If you’ve ever been in the position of buying or selling a home, chances are you have considered a home warranty.
Whether you are looking to sweeten the deal on your older Colorado home for a potential buyer or you are looking for a way to protect your budget in the first years of home ownership, a home warranty may be just what you want to protect your investment.
What is a Home Warranty?
According to Investopedia, a home warranty is a contract between a homeowner and a home warranty company that provides the homeowner with services that will either repair or replace a home’s major components. This includes anything from a furnace or HVAC to the home’s plumbing or electrical systems. In some cases, these warranties also cover major appliances that are staying in the home such as refrigerators and washing machines.
Is a Home Warranty the Same as Home Insurance?
While both protect a homeowner from the unexpected, there is a difference between a home warranty and home insurance.
A home warranty is a policy that covers what it would cost to repair or replace major elements of a home. These may need to be repaired or replaced due to a manufacturer’s defect or normal wear and tear.
However, home insurance protects you, your house, and all of its contents should an event beyond your control occur such as fire or storm damage.
Is a Home Warranty Worth the Money?
There are a few factors you should consider before you decide whether or not to purchase a home warranty. You want to ensure that your warranty covers what you think will make the additional cost worth it. For example, you should always prioritize covering systems in your home that, if in need of repair, would impact other key components of your home such as your electrical system.
According to Bob Vila, homeowners need to consider the following when looking into customizing their home warranty:
- The systems and appliances the warranty covers
- The systems and appliances the warranty DOES NOT cover
- How much of the repair or replacement is covered by the warranty
- The cost of service visits
It’s also vital to read the fine print about anything that would cause the warranty to be voided. Reasons your warranty could be voided include transfer of ownership, neglect to maintain an appliance or system, or even attempting to do repairs or replacements yourself without a contractor.
Why Home Warranties Are a Good Idea
Home warranties most commonly come up when discussing the sale or purchase of a new home. Home sellers often offer a year warranty for a couple of reasons: to protect their asking price for their home and to offer peace of mind to the home buyer.
Homesellers need to decide what systems to repair or upgrade before putting their home on the market. These systems also factor into a fair asking price for the seller. A home warranty helps a seller keep their asking price fair and steady instead of needing to adjust it if things start to need repair during the selling process.
Home warranties also give the buyer peace of mind. If purchasing an older home with older systems, a buyer knows that if something goes wrong right away, they won’t be spending a lot of money out of pocket to fix it.
In addition to peace of mind, warranties also offer a great deal of convenience, especially if you’re not a “handy” person. You won’t need any tools or know-how to get what you need to be repaired, nor will you need to spend time researching reliable contractors to get the job done. The warranty company already works with approved contractors to cut out the hassle.