Here’s What Your Clients Should Know About Home Warranties
When buying or selling a home, one topic that often comes up is the home warranty. Some see it as a safety net, others as an unnecessary expense. As a real estate agent, it’s helpful to guide clients through the pros and cons of a home warranty so they can decide if it’s the right move for their situation.
Here’s a breakdown of what home warranties really offer and where they sometimes fall short.
First Things First: What Is a Home Warranty?
A home warranty is a service contract that covers the repair or replacement of major home systems and appliances due to normal wear and tear. It typically includes items like HVAC systems, water heaters, kitchen appliances, and electrical or plumbing systems.
Coverage varies by provider and plan, so it’s important to read the fine print.
The Pros of a Home Warranty
Budget Protection for Unexpected Repairs
Home systems and appliances don’t last forever. A home warranty can help protect your wallet when major items break down due to normal wear and tear. Instead of paying the full replacement or repair cost, you usually only pay a service fee.
Peace of Mind for First-Time Buyers
If you’re new to homeownership and don’t have a trusted handyman or a slush fund for repairs, a home warranty can act as a safety net. It’s especially helpful during the first year in a home, when you’re still learning what might need attention.
Convenience
Rather than scrambling to find a plumber, electrician or appliance tech in a pinch, you simply contact the warranty company. They handle the scheduling and send a vetted service provider your way. It’s less hassle, fewer decisions and no Googling reviews in a panic.
Increased Buyer Confidence When Selling
Offering a home warranty as part of a real estate deal can be a selling point. It shows buyers you’re invested in their peace of mind and may reduce disputes over post-inspection issues. Some sellers even use it to sweeten the deal in a competitive market.
The Cons of a Home Warranty
Coverage Limitations and Exclusions
Not all home warranties are created equal. Most basic plans won’t cover everything, and the fine print can be frustrating. Pre-existing conditions, improper maintenance and certain types of damage are often excluded. Some items, like roofs or septic systems, may not be included unless you pay extra.
Service Fee Costs Can Add Up
While paying $100 instead of $2,000 for a new furnace sounds great, repeated service fees can stack up. If your home has frequent issues, you might end up spending hundreds of dollars in fees – on top of your annual premium – without always getting full repairs or replacements.
Lack of Control Over Technicians and Repairs
With a home warranty, you don’t get to choose who does the work. Some homeowners have reported delays, poor service or temporary fixes that don’t solve the issue. You’re also tied to the company’s process, which may not always align with your timeline or preferences.
Denied Claims
One of the most common frustrations with home warranties is denied claims. Whether due to unclear maintenance history or a technicality in the contract, it’s not unusual for homeowners to feel caught off guard when something isn’t covered. Reading the policy thoroughly is not always easy but it’s essential.
So, Should Your Client Get a Home Warranty?
If the home has older systems, or your buyer is nervous about surprise expenses, a home warranty could be a smart purchase. On the flip side, if the home is newer or recently renovated, the money might be better saved for a rainy day.
Ultimately, it’s about expectations. A home warranty isn’t a magic fix-all – it’s a tool. When used wisely, it can add value and peace of mind. The key is helping clients choose the right plan for their needs and understand what it really covers.
