So, you’re buying a house or condo…soon, you’ll be house-rich and likely cash-poor, and like most buyers, for awhile won’t have a lot of extra cash to handle those house-failure emergencies.
Home warranty to the rescue? Not really. Home warranties are great tools to reduce costs and to help ease the pain of unexpected breaks, damage and failures. But like any service-oriented product, you must read the contractual fine print.
I have helped a lot of buyers get home warranties in the negotiation process, and have recommended sellers provide them either as part of the closing or to help quell fears of nervous buyers. I have seen home warranty companies completely ignore their customers and their claims, and have seen them also perform miracles at no extra charge–and quickly, so there is no hard rule on which companies to use.
Why would you want a home warranty? Five strong reasons to consider:
1) It’s part of negotiating: Don’t ask, don’t get; that’s the primary rule of sales, and it applies to negotiating for your home, too. Most home warranties are less than a few hundred dollars for a year’s worth of coverage, so it always make sense to ask for one, to be paid by the seller. If you need it, you’ll be getting the premium at no cost. Don’t need it? No money lost.
2) Your New Home’s Systems are Iffy: Your heating, plumbing and cooling systems are expensive. Just to have an evaluation done to find out what a problem might be is expensive. If you’re buying a home in which either you or your inspector or agent have noticed some potential issues because of age or lack of maintenance, having a warranty available can save thousands of dollars on systems that are vital to keeping your house humming.
3) The appliances in your new place work, but aren’t great: A home warranty is great for appliances that are older, but still working…for now. Maybe you hope to replace and upgrade appliances, but just can’t or don’t want to do that right away. A warranty will help you hedge your bets that you can continue to use your appliances, but, if something breaks, you can have it repaired until you’re ready to splurge.
4) You’re New to Town: Maybe you’ve moved across the state, or across the country. If something breaks, there’s typically little time to do a lot of due-diligence to figure out who is the best, reliable, affordable repair service in town. Home warranty companies use a network of local contractors and they know their reputation depends on the services they provide on-site. Have a problem with the work they perform after-wards? Contractors don’t want to lose their relationship with the warranty company and lose future business, so you might get more attention than otherwise.
5) Investment Properties: If you are a landlord, investor, are buying for a college-age child or won’t be around to handle a crisis, a home warranty can step in where you can’t. Or don’t want to. Your investment will likely be treated better and potential, small problems may stay (versus getting ignored by renters) that way if folks know they can call a warranty company and avoid a high-expense of an independent repair company.
Home warranties don’t replace homeowners insurance-they’re an addition. And they don’t cover everything, all the time. Take time to read the fine print on a potential contract, ask a lot of questions and shop for a reputable company. They are out there. And then relax! Your new place is for enjoying, not fretting over potential problems!