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What are "Home Warranties" and should you consider them?

Asked by Trulia Cape Coral, Cape Coral, FL Mon Apr 1, 2013

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A home warranty is a one-year service contract that helps protect home owners against the cost of unexpected repairs or replacements of their home’s major covered systems and appliances that breakdown due to normal wear and tear. A home warranty offers a network of prescreened contractors and qualified technicians, who work in conjunction with the warranty company.

A new home warranty that comes with your new home maybe comfort for your thoughts, but take heed of the fine print. The home warranty is purchased by the builder; the happy feelings of security can quickly turn into a nightmare when something goes wrong. Many times your builder and the home warranty company insist your particular problem isn’t covered.

As a home inspector, I have seen many situations in which home claims are denied because of one year builder warranty and new home warranty regulations, and even contractors that have gone out of business only to open under a new company name. A new home warranty is more of a service agreement than an insurance policy. Be proactive; safeguard yourself by comprehending the policy. When making a home warranty claim, reread your policy thoroughly and be persistent when dealing with the warranty company and builder.

New home warranties cover, workmanship and materials related to a home’s systems and components, including HVAC, the electrical system, plumbing and windows. Most likely it will not cover appliances or components accompanied by a manufacturer’s warranty. It also usually will not cover alternative accommodations if you have to move out of your home while repairs are being made.

A new home warranty can last for as long as ten years, but includes shorter coverage terms for certain systems, workmanship and materials. Doors, drywall, and trim are only covered for only the first year; other major structural items may be covered for years longer. Home warranty coverage only takes effect when severity of defect meets the specified terms covered by the warranty. A builder will usually warranty workmanship for up to a year. Make sure you have submitted all claims prior to the year. Schedule a new home warranty inspection to evaluate and document any concerns prior to end of the builders warranty or items limited by a new home warranty.

Get a professional home inspection before you close on the home. Not only can the home inspection ensure the home is properly constructed, it can also establish the situations of the home at the date it was moved into. It is always prudent to document as much information as you can before filing a claim.

Frank Carr, Home Inspector
First Choice Home Inspections
home.inspections@aol.com
(386) 624-3893
0 votes Thank Flag Link Wed Apr 3, 2013
Hello,
A home warranty on an older home offers an excellent amenity to the buyer. Plus it can be very helpful if something happens to an appliance or A/C unit prior to closing. The seller will ordinarily pay around $300 - $600 per year to cover appliances, A/C, hot water heater, garbage disposal and plumbing. Thanks for your question.

Sarah Garrett, Realtor
ALLIANCE REALTY GROUP
"Chosen Best in Client Satisfaction 2006-2012" by Gulfshore Life Magazine
sarahgarrett@argfl.com
239-464-8620
0 votes Thank Flag Link Wed Apr 3, 2013
Depending on the price of the home, age, condition at purchase, owner or renter a home warranty may be very beneficial. There are different levels (coverage) and pricing. Read the fine print !!!
I have seen them be very rewarding on resales and not rewarding on newer homes.
Hope this helps. Feel free to contact me.
0 votes Thank Flag Link Tue Apr 2, 2013
Good question and there are many ways to look at home warranties. Age of the house and items contain within. Basically they are use for 2 main purposes. Protect you from assurance from any major defects or repairs that can be costly. It also allows for a budget for emergency cost for repairs within the home that are going to eventually happen. If you do not use the service, you are out the annual cost. So, it does allow for some “peace of Mind” but at a cost.

The annual costs can be from 300 to 600+ a year and discounts on additional service fees ranging from $50 to $75 for each repair job. The repair people are your neighborhood service providers that can be hired without a home warranty, but at a greater cost as well as your time in locating them. The service people you get from the home warranty company are doing subcontracting work and allow them support for their business.

Are they worth it? That depends on many things too, one being, how old are the components comprised of that makes up your home and are contain within. One thing you may want to pay attention to as you review the houses that caught your interest and you are considering buying is the life expectancy of the items. Everything has a “life expectancy’ as to how long they can be used before you have to buy another or break down. In Florida, we do have terrible electrical storms that can do great damages to appliances and the items within the house. It always good to see that the house is properly grounded, so it will help in keeping these damages to a minimum as well as you should shut things down during the storms, that usually last a short time, and nobody most likely don’t do.

Hope this helps

Ron (Realtor Ron W) Wolchesky
"Success is when we work together to achieve your GOAL!"
License in Florida
Home: 239-349-4684
0 votes Thank Flag Link Tue Apr 2, 2013
0 votes Thank Flag Link Mon Apr 1, 2013
An issue that has become more controversial over time. Ten or more years ago, the Home Insurance policies were quiet straight forward, deductibles flat $ 35 to $50.
These days, like with every other Insurance Policy, there are exclusions and quiet some guidelines to pay attention to. So it's important to do your Homework.
0 votes Thank Flag Link Mon Apr 1, 2013
A home warranty offers a buyer some piece of mind, in the situation where appliances or main components of the house, such as the A/C unit, hot water heater, kitchen appliances, etc, are older and may need to be replaced or repaired in the near future. Depending on the warranty, it will most often times cover the repair and in some cases, cover the cost of a replacement all together, if it can not be repaired. So for the first year, you can feel secure in knowing you have some help, should the need arise, and expenses on the buyers end can be significantly cut. For a seller, offering a home warranty can help bring buyers to them, acting as an added bonus.
0 votes Thank Flag Link Mon Apr 1, 2013
A Home Warranty is exactly what it states. This can be offered by a seller or a buyer may purchase one. This plan will protect your appliances, a/c, plumbing etc. for a certain amount of time. There are a number of companies offering this protection and my advice would be to examined each plan and compare.
0 votes Thank Flag Link Mon Apr 1, 2013
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