What Is a Home Warranty and Why Do I need one?

By
Real Estate Agent with Coldwell Banker, 170 N Main Street, New City NY 10956
http://actvra.in/NxR

What Is a Home Warranty and Why Do I need one?

Your home is probably your single biggest investment.  For most new home buyers the last thing they need to worry about is an unexpected repair that can seriously strain their budget.  For peace of mind and as added protection against anything major that might go wrong with a homes major systems, it's a good idea to get a home protection plan.

handyman

It safeguards you against the financial strain of a major repair and for first time homebuyers that have little or no experience in maintaining a home this can be a real lifesaver.

What exactly is a home warranty?  It's actually a renewable service contract that covers the repair or replacement of most of a homes major systems.  Most home warranties will cover the plumbing, electrical, and  heating systems of the home and also some of the homes major appliances such as refrigerators, dishwashers, and ovens.

plumbing

The way it works is that the home warranty company contracts with local repair companies and servicemen to provide service.  If something breaks you call the home warranty company and they send an insured and approved contractor to do the work.  In most cases, your only out of pocket expense will be a small service charge to the contractor. All other work and replacement parts are assumed by the the warranty company.   If it becomes necessary to replace any appliance or system, they will replace like with like or in the case of a discontinued item, they will replace with the next closest comparable item.

If, as a seller of a home you offer a home warranty to your buyer, then the coverage offers protection for the home the entire time it's on the market  from the time its listed until one year after title transfer.  This gives buyers extra confidence in the real estate transaction since they know that if anything goes wrong while the house is under contract, the home warrenty company will fix it.  They don't have to rely on a seller who might avoid investing more money into a home he's trying to sell.

The best source for a Home Warranty company would be your Realtor since they deal with these companies daily and know which ones are the most popular ones with their home buyers.

As a realtor I generally encourage both my home sellers and buyers to invest in a home warranty.  They range in price between $350-600 /yr depending on the company, location and coverage.  I'll negotiate it for my buyers and contribut to the cost of it for my sellers. Its a small price to pay for piece of mind.

Posted by

Lora "Leah" Stern - Your Rockland County, NY REALTOR of Choice - (914) 772-4528

Your Rockland County, NY Real Estate SpecialistLeah Stern Signature Photo

Lora "Leah" Stern
Real Estate Salesperson
Coldwell Banker Residential Brokerage
(914) 772-4528 CELL
(845) 634-0400 OFFICE
(862) 345-2463 FAX

If I can assist you in any way with your real estate needs in Suffern, NY Rockland County or the surrounding areas, please feel free to contact me by phone at (914) 772-4528, email me at Leah.Stern@cbmoves.com or visit my website .

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Re-Blogged 18 times:

Re-Blogged By Re-Blogged At
  1. Praful Thakkar 01/13/2011 11:50 PM
  2. Ellie McIntire 01/14/2011 12:57 AM
  3. Vickie Nagy 01/14/2011 02:19 AM
  4. Karen Kruschka 01/14/2011 08:12 AM
  5. Rob Arnold 01/14/2011 10:55 AM
  6. Linda Sabo 01/14/2011 11:52 AM
  7. Gloria Todor and Doug Durren - Delaware County PA Real Estate 01/14/2011 12:09 PM
  8. Karen Fiddler, Broker/Realtor 01/14/2011 12:43 PM
  9. Brandon & Grace Yee 01/14/2011 12:46 PM
  10. Donald Bradbury 01/14/2011 12:46 PM
  11. Ed Silva 01/14/2011 07:22 PM
  12. Debbe Perry 01/14/2011 10:18 PM
  13. Trisha Pennington 01/15/2011 12:53 PM
  14. Gene Riemenschneider 01/15/2011 10:18 PM
  15. Cindy Jones 01/16/2011 02:35 PM
  16. Judi K Barrett 01/16/2011 02:39 PM
  17. Pamela Stangler 01/17/2011 10:02 PM
  18. Kristen Wahl 01/20/2011 07:57 PM
Topic:
Home Buying
Location:
New York Rockland County
Groups:
Posts to Localism
Almost Anything Goes
Advice for Sellers
Advice for Buyers
1st Time Buyers
Tags:
home warrenty
suffern ny realtor
buying a home in suffern ny
selling a home in rockland county ny

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Anonymous
Brent, Brentwood Home Inspections

I get the feeling that most people responding to these discussions don't read many of the previous posts. As has been pointed out a few times in this thread, most, or all of these warrantys are pretty worthless and are just a cheap marketing tool rather than any real protection for the client. If someone is aware of one that doesn't fall into this category, I would be interested in seeing a link to it so I could be educated about one that isn't worthless.

