Home Owners Warranties: Worth Buying?

Is a home owners warranty worth buying? It depends. My neighbors have them as do my in-laws and most have been pleased with the service. But when it comes to a seller offering a home owners warranty my opinion is: not so much.

WarrantyA home owners warranty may seem like a nice incentive to offer a potential buyer but there are several gotchas. Typically the seller pays around $400 for the warranty, with coverage starting while the home is on the market and then conveying to the buyer, sometimes for an additional fee. Should the seller or subsequent buyer need service there is usually a deductible and nominal service call charge.

There is also the fine print on the back of the contract, which can virtually nullify coverage on an old appliance. If the service company deems the equipment to be obsolete, they may not fix it at all or charge a pro-rated fee to do the repair that could equal more than half the cost of replacement. In some cases the providor may offer a discount to replace the unit.

I recently sold a foreclosed property where FreddieMac actually provided a two-year home owners warranty as part of the deal. They even paid to fix the broken air conditioner before settlement. My buyers were thrilled to get the added value and increased their offer to ensure the deal was theirs cialisviagras.com. But less than a week after we closed the AC unit failed again so a call was placed to the warranty service provider. After paying the $100 service fee they were informed that the unit needed to be replaced but would not be covered for the following reasons:

1. They claimed it was a pre-existing condition (but passed inspection)
2. The owners had not been in the house long enough (that was not even mentioned in the contract)
3. It was an obsolete piece of equipment

Even after providing proof that the unit was in fact working when they closed, the service company simply walked away without any attempt to negotiate a solution or offer a discount on a replacement. My clients may have purchased a new system through them but they vowed never to deal with them again, in spite of the two year warranty. The $5,000 purchase went to a local HVAC company instead and the home owners are filing a complaint against the warranty company.

Buying a home owners warranty may be a good value for an established home owner but a call to the Better Business Bureau or a quick Google of the warranty company will reveal their track record. As for me, I passed on the warranty and have spent less than $1,000 on appliance repairs in my five years of home ownership, so I am ahead of the curve (for now).

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