Today’s questions is from Michele:
We are purchasing a home built in the early 80’s. Most of the appliances are more than 5 years old, but it has a new roof and new furnace.
I’m wondering if it’s worth the $400-$600 to buy a home warranty? I know that with a warranty, we might be tied to certain repair companies, be required to pay a flat fee for repair visits, and aren’t guaranteed replacements unless it’s completely unfixable. -Michele
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We bought our first house last November. The seller included what was supposed to be comprehensive coverage from American Home Shield. In the first few months our refrigerator died, the dishwasher started leaking, one of the (2) hot water heaters started leaking on the coldest night of the year in the middle of a snow storm, and the washing machine would stop mid-cycle. Turns out that the only things that are actually covered are the dishwasher & hot water heater. The first contractor they sent out (for the hot water heater) quoted us ~$500 (above & beyond the $75 fee (to just come out & assess the damage)). When we told them it would be a month or so before we could have that spending cash the vendor stopped returning our phone calls & didn’t respond to AHS’s requests for us either. I ended up getting quotes from other vendors & called AHS to tell them that their vendor was ripping off their customers. Finally, for an extra $75 they sent out someone else who replaced (finally) our hot water heater & disposed of it at a price more in line with what other local contractors were charging. When our air conditioner’s motor went bad in June it took a week to get someone out to look at it but they were able to get it fixed asap & only for the $75 fee. As our first year will be coming to a close soon we’re considering stopping the warranty altogether or going with another company.
Yes! We bought our first home in November and we got it. During our home inspection, the air conditioner wasn’t turned on because it was too cold and apparently you cannot run it if it’s too cold out. So, when the end of May rolled around, we turned the unit on and…nothing. The owners before didn’t use any fridgerant or whatever it’s called and caused the unit to stop working. We had to have the entire unit replaced. This would have been maybe $2000 give or take but because we paid for the warranty all we had to pay was $60. We plan on buying it again.
http://www.latimes.com/business/realestate/la-fi-lew-20140511-story.html
Mine was included in my new home purchase from the previous sellers. To me it was a TOTAL waste of money. My plumbing went out and I called the company and they told me it was a “pre-exisiting condition” and wouldn’t be covered. WHAT?!? Needless to say I’ve tossed all their renewal notices in the mail out.
It depends! Take a very close look at what the warranty covers. For example, if it says, Refrigerator is covered…. take a look at the details because most of the time the basic coverage which is provided with the home purchase only covers things that are INTEGRAL part of the appliance. Another thing to consider is the service fee for each visit. Lastly, the warranty is all about “repairing” and not replacing even if it’s time. They usually would rather spend the extra money to have something serviced. If you do get a warranty, go for Supreme Protection or similar (NOT Basic) and have the seller pay for it (it’s becoming fairly standard actually). If the seller refuses, see if you can split the difference. Also, if you do get the warranty and ever have the same issue, ALWAYS remember that you can have the warranty company take care of the service fee. Talking to a supervisor usually will take care of that. Good luck!
I’ve used AHS now for over 8 years. I’ve had a pretty good experience with them. I look at it as insurance. Recently, both of my A/C units stopped working. The company requires a 48 hour turn around time, so someone called me within the day and had me scheduled within 48 hours. They had to add freon. I had to pay out of pocket which was actually the first time. The 3 weeks later the motor went out (my unit is over 14 years old) they came out on the same service fee. I also had the transformer on my over the range microwave to go out. They replaced it with a much better unit.
My first house the air handler went bad. Because it was an older house, and they couldn’t repair the unit, I received a brand new A/C unit. I would say it’s worth it. If you don’t have a maintenance repair person who is qualified to take care of appliance issues.
Best decision ever! I have had HVAC issues and pipes bursting in my walls both covered by my home warranty. Be sure to get the policy that allows for repairs even if owner doesn’t maintain properly. My HVAC issues came from some maintenance that we had no idea had to be done every few years. That repair alone would have cost me thousands of dollars out of pocket instead of the $50 service fee!
A one-year warranty was paid by the sellers when we bought our house almost 8 years ago. We let it lapse for about 8 months at one point, but have continued to renew it otherwise.
Unlike many others, it has been a lifesaver for us. Our house was built in 1890 and has the plumbing and electrical systems to match. We’ve had numerous plumbing issues (from leaking pipes in the basement to shower pipes leaking inside the walls to constantly running toilets), major issues with our boiler (we have hot water radiators for heat) and several appliance issues (gas oven & stove burners that wouldn’t light, broken ice maker, broken dishwasher racks). In that 7.5 years, we’ve also had a new hot water heater and microwave as well as replacing multiple joints, cut-off valves and many feet of plumbing. Yes, we pay a $75 service fee. But, even after the roughly $500/year premium, the warranty has paid for itself with one plumbing event.
