Step 23 - Do you Want a Home Warranty?

Home Warranties

A home warranty is distinct from homeowners insurance and does not serve as a substitute for homeowners insurance. Homeowners insurance provides coverage for major perils such as fires, hail, property crimes, and certain types of water damage that could impact the entire structure and/or the homeowner’s possessions. In contrast, a home warranty is a separate contract that covers repairs and replacements on systems in your home, typically for one year. It's important to note that if you’re purchasing new construction that has never been lived in before, the builder usually provides a one-year warranty, and after that, the home warranty comes into effect for a specific duration.

What is Covered Under a Home Warranty?

The specifics of home warranty policies vary depending on the company from which you purchase it. Generally, a home warranty will cover your home’s appliances and systems such as electrical and plumbing. However, it typically does NOT cover exterior issues like the roof, water intrusion due to a roof issue, fencing, decking, landscaping, or items in a detached garage. The cost and coverage of a home warranty can vary widely, so it's important to compare policies before making a purchase. Typically, warranties range between $500 - $800 and are valid for one year from the purchase date. Additionally, while home warranties cover many of your new home’s crucial systems and appliances, those items must be in working order before the contract is entered into with the warranty company. When buying a home warranty, consider premium and optional coverage to customize the plan to fit your needs, especially if your home has multiple ovens, dishwashers, a wine fridge, etc., as these extra appliances may not be covered under the standard warranty.

Who Pays for the Home Warranty?

The answer to that depends. At times, we negotiate for the seller to provide a home warranty as part of the contract negotiations. If that's the case, the home warranty will be provided and paid for by the seller, and you'll receive the details of the home warranty at the closing. If we did not request a home warranty as part of the contract, then you need to decide if you want to purchase one separately.

What is the Cost of a Home Warranty?

The price of the home warranty is influenced by various factors like the age and size of your home, as well as the coverage you desire. Typically, the cost ranges between $500 to $1,000. Additionally, if something breaks and the home warranty company needs to make a service visit, there is usually a service fee call of approximately $99 per trip. Under most warranty programs, there are no extra charges for repairing an item beyond the service fee call.

Are appliances repaired or replaced?

The home warranty company will typically attempt to repair the item first. If repair is not feasible and the appliance needs to be replaced, they will generally substitute the item with a model that has similar features. For example, if you have a fridge with an ice machine and a water dispenser, you will receive one with similar features, although it may not be the same brand. For instance, American Home Shield typically replaces all appliances with a GE brand. Therefore, if you have a Subzero fridge, you’re likely not getting another SubZero. Instead, you’ll receive a GE fridge with similar features. If you prefer a Subzero, most warranty companies will provide you with the cost of the GE fridge in cash, allowing you to use it towards purchasing the Subzero on your own.

How Can You Purchase A Home Warranty?

If the seller does not include a home warranty and you are interested in purchasing one, there are several reputable companies such as 2-10, Choice Home Warranty, Cinch Home Warranty, and HSA Home Warranty. You can likely obtain a free quote online. 

As your real estate agent, we can also look into costs and coverage for you. When you obtain the policy yourself online, you usually can work into a monthly payment option while the policies with real estate agents are an annual payment that is paid at closing. This is something you will need to decide before closing and would request to have the home warranty commence on the day of closing. Most home warranty companies will also allow you to begin a policy up to 30 days after closing.

When a home warranty is comprehended and utilized for its intended purposes, it can be the simplest way to save on home repairs and alleviate the additional stress with buying or selling a home.