Home Warranties are they worth it?

Let’s start with some basic questions. Have you heard of home warranties? No, they are not home owners insurance. These are warranties that cover the mechanicals' of your home, which are not normally covered by your home owners’ policies.

Are they provided for new homes only? No, home warranties can be bought at any time, regardless of the age of the home.

Do you have to be a builder or business to buy them? No, you as a homeowner can purchase a home warranty at any time for your home. In recent years you may have seen sellers buying these and giving them to buyers to increase the chances of their home selling.

I have to admit I often was the one to laugh at home warranties as a stupid senseless thing to buy. Just another way for someone to make money. I mistakenly, like many, thought that your home owners insurance covered most problems with your home. Then I became a home owner myself…and reality set in. The first time we had to replace our washer, or when our sub pump went after a hurricane went through PA it hit us in the old piggy bank. Then there was the time the pipe broke in the basement, or how about when the septic backed up into the house (due to improper pumping by a septic provider) causing a lot of damage. Let’s not forget when the heating system finally gave out during a cold winter, when I needed a new roof due to age, or when the well pump gave out this past summer. All these events made me realize a few things. First the saying “when it rains it pours” is very accurate. The second being a home owner some days is no fun at all. Especially when it’s the dead cold of winter, snowing and you have no heat. Cue high emergency repair visit. The third being that my valued home owners’ insurance policy did not cover any of these items. Fourth these were pretty expensive repairs that we honestly didn’t always have the money to fix when they gave out. Now if you have a sizeable emergency fund stashed away you might be ok, but the reality is most people do not. For many years we fell into that category as well. After spending all the money to purchase a home, most are out of cash. So if an emergency occurs they are putting it on credit, if they fix it at all.

Which is why I must confess at Southern End Investments we normally provide a one year home warranty to go with the homes we resell. We understand buying a home is an expensive investment. While we try our hardest to prepare the home for new ownership by updating items and replacing them at the end of the day we are still selling an older home. All the cosmetic fixes in the world, tests on major systems, and inspections will not guarantee that the home will not have issues. For example an inspection may say you have years left on the roof, but the first rain storm brings to light a leak in the roof! You now have a roof to replace, but every time it rains you also have damage from that leak until it is! In some cases home owners will cover this but sometimes they’ll say the roof failed due to age and refuse. Then after shelling out all this money to buy the home you may not have the money to replace the roof and fix the damage. Enter the home warranty. Provided there is roof coverage they will fix or reimburse most if not all the cost to get your home back to new at no added expense to you. Saving you money and giving you peace of mind.

Unfortunately I can’t get into specifics of home warranties because they vary from company to company, but a quick search online will provide you with a list of them as well as reviews. A realtor may also be able to recommend one to you. Some warranty companies are better than others so I would ask around and see what people think. The cost of warranties also varies depending on the level of coverage, additional options selected, where the home is located, type of home, etc. Most offer online quotes though so you can get an idea of what your personal out of pocket cost will be. Home warranties also cover most of the little things in the house that a home insurance policy will not, like appliances. The majority of home warranty companies also do not care that your heating system may be near the end of its life, they’ll cover it anyway. The yearly fee for them is minimal compared to the cost of replacing a unit. I personally would rather pay $500 or so now, than $1,500+ for a new heating system in a few months. Home warranties can also be extended and I have found that the more years you sign up for ahead of time the bigger the discount. Home warranties do not need to be purchased as soon as you buy a home either. They may be bought at later dates. Maybe when you move into your home you have a good emergency fund but something comes up that eats away and you can resupply it. You can at that time buy a home warranty to assist in any future unexpected repairs.

So is a home warranty worth it? Only you can answer that based on your individual situation of course. If you buy a home and have a sizeable emergency fund, it might not be worth it to pay this expense. If not however, and one is not offered by the seller, then you may want to consider one. Maybe you even want to keep it in mind for a later date for yourself or someone you love (think great gift for elderly parents, your welcome). It could save you money and headaches at the end of the day, should the unforeseen happen.

Until next time!

#homewarranties #houserepairs #savingmoney