The (Limited) Value of Home Warranties
Source: AZ Central
This article in the Arizona Republic illustrates a point that I’ve been meaning to write about for a while: the true value of a home warranty.
Even though we almost always negotiate a one-year home warranty plan in to a contract when our clients purchase a home, we do have a healthy skepticism toward them.
Let me start with my own story. When I owned my first home, my air conditioning went out in the middle of the summer. I needed to get it addressed, and in a hurry. I called my home warranty company to get them to send a person out. For whatever reason, they could not get to me for a couple days. So, I called a repairman to help diagnose the problem.
Around that time, they got back to me. When they found out that I already had somebody out, they told me that they could not repair it. I guess anybody but their guy puts a hex on the equipment. Basically, my warranty was worthless in relation to the A/C.
From that point on, until I bought my next home, I self-warranteed. In other words, I tried to put away every year the amount I would other-wise spend on a home warranty. If the warranty costs $500/year, I put that away in an save investment account. I figured that, if an A/C lasts 12 years, then I will have saved most of the cost of a new A/C.
The three biggest costs that arise from maintenance of a home include roof, plumbing and A/C. Warrantees may not cover roofs. They may not cover lots of things. So, I figured I’d be better off saving on my own. Have a look at the article for some good tips and things to know about the home warranty, and what to look out for.
So, why do we write in a one-year home warranty for our clients? Simple, if we can get the seller to pay for it and you get the benefit of some protection for you, why not? Always read the policy, even if you got it as part of the contract.
However, unless you don’t have the ability to save money as I described, or if some part of the home you purchase is already really old and failing, you might be able to take care of it yourself.
Like many things, it comes down to taking the time to read the fine print. We always suggest that you do.
For more tips about home buying, contact us at 602-456-9388.
