What is a Home Warranty & Do I Need One

A home warranty is a contract between a homeowner and the warranty provider. It is designed to cover repair or replacement of your home’s major appliances. It typically includes things like washers, dryers, refrigerators, water heaters, HVAC systems, ovens/ranges, and microwaves. Some plans include plumbing and electrical. 

A home warranty is different from homeowners insurance. Homeowners insurance is designed to cover repairs to the house itself in the case of a disaster such as a fire, hail, lightning, wind, or other types of unexpected situations. It also covers personal possessions that are damaged due to disasters. 

You may be asking yourself, what is a home warranty? Do I need one? Here’s what you need to know. 

How Does a Home Warranty Work? 

A home warranty is something that you can decide to purchase. You can pay for it up front or in monthly installments. The type of warranty you purchase depends on what you want to have covered. A basic plan usually includes household appliances with the exception of refrigerators, freezers, icemakers, washers, and dryers. A higher tiered warranty would include those larger appliances and may also include electrical and plumbing. You’ll pay more for the higher tier plan, but you’ll have more extensive coverage. 

Then if something goes wrong with one of your appliances or you have a plumbing problem, you call your home warranty company and they will send one of their approved service providers to your home. There is always a fee associated with a service call.  The technician will evaluate the problem and submit an estimate for repairs to the warranty company. The warranty company determines whether or not the repair is covered and what amount will be covered. Some companies, for example, cover refrigerant for your A/C and some don’t.

Do I Need a Home Warranty? 

You do not need to have a home warranty. Instead you could choose to pay for repairs or replacement of your appliances out of pocket if something goes wrong. However, repair costs can be significant, and replacing a large appliance such as a water heater can cost hundreds and even thousands of dollars. In no way is a home warranty required, but it may be a wise financial decision, especially if you have older appliances, HVAC and plumbing.

Home Warranties and Real Estate Transactions 

If you are buying or selling a home, the topic of home warranties may come up. There are a few different reasons it can be helpful to purchase a home warranty when selling or purchasing real estate, such as: 

• Negotiations. A home warranty can be used as a point of negotiation during the sale of a home. The seller may purchase a home warranty to help encourage a potential buyer to make an offer or to pay the asking price for the home. 
• Financial protection for the seller. If you’re selling your home and it is under contract, meaning you already have an offer that is pending, there is a lot at stake. You are legally obligated to turn over the home to the buyer in the same condition it was in when they made the offer. So if something goes wrong in the meantime, like your AC goes out while the home is under contract, you are obligated to repair or replace it. Purchasing a home warranty can take some of the financial burden off of you. 
• Financial protection for the buyer. Even after a home inspection, there’s always a possibility that something could go wrong as soon as you move into your new home. You don’t want to get stuck with a broken water heater a few weeks or months after moving in. A home warranty covers potential issues that may occur in the first year in your new home. 

Looking to Buy or Sell a Home? Contact the Pamela Walters Group

The home buying and selling process can be complicated. But with the help of the Pamela Walters Group, you can have experienced RealtorsⓇ working on your side to make the process as smooth as possible. 

Call (903) 962-0075 or contact us to schedule a consultation. We make the process of buying and selling homes stress-free.