Do I Really Need A Home Warranty?

Buying a house is likely to be one of the biggest purchases (if not the biggest purchase) you will ever make, so I recommend protecting yourself with a home warranty.

Home warranties can cover everything from repairing plumbing leaks to replacing a central heat and air system. They are particularly important at the time of purchase, because when a house sits vacant, things have a way of deteriorating (much like a car that sits in the driveway for six months). Things that weren’t in great shape tend to fail when restarted after a long dormancy.

I can’t tell you how many times I’ve received a call from a new buyer because their water heater failed right after they moved in, and that blankety-blank seller must have known about the problem. While unscrupulous sellers are out there, it is far more probable that the seller acted in good faith and the buyer was the victim of bad luck.

Septic leach lines and plumbing lines are particularly susceptible to dormancy. Here’s why: leach lines provide water to surrounding root systems. When the water stops because the house is vacant, those roots start searching for water. They worm their way into those leach lines and block them, leaving the new homeowners with a mess to take care of when they move in.

Similarly, water and gas lines that have handled constant pressure without incident may have weak spots that only become evident when a surge of pressure (as a result of restarting use) pushes water or gas through those spots.

Problems are even more likely when Grandma and Grandpa—who used to live quietly with their cat—sell the house to a big family with five kids. And of course, all of this is compounded by Murphy’s Law.

Be aware that home warranty companies (like most companies) are in business to make a profit. They anticipate they’ll pay less in claims than they’ll collect in premiums. But like the goal of every insurance policy you buy, your motivation is to offset an unlikely catastrophic expense with an affordable, definitive cost for insurance.

Your realtor can arrange an appropriate home warranty for you. As with most things, warranties come in many shapes and sizes (and costs). A standard policy typically covers plumbing and electrical problems, as well as problems with built-in appliances like dishwashers. Standard policies rarely include other appliances like refrigerators, washers and dryers, or stoves. Nor do they cover central heat and air, swimming pools and hot tubs, or well pumps. However, coverage for all of these is available for an extra fee.

What you probably won’t find coverage for (regardless of price) will be things like landscaping, structural issues like roofs, pest and fungus damage, title problems, and things you break yourself. Like other insurance policies, you also won’t be able to find coverage for known problems.

Even with a home warranty, you generally have to pay for the service call that determines what the problem is. The good news is, if the problem is covered by the home warranty, the $75 service call is all you’ll pay.

This brings me to one of my favorite sayings, “The big print giveth, and the small print taketh away.” READ YOUR POLICY. Be sure you understand what you’re agreeing to and how much you’re paying. I knew a guy who purchased the extra heat and air conditioning coverage because he bought an older home. Only after the heater broke did he discover his specific natural gas heat and air system was not covered by the policy.

The only time I don’t recommend buyers purchase a home warranty is if they are buying a brand new home, because it should be covered by a contractor’s warranty.

If you have questions about real estate or property management, feel free to contact me at rselzer@selzerrealty.com or visit our website at www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.