All of the contractors we’ve worked with have been efficient and professional. We laugh that we even know by name all of the plumbers for the contractor the warranty uses! (I guess that doesn’t say much for the state of our pipes, does it?!?)
Are there things not covered? Yes, mostly cosmetic issues like the ceiling plaster suffering from pre-existing water damage. However, the few things that haven’t been covered have been far outweighed by our savings on what has been covered. I say it’s worth it, especially if you have an older home, unless you are sure you have enough saved for unexpected, major repairs.
Our realtor actually included a year of coverage as a present. He does that for all his customers. We were so glad we had the coverage because our heater broke within the first 5 months and we were able to receive a brand new unit for $75, which was the charge of the service call. Our home was also built in the 80’s. I think it’s a wise choice to pay for coverage because you never really know what kind of problems you may be inheriting with the purchase of a “new” home.
http://www.clarkhoward.com/news/clark-howard/homes-real-estate/home-warranties-not-worth-paper-theyre-written/nDYMR/
Yes. We got one when we bought our house two years ago and I am so glad we did. We have had multiple plumbing issues. These have cost us a copay of $60 each time, but it’s much cheaper than what we would have paid had we not had the home warranty. I highly recommend it.
If you are buying a house, I’d ask for the sellers to include the home warranty as part of your negotiations {and ask for the best plan available}. Most realtors encourage buyers to ask for that in order to give you a peace of mind about making the purchase. When we bought our current home, we ended up needing to make a claim {and now have a brand new hot water heater} and it was nice to know it was covered. However, we never choose to renew home warranties after the first year which is when we’d have to start paying for it. We have opted to have an emergency fund to use in cases where repairs are needed that we didn’t foresee, but I would DEFINITELY ask for it in the negotiations of the purchase!! 🙂
I live in the Sacramento Valley where the temperatures can easily reach 100 degrees during the summer. My home warranty for my home built in 2007 has been invaluable due to problems with the air conditioning system. My warranty is around $550 a year and includes all of my major appliances. My co-pay for a service call is $65. I have made three service calls since I have owned my home (three years) all related to the air conditioning system. As I am not a saver, I could not have afforded to have paid for these repairs out of pocket. My first two service calls I couldn’t have asked for a better AC company. My third service call (this year) unfortunately I received a terrible company out to service my AC that spent four hours working on my AC to tell me that I had a leak in the system in which I needed to pull permits (out of my pocket) and do some repairs in the neighborhood of $2,000 to fix the problem (out of my pocket). I called the warranty company and asked for a second opinion. The second company was excellent and simply recharged my AC system and replaced a capacitor and I was good to go. I am VERY pleased with my warranty company and cannot imagine not having a home warranty on my home.
No, no, no! My mother in law has had so many problems that they “don’t cover” they have lived in the house for 9 years and all the repair company do is charge $100 to fix anything. They had mold growing in their dishwasher because something on the inside was obviously broken and the company said that it wasn’t “broken” because it still technically worked. Huh? Yuck! For what thy have spent over the years they could have top of the line appliances instead of 15 year old appliances with off brand replacement parts!
We pay $25 a month through our electric co. (DTE) for a home protection plan. It covers all of our appliances, and has paid for itself over and over not only in dollars, but also in reduced stress. There is no deductible, and we usually get a repair person out in a day or 2.
We purchased a foreclosure and had new AC system and we had to put all new appliances- was SO glad we bought a Home Warranty! Within the first year we had 3 busted pipes, two leaking toilets, a water heater that went out, and I can’t even remember everything else. Very good investment for us. I’d recommend it for at least the first year- you never know what hidden issues there may be .
I have always had the home warranty thrown in as part of the deal. Either it was included or the realtor gave it to us as a “thank you.”
I have never seen it worth it. Always copays and very very strict about what parts will be fixed and they use the cheapest parts to fix and don’t fix underlying problems…. Save for a home repair fund and don’t be tied to their people and masking problems.
I would advise them to negotiate it into their offer… when we sold our home it only cost us a VERY small amount to offer a 1 year home warranty to buyers…
Wish you many years of happiness in your new home if you do move forward with the purchase! 😀
I work in Property Management and I definitely recommend a home warranty. We have owners that their home warranty has saved them thousands.
Our seller paid for one. We had several issues and barely any of it was covered by the warranty. Read the fine print because most of them have really big holes in coverage! I wouldn’t be willing to pay for one in the future.
