Many of our clients in the Austin real estate market protect their investment when purchasing expensive electronics, large appliances and other high-end items. They often ask if they should purchase a warranty for their home. It depends on the situation and here we will try to offer information to help you determine if a home warranty is right for you.
A home warranty is a policy that covers the cost of repairing certain home systems and appliances if they break down due to normal wear and tear. This is not to be confused with homeowner’s insurance which covers contents and structure that are damaged during accidents or natural causes.
Many home buyers choose to purchase a home warranty as soon as they close on buying a house. This provides them with some peace of mind because it will prevent unexpected expenses such as a malfunctioning refrigerator or leaking hot water heater right after moving into the home. Being free from these worries is worth every penny to people who have already got enough to do trying to get settled into their new home.
Most home buyers are required to get homeowner's insurance as a condition of their mortgage agreement. Home warranties are an optional purchase, and the price range usually begins around $300 for basic coverage and can go up to $600 for more comprehensive coverage. Most home warranty companies offer additional coverages for things like wells and swimming pools. Home warranties usually cover:
Washer and dryer
Heating and cooling systems
A homeowner can purchase a home warranty at any point in time, but typically the best home warranty deals are found at the time you purchase your home. At the end of the first year you will normally have the option to renew the warranty or cancel it.
Benefits for home buyers and sellers
The benefits of a home warranty for a home buyer is that it keeps them from incurring additional expenses early in their home ownership, when surprise repairs and expenses can be at their most stressful.
Sellers benefit from having a home warranty because it covers the major appliances and systems while they are trying to sell their home, and a home warranty can often serve as a bonus to the home buyer if the seller pays for the first year of the warranty.
When do you really need a home warranty?
There are situations in which a home warranty may not be worth the expense. In new homes most of the appliances are covered by the manufacturer's warranty. However, if you have purchased an older home the odds are much greater a major system or appliance may break, and most warranty companies do not differentiate between newer homes and older homes. Getting the necessary repairs and replacements done in an older home makes a home warranty a sound idea.
How to utilize your home warranty coverage
If an item covered by your home warranty breaks, contact the warranty provider and they will connect you with a pre-screened contractor in your area. You may incur some expense depending on your home warranty contract. Sometimes there are deductibles, or the service call may be your responsibility to pay depending upon the terms outlined in your warranty.
You will have to assess your personal situation to determine whether a home warranty is a good idea for you. If you were buying a brand new or recently renovated home, your need for a home warranty will be much less than if you were buying an older home. Home warranties are a great idea for those who have higher risk of a major appliance or system breaking down and will usually pay for their first year with the first service call.