage and if it has a pool or spa.
I suggest you purchase the warranty for two reasons. One, you will have piece of mind. Two, even if you use it once, you will probably get your money’s worth. Don’t try to save a minimal amount when you are purchasing the most expensive investment of your life.
The problem most buyers and agents have is that most home warranty companies will not honor certain claims and will definitely not pay for preexisting problems.
On the other side, it would be wise for a seller to pay or split the cost of a home warranty because even if the home is sold AS-IS, they don’t want the hassles of getting a call from their agent saying there is a problem.
Note: Even if a home is sold AS-IS, the buyer may be able to go back to the seller if the problem wasn’t disclosed, unless it’s a trust or probate sale.
Some agents will surprise their buyers by buying a home warranty for the clients as a gift.
I once had a buyer who is very educated tell me that he didn’t see the value of buying a home warranty and the money would be better spent on a future problem.
Thank God I purchased the warranty for them because after closing escrow on a Friday, when they arrived on Saturday with the moving truck their garage was soaked EVERYWHERE because the water heater blew up.
The home warranty picked up the cost and my buyers were very happy.
Needless to say, that following Monday I got a very nice call thanking me for the warranty.
I hope this story helps you in your decision to whether or not to purchase a home warranty.
- Tap
Post Specific Disclaimer: All home warranty policies are different. Please make sure you and/or your realtor have read over the warranty terms in their entirety before purchasing a home warranty. I, nor Team Tapper, hold any responsibility for the information provided in this article.
I had nationwide home warranty for a few months and I terminated the policy after having many bad experiences within a short time. They never covered anything and found excuses such as pre-existing conditions, maintenance negligence etc.
I wanted to buy some other decent warranty. But as you can see in this home warranty reviews site, most warranty companies seem to have problems
http://www.homewarrantyreviews.com/reviews
I think I am going to consider one of the top rated companies listed there, which means company with least number of complaints
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It’s awesome that your warranty actually kicked in and protected you!
Susan´s last blog post..Selling a Short Sale in This Market
[...] Should I Buy A Home Warranty When I Purchase A Home? This week I will answer the question, “Should I buy a home warranty when I purchase my home? The problem most buyers and agents have is that most home warranty companies will not honor certain claims and will definitely not pay for preexisting problems. On the other side, it would be wise for a seller to pay or split the cost of a home warranty because even if the home is sold AS-IS, they don’t want the hassles of getting a call from their agent saying there is a problem. Please make sure you and/or your realtor have read over the warranty terms in their entirety before purchasing a home warranty. read more [...]
A warranty is always a good thing to have in place in case of emergencies. It would end up costing you much more to fix if you were no covered.
It’s great that your home warranty actually worked. However, I bought 3 different properties using 3 different home warrany companies. I’ve had all kinds of things happen to these homes: from the garage door not working to a fence blowing over to the hot water heater failing. Nothing was covered, except for once when my furnace gave out. And even with that it was a partial cover. I don’t believe a home warranty gives you peace of mind. I feel you are paying extra for something that doesn’t actually pay up. It’s a gamble.
Jarrod T – Hey Jerrod, Thanks for commenting. Yes, the warranty will not cover a pre-existing condition nor will it because of neglect of maintenance. However, if the problem simply randomly happens during the course of your 1 year policy then it can be very helpful. Sorry to hear about your bad experiences with them.
Thank you for the great reference for the home warranty review site!
Susan – Did you have bad experiences too?
Tony – My point exactly
Joanne – Joanne, I know how you feel, I had the same problem with one of my rentals last year. However, Last week my clients wanted to upgrade their furnace system after the old one broke down. The insurance company eventually credited them $1,000 towards their new furnace. So for them, it was well worth having it, and they got the warranty for free because I negotiated it for them.
Most insurance companies don’t like giving away money when you ask for it, you have to demand it. I guess that’s where the inner negotiator in me shines. As the saying goes, the squeaky wheel gets the grease.
Your site displays incorrectly in Mozilla, but content excellent! Thanks for your wise words.
Hey Toomma,
Thank you for the complement. However, I just checked capability with all browsers. Mozilla Firefox, Google Chrome, Internet Explorer, and Safari… All are working fine. Can you give me any more details about the problem?
Thanks,
Brendan Aiello
I agree. Home warranties are great for the exact reason you talk about. It is such an inexpensive thing in the big picture of buying a home. I used to provide them to all my buyers and more often than not they would end up using it at some point in that first year.
Hey Jeff, thanks for the comment. Your right, for such a inexpensive thing it’s not worth arguing about. It’s also a nice thing to do.
Tap
How are things in Myrtle Beach?
Hey Tap, Great blog! Just found it and think I will be a regular reader. Things seem to be improving here in Myrtle Beach. Properties that are priced well seem to moving a lot quicker recently. Hopefully that trend will keep up.
You are completely correct in recommending home warranties. When you are purchasing the largest investment of your life, why wouldn’t you want the peace of mind a warranty can provide.
Exactly, Mark. Even if you don’t use it you have peace of mind. If you use it once, it will probably will itself two fold or more.
Thanks for the comment.
Tap
Very nice information. Thanks for this. You really have a very informative site, thank you for sharing!
yes you should, but always look at the fine print.
i’ve seen too many people buy a home, but then ignore things like when any warranty claims have to be sent in. Even a few days after the deadline, they’re standing around asking what happened!
- Chris
Chris, It’s our job as agents to educate our buyers and sellers. We do this every day, they don’t.
Tap