No way, no how, never again for us. We considered long and hard and, after talking to friends who had a policy, we tried it— for 2 years. During that time I had 1 repair that they covered (my dryer). That one cost me the $75 copayment. All of the others (a heating duct, a toilet that failed, a leak in the pipe to the sink, and a fridge that needed a new part are the ones I recall), the company took our call, sent their repair person, and then informed us the problem wasn’t covered due to some obscure reason that might have caused the problem. I’m a serious stickler for reading contracts etc and spent major time on the phone, contract in hand, listening to the representative skirt around things that we’re not clearly specified in the contract as they refused to cover repairs. At the end of the 2years, it was seriously not worth the cost. I might do it on a new house if the seller was paying, but otherwise, never again. I agree with Chris, put the money into your emergency fund.
We bought a 17 year-old house and the owner provided a one-year home warranty. We renewed it every year until we sold the house this past June, and it was worth the cost for the peace of mind knowing the original systems in the house were covered. We used it for repairs many times, and also received a new dishwasher when parts were no longer available for the old one (27 years old!). We paid for one year to the new owners, also.
we had ours included by seller when we bought the house too. My experience is no! We had our a/c go out within that time frame. It was only with several weeks (and no a/c meanwhile) of arguing with them that they even were willing to fix it. They declared they would do nothing since our house was not up to code (it was when it was built in 1993 but not in 2006) With a much older home definitely you could deal with this. Even when they did do the work, we still paid a copay and while we got a new a/c unit (not complete system) out of it, it has since failed only 7 years into it. Should have lasted much longer. The fellow who did the work for us this time told us they put in the cheapest systems available and cut all sorts of corners. Thus, we replaced the whole system ourself 7 years later.
ps…we paid much more than the $75 copay mentioned above. IT was enough that we could have put that and the cost of the warranty to good use buying a better system ourselves–which we ended up having to do.
We purchased a house from the 1960s one year ago. Our home warrantee was paid by the seller. In the first six weeks alone we had enough problems that more than made it worth it! We were conflicted about whether we should renew it; we have an older HVAC system etc and it would be hard to pay for it if it went out right now. In the end, we asked several seasoned home owners and they all said to assess the possible/likely problems you would face in the next year and if you can handle them financially, then skip the warrantee. If not, then get it. We opted to renew it for one more year. After that, I think we will be more financially able to handle a major repair or replacement. We are saving towards replacing the HVAC system if/when it does need to be replaced.
As others mention, see if the seller will pay for this. I had one for the first year, in my first house. I only had it because the seller paid for it. I didn’t renew it after that at my cost, and that house was built in 1949. The house I live in now was built in 1963 and we didn’t get one when we purchased this house. It’s very limiting in the repair companies you can use and in my (and other people I know) experience there are many outs for the insurance companies and they will do anything they can to not pay for your repairs. If someone else will pay for it, that’s great, but I don’t think it’s worth your own money. Better to start a house emergency fund with that $400-600. Many things will already be covered under your homeowners policy already.
Excellent advice. When we purchased our current home, a warranty was included by the sellers. We did use the warranty a few times, but there was a $75 service fee each time and we had to use the pre-approved repair company. It’s nice to have if the sellers provide it, but don’t spend your own money. Save your money in an emergency fund instead.
What kind of things are covered under homeowner?
When we purchased our house, a one year home warranty came with it, paid for by the sellers. In that one year we did use the warranty, but not enough to warrant paying $400-$600 for it ourselves. You also have to pay a fee every time someone comes out to fix something (I believe ours was $50). We decided not to extend the warrantee for this reason. The biggest item that broke was an electric gate, and as one commenter already mentioned, the company considered it outside of the foundation so it never got fixed. Our house was pretty nice when we bought it, so I would also factor the condition of the house and age of items in the home into the equation. Ultimately the decision is yours, but I would take that $400-$600 and put it in a savings account for repairing items.
We debated on whether or not to have the seller get the warranty or to put the dollar amount towards closing costs when we bought our house last November. It was a complete rehab with all new electric, plumbing, etc. We decided to get the warranty and boy am I glad we did!
Just this past Sunday when we got home from vacation we found we had NO air conditioning! We paid our $75 per service call fee. The remainder of the over $1,000 repair was covered by our warranty. It wasn’t much fun to end our trip in the hottest part of the summer without air conditioning. But it would have been much worse to have ended it with such a big bill!
What’s your home warranty company Carla?
2-10
http://www.2-10.com/
They seemed really good- had someone to our house the same day. I liked the company they sent out. The tech seemed really knowledgeable and honest. The tech said he thought 2-10 was one of the better home warranty companies, that they covered more and with less reluctance. Overall we were pleased with our experience.
We live in a home from the 70s with original appliances and have just either fixed things ourselves or looked on Craigslist. I think it just depends how much of a “handyman” type family you are and if you’re willing to do things yourself and/or buy used.