Jan 14, 2011 10:58 PM #51
Rainmaker
740,606
Sharon Parisi
Keller Williams Dallas Premier Realty - Dallas, TX
Dallas Homes

Your post is a good education for buyers and sellers.  I agree with Lenn that it also provides "risk reduction" for Realtors.

Jan 14, 2011 11:59 PM #52
Ambassador
1,457,854
Jennifer Fivelsdal
JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571 - Rhinebeck, NY
Mid Hudson Valley real estate connection

Leah great discuss and topic.  Congrats on the feature.  So what company do you use? I was looking to switch companies; called one 3 days ago and still waiting for a call back.

Jan 14, 2011 11:59 PM #53
Rainer
193,644
Thomas McCombs
Century 21 HomeStar - Akron, OH

We have to look at the cost. The upfront premium is between $375 and $600, and each time there is a claim there is a $50 or $100 deductible. How many repairs actually cost more than $425 to $700.

Very few, in my opinion. Combine this with the difficulty of getting the repair people out there on a timely basis, and I think the odds are that we are better off setting those funds aside for repairs if needed, rather than spending them upfront.

The home inspection will catch most of the things that are likely to go wrong so they can be taken care of early.

Its marketing. I think these warranties are great only if someone else pays for it.

Jan 15, 2011 09:04 AM #54
Rainmaker
251,779
Phil Parisi
Better Homes & Gardens Real Estate Laviano & Associates - Jensen Beach, FL
Specializing in Florida's Treasure Coast

Home Warranty, It's good to have.

Jan 15, 2011 12:18 PM #56
Rainmaker
734,356
Debbie Walsh
Keller Williams Realty - Middletown, NY
Hudson Valley NY Real Estate 845.928.8000

I am late to the party but congrats on the feature my friend. Great post-well written and much deserved star!

Jan 15, 2011 03:21 PM #57
Rainmaker
139,910
Liane Thomas - Corona & Riverside Real Estate
The Jet Team, Allison James Estates & Homes - Corona, CA
Bringing you Home!

Our E and O insurance deductable is cut in half if the home has a home warranty. Hmmmm $230 home warranty of an additional $5K to E and O if there is a problem. This one is easy! I provide one even if the buyer or seller will/can not.

Jan 15, 2011 07:32 PM #58
Rainmaker
1,280,991
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

This is a good post and important for people to understand.  I would not buy a home without one.

Jan 15, 2011 10:16 PM #59
Rainmaker
495,586
Lora "Leah" Stern 914-772-4528
Coldwell Banker, 170 N Main Street, New City NY 10956 - New City, NY
Real Estate Salesperson

Brent - Not all home warranties are created eual.

Rob - Not all home warranties will cover preexisting conditions.  Need to know this upfront.

Dana- Agreed - They are warrenties, not guarentees.

Praful- Thanks for the reblog

Jan 16, 2011 01:46 AM #60
Rainmaker
495,586
Lora "Leah" Stern 914-772-4528
Coldwell Banker, 170 N Main Street, New City NY 10956 - New City, NY
Real Estate Salesperson

Cynthia - THanks.  I'm sure you'll have adifferent spin on it and I'll look out for it.

Brent - Agreed.  You need to read the fine print.

Lori - Lucky for you seller!

Brandon - Thanks.  It desn't safeguard against everything, but is great for what it does do.

Karen - I love them too and thus far, my experience has been only positive.

Ronald - Murphy's Law.

Brad - A samll price to pay for peace of mind.

Jan 16, 2011 01:53 AM #61
Rainmaker
495,586
Lora "Leah" Stern 914-772-4528
Coldwell Banker, 170 N Main Street, New City NY 10956 - New City, NY
Real Estate Salesperson

Ed - I feel the same way.  The mechanicals of the home are what I try to protect them with.  Anything else is gravy.

