Are Home Warranties Worth It?

Home warranties have become increasingly popular over the past ten years. It is estimated that about 80% or more of residential sales come with a home warranty policy.

From the seller’s point of view this is a great marketing investment. Obviously, anything that gives the potential buyer enough peace of mind to pull the trigger is worth the $350-$500. It may, in some cases, offer the seller some peace of mind as well, if they are concerned about future problems with the home coming back on them. There can be unseen problems in a home that even the most honest seller, who genuinely attempts to disclose everything, can miss.

From the buyer’s perspective, you have nothing to lose. However, don’t assume every claim will be successful. Here are some tips to help you ensure you get the most out of your home warranty. First, read the fine print. The Devil is in the Details. Pay close attention to what is covered. Second, don’t forget that you have a warranty. Quite frankly, this is what the warranty companies are counting on. Keep a note on the fridge to remind you. Make sure that it includes the warranty period so that you don’t procrastinate and end up paying for repairs that were covered. Third, if you have concerns, consider having a Home Warranty Inspection thirty days before your warranty expires. Quite often issues with a home are not obvious to the average home owner-they tend to hide in attics, crawlspaces, or on the roof. Make sure that the Home Inspector is licensed in the state that you reside. It is also a good idea to have the inspector look over your warranty contract. They should have experience with Home Warranty claims and offer valuable advice.

Now home warranty companies could do a much better job communicating upfront what is and is not covered. This would help avoid future misunderstandings. Also, they should put as much emphasis on customer service as they do on sales. With Home Warranty sales climbing the old adage, “Buyer, beware” comes to mind. Deal with reputable companies that were around before the boom. It would be nice for the warranty company to still be in business should you need to file a claim against the policy.

Overall, home warranties, like most anything, can be a great value to an educated consumer. Simply, take the time to know what you’re buying.