Home Warranty Programs for Buyers
If you’re buying a home, the topic of a home purchase warranty will come up at some point. Perhaps the seller will offer you a free year, or you’ve received some offers in the mail. These warranties can be used for any home, old or new, and differ from home insurance policies.
A home insurance policy covers your home in an emergency, such as fires or floods. A home warranty for buyers focuses on your home’s appliances – the machines that run the home – such as the HVAC (furnace) system, plumbing, or electrical systems. The best home warranty plans for buyers should have extensive coverage, low premiums, and clearly outline what you need to do to maintain the warranties.
As for when to buy, home warranty policies can begin whenever you like. You don’t have to purchase the warranty as your home closes. That can be stressful, and you may want to take a breath and shop around. It’s a great idea, with the only word of caution being that it’s helpful to begin budgeting for potential repairs immediately. As a home warranty covers those repairs, they’re of more use sooner than later.
Questions home buyers should ask when searching for home warranty programs
It’s important to understand what a home warranty is and what it isn’t. There are a lot of different terms that all sound similar, which you want to keep straight. Many confuse home warranty programs with homeowner’s insurance, but both vary in coverage.
Homeowner’s insurance protects your home from disasters. If a tree falls onto your home or fire and smoke damages it, this would fall under house insurance. This insurance even protects you against theft. If you have a pipe burst, homeowner’s insurance will fix the flood’s damage, but they don’t cover the cost of the pipe itself. That job falls to you as the homeowner. A home warranty would cover the major systems within the home, should they fail. If that pipe bursts, the warranty would cover the pipe.
What is a home warranty for a buyer versus a home insurance policy? In essence, a home insurance policy safeguards against disasters that might happen, while a warranty focuses on aging systems in the home that will eventually break down – it’s just a matter of when. This includes the major systems within a home, such as the electrical, plumbing, and HVAC, as well as the major appliances, including the fridge, dishwasher, washing machine, and dryer.
If you’re interested in a home purchase warranty, be sure to ask the following questions to find one that’s right for you:
What do I have to do to ensure my appliances are covered by the warranty – for example, general maintenance and upkeep?
What happens if I buy the warranty and an appliance breaks down due to the previous owner’s neglect?
What is my technician service call fee should a problem arise?
How long have you been in business, and what makes you stand out?
With all home warranties, read over the coverage list carefully, as well as the exemptions list, so you know exactly when you’re covered and when you’re not.
How do home warranties for buyers work?
Repairs are a necessary fact of home ownership. It’s just a matter of when they’ll crop up.
Home warranty plans for buyers help you budget for these sudden repairs easily. You agree to the cost upfront, and with most companies, pick a plan that’s correct for you. You already know the call fee if something happens, and the rest is covered. Each month, you’re putting money into the warranty and can consider that your emergency repair fund.
Even basic appliances can cost a few thousand dollars, which isn’t exactly money most people are sitting on casually. There’s no limit to how many times you can engage your home warranty, so if you’re having a bad month, the warranty will keep you covered.
You can extend your home warranty past a year if you choose to, which is usually a good idea. It’s like living in an apartment in some ways – if something breaks down, you simply call maintenance to come and fix it. The difference is you’re choosing the company that manages their maintenance guys.
Many people love the home warranty for the peace of mind it gives alone. Finding a contractor is stressful, and when things are falling apart, it can affect many aspects of life. Skip all that stress, and allow the home warranty company to deal with repairs.
You can usually cancel anytime if you have second thoughts. If you have the warranty, and nothing is going wrong, you can think of it as saving money for a rainy day. If you don’t already have one, consider a home warranty. Buying a house is stressful enough without fearing something breaking down immediately after closing the deal.
What Does A Home Warranty For Buyers Cost?
With a home warranty for buyers, you pay a call fee to have a technician come to your home if something breaks down. They inspect the cause, and if it’s through wear and tear (and you’ve maintained your appliances properly), they’ll repair or replace the machine. The call fee, which can have a few different names, but all work the same, is around $100 and set with the warranty policy you purchase. You’d have to pay the call fee for each type of contractor (for example, if you need an electrician and a plumber), but beyond that, they would cover everything else.
The average contractor costs $40 – $70 per hour, depending on the job and the type of contractor you need. If your roof leaks, you’ll need to replace a few shingles (and fix up the water damage), which isn’t cheap. The cost of the shingles alone may run as high as $50. Already, at a minimum, you’re at $70 on the lighter side. But the average call fee for a home warranty is between $75 to $100, so even at the lowest rate, you’re close in this example. But that’s only assuming it will take the contractor an hour. Any longer than that, and you’ve already made up for the cost of the call.
If a pipe leaks, the cost to fix it is around $500 on average, but that depends on the type of pipe and its location. Like any issue, some factors can alter the cost for the worst. HVAC systems, on average, can cost $350, with $600 being the higher end of that spectrum. If any of these systems break down even once during the year you have a warranty, you’ve already justified your costs.
Your appliances don’t cost much less for repairs. While you might get lucky depending on the machine and what’s wrong with it, most costs tend to rise quickly. Repairing a washing machine can be anywhere from $80 to $600, and a dishwasher is similar. The oven usually starts at $100 for repair. Imagine your fridge breaks down – that can cost between $40 to $1,000, though the average is in the ballpark of $300.
The replacement cost for these appliances isn’t any better. Across the board, it’s always cheaper to repair your appliance than replace it outright. A fridge can cost between $1,000 to $7,000, which is way higher than your yearly premium for an average home warranty. When you consider how old your new home is and the age of the appliances, a home warranty starts to look more appealing.
Final thoughts on home warranty programs for buyers
If you’re buying a home, it’s a great time to consider having a home warranty. The best home warranties will cover the gamut of home systems and appliances, from the roof to the ceiling fans to the fridge and toilet.
These home warranties are beneficial in many ways. They fill gaps in your homeowner’s insurance. House insurance fixes damage caused, like damage from fire or flood. If you have a burst pipe, a leaky roof, and an electrical short, your insurance won’t cover the cost of that repair. You’ll need your home warranty for that. It also saves on repair costs, with the average cost for repair being nearly the cost of a yearly warranty policy. If you want peace of mind and protection for your wallet, then it’s a great idea to consider a home warranty.
