Home warranties are a service contract for your home that can cover items that are normally not covered by home insurance – like failures in major systems and appliances due to wear and tear. With a home warranty, you call the warranty company instead of a repairman when you have a system or appliance problem.
Then, the company will arrange for a service provider in your area to complete the repair or replace the system or appliance.
When is a home eligible for a warranty?
Home warranties can be purchased for existing homes or when buying or selling a home. You also may be able to negotiate with a seller to include a one-year home warranty on the home you are buying. Ask a REALTOR® for advice on negotiating warranties with sellers.
A home warranty can provide reassurance to a buyer who has limited information about how well the home has been maintained. A warranty can also be beneficial for people who have depleted their savings to buy a home & want to avoid any more major expenses.
What does a home warranty cover?
The coverage you get will determine what’s covered and what’s not. Like home insurance, you can select from several different home warranty companies. Be sure to compare options and pricing to narrow down your options.
Items covered in warranties may or may not include:
- Appliances – Refrigerator, freezer, dishwasher, oven/cooktop, washer, dryer, and/or garbage disposal.
- Mechanical/Electrical – Electrical system, garage door opener, security system, heating & cooling system, ductwork, ceiling fans, and/or exhaust fans.
- Plumbing – Toilets, spas, water heaters, sump pumps, pools, well pumps, and/or septic systems.
Be sure to read your agreement to make sure it covers what you need before you sign the contract. There may be some stipulations or exclusions on how much the warranty will cover per appliance, system, or incident. They may also require written proof or documentation of regular maintenance on certain systems & appliances.
How much will a home warranty cost?
The more extensive your coverage is, the more expensive it will be. Some companies may offer a “systems only” warranty, some may offer an “appliances only” warranty, and others can offer a combination of both. The cost will not be affected by the age of the home (unless it is a brand new build) or the square footage of the home (unless it is over 5,000 square feet).
You may also be able to get add-on coverage for things like hot tubs, spas, and pools. Separate structures, like guest houses, are generally not covered by the basic policy but can be covered for an additional fee. However, garages are typically included as a standard feature of a warranty.
Systems and appliances that have not been properly maintained may not be eligible for coverage. Most home warranty providers will require a flat fee for service calls, and they may offer lower monthly coverage rates if you opt for a higher fee for service calls. Your contract may also require a deductible, which you must pay in addition to the service call fee before the coverage begins.
Depending on your home warranty provider and plan, service calls can be anywhere from $50 to $125 or more. Plans can start as low as $30 per month for basic coverage on a single system or appliance and can surpass $300 per month with extended coverage.
Do I need a home warranty?
A home warranty can reduce the amount of “emergency” expenses a homeowner can encounter. However, you will incur a monthly fee for each month of an annual contract period.
Consider your needs and weigh out your options. Determine what you can afford to replace with savings before choosing a warranty or over-paying for coverage you may not need. A home warranty can be an unnecessary expense if your appliances & systems are in good shape and you have some savings for emergencies.
On the other hand, a home warranty can be a worthwhile experience for first-time homebuyers who have little to no home maintenance experience. Having the home warranty as a cushion can be a good thing until first-time homeowners get used to the responsibilities of maintaining a home. If a major system failure or appliance issue would crush your budget (and if you can afford the additional bill every month), a home warranty is a good choice.
Find a Local Real Estate Agent to Guide You Through The Process
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Team Melton is ready to help you with the home buying experience. Our team of professionals has over 50 combined years of real estate experience to assist you through every step of the process.