It would depend. If you have new construction and most of your larger purchases, such as furnace, ac, hot water heater, tank-less system, etc. each have individual coverage, in those cases they hold a better rate of coverage. Be very careful, as many contracted, “paid-for-by-seller plans,” do not cover specific smaller repairs such as ice makers, range tops, convection ovens, and even larger repairs such as walls and sheet rock are often stipulated to be repaired not to finished condition, but to filled condition, meaning they strip, patch, and fill holes in the walls only, which will still costs you thousands in repairs in the long run. Also, many plans still require service call fees, which can exceed the initial cost that they offer for the overall repair, rendering the plans useless, even is brokered into a mortgage. Check with your proposed coverage company first before adding any plans, you may be surprised as to what will actually be covered, how transparent those terms and conditions are, as well as what your actual costs may still run you in the long run.
When we sold our house, we paid for it for the buyers. Ask for it when you negotiate the contract. I do believe that the buyers had to utilize it due to termite damage that was found after the sale because their lawyer did not read the report from the termite inspector before closing. Or maybe the lawyer had to pay…I don’t remember, but make sure all inspection reports are read carefully!
Ours was paid for by the seller, but the problem we had was sewer lines. There was a big tree in the front yard, the roots had gotten into the sewer line. The home warranty didn’t cover anything “outside” of the foundation so the sewer line and repair wasn’t covered. We started having problems within 2 weeks of moving in. 🙁 We thought for sure the heater would give out, but it lasted the whole 5 years we lived there. I guess you might compare what’s inside the house to what’s outside the foundation line. 🙂
I also had mine included with the cost for one year. It included most home repairs. Unfortunatly we forgot it was included and paid everything out of pocket. Whoops.
Most realtors will ask for that to be paid for by the seller.
When we bought our house 11 years ago, the seller provided a 1 year warranty. Within a few weeks, the transformer of the heat pump went out and we used the warranty… had to pay a $75 fee. That was only the start of the heat pump problems and they never did replace it. They did not cover the majority of the other problems we had in the first year. Also the fine print usually states that they only cover a certain number of events or up to a certain amount of money on repairs and replacements. So if the furnace dies and then the fridge and dishwasher go out, you’re on your own for the last two and anything else. The company (American Home Shield) was slow to respond and it seemed like they contacted out with the slowest companies that did the shoddiest possible work with the minimum amount of effort. If your seller doesn’t provide one for you, don’t bother. Just stick 1% of your home’s value into a “repairs fund” account at your bank. Then you can choose the best company for your needs.
I agree, we had AHS. We asked the seller to pay for the warranty the first year than we continued with them for 7 more years. Our furnace went out twice during the coldest week of the years and it took AHS one week to get someone out to repair it. The last year we had them one of our CA units went out and they sent someone to look at it and he said it was dirty and it had been placed under the deck. I explained to AHS that the unit was there when we bought the house. I explained that the previous year AHS had sent someone out to look at the same unit and cleaned it. Needless to say AHS refused to replace the unit and we dropped them. They also fixed our microwave 4 times in 2 weeks, but the last time it took the repairman 1 month to get back out to us. I would ask for it from the sellers the first year and save the cost for home maintenance and do without it. We figured we had paid in at least $3600 and AHS had maybe paid out $300 plus you have to pay for each service call, about $75.
Make the seller pay for it. Our water heater broke and the first time the guy came out I think he just fixed it enough to make it work. It went out again and then he replaced the whole thing. We basically got a new water heater for free. Once the warranty is up I wouldn’t renew it.
In our experience, it was a total waste of money. We had a water leak a couple months after we bought our home, the water was steadily leaking and the warranty company could not get one of “their” companies out for 3 days. Needless to say, we had to hire our own contractor so that the problem could be remedied, and we were not reimbursed. We had to file a claim on our home owners insurance to cover the damage that was sustained during the leak.
Ours was included from the seller (we live in CA and that seems pretty standard) but it wasn’t much use to us. Our wall AC unit went out and when the guy came to replace it he said that it wasn’t up to code so he wouldn’t do it unless we hired an electrician to update it and a drywaller/stucco guy to fix the wall since it would be a different size then what was there. so needless to say we didn’t do it and put in central AC instead. But like the person before it seemed to help. 🙂
I think it is worth it to ask the sellers to include it when purchasing a house. I would not pay for it out of pocket. You do have to use approved repair peeople and go through a process of getting things fixed and eventually replaced if needed.
When we bought our home it was included in the price. During that first year someone came to fix the air conditioner three times, and the garbage disposal went out and had to be replaced. In the case of the garbage disposal, the one in there was heavy duty, so they had to replace it with something comparable. The labor was long as well. I’m glad we had it.