Michelle- As a property manager you probably have access to vendors at prices that the average homeowner can't get, so I can see that being restricted to the warranty companies timing and service people might be a deterrent.

Robert- You make a good point.  Warranties are not guarantees.

Joan - My understanding is that they vary greatly in the basics that they cover.

Pam - They're a great idea for older homes or homes with older systems,  Its a precaution against system where maintenace has not been done.

Jan 16, 2011 02:06 AM #62
Rainmaker
495,586
Lora "Leah" Stern 914-772-4528
Coldwell Banker, 170 N Main Street, New City NY 10956 - New City, NY
Real Estate Salesperson

Sharon - Risk reduction for realtors is a good enough reason for us to provide it for our clients. 

Jennifer - I'd assume that if you had to wait 3 days for a call back, that that's not a company you'd want to recommend to your clients.  In all likelihood it would take them even longer that that to get service!

Thomas - As a homeowner I'd continue to pay for it only if I thought I'd be receiving more return on the investment than I'm paying out.  That would depend on the age of the systems in my house and if the items I needed replaced were covered items.  For the first year of owning the home I'd want it until I learned all about the home and its workings.

Phillip - Agreed.

Debbie - Thanks and you're never too late.

Liane - That would be a no brainer for me too.

Gene - I wouldn't buy a home without one either, though it appears we hae many here who don't share that sentiment!

Jan 16, 2011 02:17 AM #63
Ambassador
1,923,597
Judi K Barrett
Judi Barrett~Integrity Real Estate Services~Idabel, Oklahoma - Idabel, OK
Broker/Owner, Integrity Real Estate Services -IDAB

Lora,

We've never had a buyer request a home warranty.  I have seriously been considering making it a point to visit with sellers about offering this as something to help their home sell. Thank you for the post.

Jan 16, 2011 02:37 PM #64
Rainmaker
1,543,262
Lawrence "Larry" & Sheila Agranoff. Call 631-805-4400 (c)
Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803 - Plainview, NY
Long Island Condo & Home Sale Specialists

Lora, You spelled it all out for everyone...great advice!

Jan 16, 2011 03:32 PM #65
Rainmaker
495,586
Lora "Leah" Stern 914-772-4528
Coldwell Banker, 170 N Main Street, New City NY 10956 - New City, NY
Real Estate Salesperson

Judi, many buyers are unaware of this but those that are, have requested them as part of their offer.

Larry and Sheila - They are not foolproof but they do offer some protection.

Jan 16, 2011 05:39 PM #66
Rainmaker
586,419
DeeDee Riley
Lyon Real Estate - El Dorado Hills CA - El Dorado Hills, CA
Realtor - El Dorado Hills & the Surrounding Areas

Leah, A home warranty is really worthwile and something I put on every contract.  Here is CA the companies that offer them have a seller's policy but it covers just during the listing period.  The buyer's coverage if purchased takes over on close of escrow.  Great explanation here!!!!

Jan 16, 2011 07:34 PM #67
Rainmaker
495,586
Lora "Leah" Stern 914-772-4528
Coldwell Banker, 170 N Main Street, New City NY 10956 - New City, NY
Real Estate Salesperson

DeeDee - Same here - The sellers policy covers them for the duration of the listing.  The buyers' for a year from close.

Jan 16, 2011 08:49 PM #68
Rainmaker
846,236
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
your real estate writer

This is something that hadn't come into fashion when I quit selling, but I think it's a wise idea. Even after an inspection, something can break down a month after closing, and buyers who poured it all into a down payment might not have the resources to pay for repairs.

Jan 17, 2011 12:44 AM #69
Rainmaker
312,118
Margaret C. Taylor
Century 21 New Millennium MD - Mechanicsville, MD
St Marys/Calvert/Charles MD Real Estate Agent

Reading the small print is important in every document.  If someone else pays the Buyer might not get everything but he will get some  protection.

Jan 29, 2011 10:13 PM #70
Rainmaker
194,622
Sandy McAlpine
McAlpine Properties - Cornelius, NC
Search Lake Norman Homes For Sale - Lake Norman NC

great explanation fo the home warranty. I try to offer one to all my listing and buyer clients

Mar 02, 2011 08:46 AM #71
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