Home Warranty Pros and Cons

Home warranty pros and cons vary depending on specific circumstances. But, there are some very common scenarios that buyers really need to know about. Home warranties are typically part of a new construction purchase. However, there are resale situations where sellers offer home warranties in-order to help market their properties. Of course, there are some difference between these two, but not a whole lot. So, let’s take a look at the most common home warranty pros and cons.

Home Warranty Pros

One big attraction of a home warranty is that there is usually a price break. So, things like discounted service calls and other savings, such as for replacement or repair costs. Additionally, there is generally extensions provided. Which means you can have other items covered that aren’t part of the standard package.

“Whether you are buying your first home or selling a home and moving into another, a home warranty could be a valuable protection for your finances and your peace of mind. Many buyers opt to purchase home warranties, which average $350 to $500 for a basic warranty and $100 to $300 more for a warranty with extra protection. Buyers, particularly first-time buyers, like the fact that they can rely on a warranty to pay for repairs during the first year while they are settling into a new home.” —Realtor.com

So, you might opt to have a swimming pool and/or spa or other items covered that have a big price tag. There’s also another consideration that isn’t monetary — peace-of-mind. When there is a home warranty in-place, you won’t fret over something going awry and the expense that comes with such an event. Also, it’s generally a gift from a new construction builder or a home seller who is willing to go the extra mile to sell their properties — which means coverage at no cost to you.

Home Warranty Cons

Of course, with home warranties, there are downsides, as well. Although they do provide a few neat benefits, there are certain aspects which aren’t as attractive. Here are the top home warranty cons you should know about:

  • Not all fees included. Okay, we mentioned the fact that you can usually take advantage of discounted service calls and parts or replacements. But, that doesn’t mean they are free-of-charge. In fact, the warranty might not cover specific parts or even totally pay for a replacement.
  • Home appliances are highly reliable. One statistic that’s overlooked (or not pointed out) is the reliability of home appliances. Statistically, only 1 in 5 homeowners experience appliance breakdown within the first three years. Thereafter, it’s more difficult to get parts and new appliances usually offer more options. Plus, they typically are more energy efficient.
  • No to negative return-on-investment. If you are considering purchasing a home warranty, you should think about its ROI. You’ll pay as much as $800 per year for enhanced coverage. If you run the numbers, in just three to four years, that’s enough to pay for a new replacement.
  • Other coverage might apply. Another thing to consider is the manufacturer’s warranty. That’s usually about one to two years. So, it might well be ample enough to forgo purchasing a home warranty. Not to mention the fact that new construction usually comes with certain guarantees and their own warranties.
  • Lack of actual coverage. No one really reads the fine print. Of course, the devil is in the details. You could well discover there are exemptions and more that do not make it such a good deal. In other words, it won’t be an answer for every situation.

If you are considering buying or selling a home in Orlando, contact us for the latest market information. We’ll also provide you with the right advice about the local real estate market so you make the best decisions.