Homeownership is rarely a stress-free experience. Whether you’ve owned your home for years or recently purchased it, many things can go wrong with your essential built in-systems and home appliances. These issues can include leaky pipes, faulty electrical wiring, and the dreaded plumbing backup, and these problems often arise at inconvenient times.
The hassle begins when you notice the issue and only ends after you’ve found a reputable contractor who can complete the repair correctly. But it doesn’t have to be an arduous process if you have a home protection plan, which will cover repair costs and help connect you with a service technician.
When to Buy a Home Warranty
Home warranties can be purchased at any time, but it’s especially common for new homeowners and sellers to investigate home warranty coverage when property changes hands.
In 2021 and the first part of 2022, the housing market has exploded due to high demand, historically low mortgage rates, and 4 million fewer homes than demand requires. Market scarcity has driven prices above many homes’ appraised value, and many home buyers are willing to waive contingencies, such as home inspections, to provide a competitive offer as quickly as possible.
In layman’s terms, it’s a sellers’ market, which doesn’t often yield room for homeowners to make additional requests before closing. With that said, it could be a prudent investment to enroll in a home warranty after you purchase your home.
Thoughts From a Real Estate Agent
We sat down with real estate agent and principal broker Jill Parker, who serves the Portland, Oregon, area, to learn what she and her clients think about home warranties, especially in the current market.
She estimated that roughly 15% of the homes she sells include a home warranty, but she’d like to see it offered more. Parker shared that many sellers think of home warranties as an added expense and are skeptical of the value, especially in this competitive market.
When we dove into more nuance, she shared that the value of a home warranty depends on the house. She hopes more sellers offer it because almost all her buyers are writing offers without asking for any repairs.
She also explained that a home warranty gives the buyer some comfort. In a market like this, where home prices are skyrocketing, home buyers can have the peace of mind that if something does go wrong that first year, they’re going to have it taken care of for a low cost and by a vetted service provider.
Photo: Adobe
Personalize Your Plan
Parker represents clients shopping for a mix of new construction and existing homes, but she made a point to mention that many of the homes she sells are well-maintained or “dialed in,” as she called it.
She described her litmus test for identifying the best package to offer to a client: “If everything is new, except maybe the furnace, is it worth the home warranty on the entire home? That’s how I decide when it comes to offering the home warranty.”
Your Agent Can Help
House hunters should consider the details of the home, including its systems and major appliances, to see how well constructed and maintained everything is. Parker says she keeps her eyes open for red flags when she’s touring a property with her buyers.
With an experienced eye for evaluating the age of the systems and the quality of the work, Parker says it is “pretty obvious to experienced agents when it’s been [repaired by] ‘Uncle Joe’ versus an experienced contractor.” When she notices that something’s not up to her buyer’s standards, she’ll bring it up in negotiations or recommend the buyer consider a home warranty policy after closing.
If you don’t have a keen eye for these details, make sure you’re working with an agent who does.
Ask Questions About Your Home Warranty Options
When making a recommendation, Parker sends her clients digital brochures for a few companies she has researched and discussed with other members of her industry. These companies include Fidelity Home Warranty, Old Republic, and First American Home Warranty. Even among her preferred companies, the service contracts vary considerably.
Parker recommends that her clients review the terms of their home warranties—setting aside enough time to read the language of the terms and conditions carefully and ask questions. If you’re confused, she recommends speaking to a sales representative directly. Her advice: “When in doubt, just pick up the phone, ask some questions, and see who you’re most comfortable with.”
Fill in Gaps of Homeowners Insurance
Home warranties aren’t just for new buyers and prospective sellers. It also fills in the gaps of your home insurance policy.
Many homeowners erroneously assume their homeowners insurance will step in for all major home repairs, but that’s not the case. Homeowners insurance applies when your home’s structure or property is damaged due to a perilous event, such as a fire. But home insurance doesn’t cover repairs needed from normal wear and tear.
Home warranties fill that gap, financially protecting the interior components of your home, specifically major appliances and home systems, such as your HVAC unit. When these items malfunction, having a home warranty provides peace of mind by giving you a convenient resource to call on. After filing a claim, your provider will connect you with qualified service technicians to address the repair or replacement, typically within 48 hours.
The Expert Recommendation
After more than seven years in real estate, Parker’s expert recommendation is that home warranties are excellent for added peace of mind. She adds that the type of coverage you’ll need will depend on the condition of your home, the age of the home, and the issues most likely to occur within the plan’s terms.
“It’s very house-specific in terms of what’s been updated and what hasn’t,” she says. Choose the coverage that matches your home’s needs.