To Buy or not to Buy a Home Warranty?

Many homes are sold with a home warranty which gives the seller a feeling of protection in case something happens during the first year the buyer owns the home. The theory being the buyer will look to the home warranty company for remedy and not come back on the seller. Of course, this is not always true and the buyer may very well come back on the seller.

Buyers feel some degree of protection purchasing a home with a home warranty and they are not directly paying for it so they gladly accept it. They may or may not use it. There are many cases that the home warranty is never used the first year. The sellers have just prepared the home for sale and a home inspection has been performed so items that may have fallen in the “covered items” area of the policy have been addressed prior to closing.
The real dilemma for the buyer is whether to renew the home warranty after the first year. Some will renew even though they can’t find the policy but they like the thought of having “protection.” Many that don’t renew actually used the policy during the first year and they recall the bad taste of that experience.
All home warranties have a “deductible” which is in place to prevent nuisance calls and to keep the warranty as cheap as possible. Typically the deductible which in essence is a service call fee ranges from $80 to $100 depending on the home warranty company.
Language in home warranty policies states that they will do whatever they can to keep the old appliance working. In regards to air conditioning systems and heating systems, this is seldom in the homeowner’s best interest. If the air conditioning system uses ozone depleting R-22 (which is being phased out) and the system is an energy hog, it would not be in the best interest of the homeowner for the home warranty technicians to keep it going. “Keeping it going” is less expense for the home warranty company but a much higher expense for the homeowner. In essence the homeowner is paying for a higher efficiency system (thru higher utility bills) they just aren’t getting the benefits of having one.
The service companies that work for home warranty companies have been known to install used parts with the thinking since the homeowner is not directly paying for it (except the deductible fee every time the technician shows up) who cares? There is no in-person quality check after they perform the service. These service companies typically service all kinds of appliances as well as heating and cooling systems and it is a challenge to be proficient in all areas. They may not be available when you need them but homeowners will wait because they have that false sense of protection – the Home Warranty!