Is a home warranty worth it?

Home warranty…worth it? Sometimes “yes” and many times “no”. Everything depends.

What is a home warranty?


A home warranty is a one-year service agreement that covers the repair or replacement of many major home system components and appliances that typically breakdown over time due to normal wear and tear.


What are the two kinds of home warranty?


In a real estate transaction, there are two types of coverages. There is a sellers warranty and a buyers warranty. The seller can buy a warranty during the listing period that covers them during the marketing and sale of the property. At closing, the warranty transfers to the buyer.


Many times, sellers will offer to pay for a home warranty plan as a buyer’s incentive. There are different plans available, the basic and more comprehensive plan. The premium for the buyer’s plan is paid at the close of escrow and it covers the home for 1 year thereafter.


The seller’s coverage is a little bit different than the buyer’s coverage as the sellers coverage is more limited. The seller’s coverage is purchased during the listing period, but it is not paid for until the close of escrow. If the home never sells, no one pays for the coverage even if the insurance paid out on a claim.


A home warranty does not cover everything.


Be aware that not everything is covered: there are many exclusions (items that do not qualify for repair)


EXAMPLE: A plastic piece from dishwasher rack broke and fell into motor breaking a part. A technician came out to tell them that the home warranty company doesn’t cover broken rack parts. The consumer is out $100 plus the cost of service visit. That wasted money could have gone towards the purchase of new dishwasher.


Home Warranty companies are competitive, but every one has exceptions to the policy .The most common exception is that the warranty does not cover items that did not work on the day ownership changed. That means you can’t buy a house with a heater that you know does not work and then expect the home warranty company to repair it later. However, if the heater was inspected while in escrow and the inspector did not call it out as not functioning, more than likely, the company will not question a claim during the policy period.


For all your real estate buying needs call the experts at Buyers Broker of Florida 407-539-1053.


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