What the Home Warranty Company Won’t Tell You

You’d be hard pressed to find a Sacramento real estate agent who won’t ask a seller to pay for a buyer’s home warranty plan. About the only instance I see in which buyers don’t get a home warranty plan when buying a home (unless they want to pay for it themselves or their agent is in a generous mood), is in a short sale. And that’s because most short sale banks will not authorize a home warranty payment for a buyer. Those short sale banks squeeze every dime out of the transaction. So, the message you’ll hear from short sale banks is no home warranty plan for you.

The reason agents like home warranties and why sellers will pay for it is because it’s like an additional buffer between the buyers and the sellers when something goes wrong. And believe you me, something will go wrong. It always does. It might not happen a few weeks after closing or even after a few months, but generally during that first year of home ownership something goes haywire. When it does, buyers tend to jump to the conclusion that the seller knew about this stinkin’ defect, whatever the heck it is, and purposely didn’t tell them it was going to break.

This is where the home warranty plan steps in. The homeowner pays a service call fee and, much of the time, the rest of the work order is paid for in full. Unless it isn’t. Unless it is exempt from coverage, and you’d be astonished at what’s not covered or what costs extra to cover. This is where your home warranty representative can be your saving grace. I fought many a battle with the home warranty company because it did not want to pay for something as simple as replacing a sink faucet.

Now, after your home warranty expires — because it’s only good for a year, they didn’t tell you that? — well, now the company will try to get you to renew it. The renewal price is a lot higher than the one-year fee paid by the seller. Whether it’s worth it to you depends on what is likely to go wrong at your house and what it could cost to fix. If your policy costs you $500, and the AC condenser cost you $400, plus you paid a service call on top, you might be (gasp) better off without the home warranty.

My furnace is on the blink right now, and I don’t have a home warranty. We got up yesterday morning, and it was 62 degrees in the house. No heat. Brrrrr. That’s cold for Sacramento. Ten years of a home warranty payment would pay for a new furnace. But we’ve owned our home for 12 years, so, see, financially we’re ahead, no matter what. Fortunately our problem was just a $400 control board. Everybody has to weigh his or her own situation as to whether a home warranty is worth it.