What is a Home Warranty?
If you’re in the market to a home you have probably stumbled across the term “Home Warranty.” What is a home warranty, you ask?
A home warranty is much like health insurance for your appliances and major functioning parts of your home. Home warranties come in all shapes and sizes but usually cover items such as your kitchen appliances, plumbing, electrical, water heater, furnace, duct-work, and air conditioning. For a small fee, usually less than $100, a technician from the home warranty company will come out and inspect whatever issue you are having and for no additional charge either fix or replace it. That’s right! If your furnace breaks down in the middle of winter and the technician can’t fix it the company replaces the whole thing! Home warranties can be purchased for specific lengths of time such as 1 to 2 years. As their popularity grows so do the lengths of time available. I recently called to arrange one for a buyer and asked if they offer 2 year warranties and the sales person affirmed that yes they have just recently started giving 2 year home warranties. The average price for a home warranty is about $500/year or at least that is how much they run here in Oregon.
The company I often use is American Home Shield, check there website for information and quotes: https://www.ahs.com/
You will often see a home warranty be offered with the purchase of a home as an incentive. Don’t worry this is not a red flag or at least not most of the time… My warning to buyers is that a home warranty can save you lots of money but negotiations of repairs should not be over-looked. Negotiate repairs upfront and ask for the home warranty as back-up. Everything should be working when you take ownership! I always encourage my buyers to either request the seller pay for the home warranty or even pay for it themselves. I can not tell you how many times I have seen home warranties save people thousands of dollars! They are becoming increasingly popular in this seller’s market given buyer’s have a difficult time winning much ground in negotiations. A home warranty is an efficient and inexpensive way for a seller to contribute to a buyer’s cost and give them peace of mind.