If you’ve read my blog posts, you will have probably discovered I like to use one word a lot: plan. Buyers, with real estate experts by their side, need to anticipate developments before they hit and have a plan (there’s that word again) to address each step in this journey.
The same is true for the inevitable breakdown in your home. Yes, it’s a matter of when, not if, something will go wrong with an appliance, plumbing fixture or heater. You can plan for that moment by investing in a home warranty now.
In a world of increasingly technical equipment (think Internet of Things) and rising costs for repair or replacement, home warranties have become a must-have service contract when owning a property. Warranties help offset the high costs associated with issues in the home related to electrical, mechanical and plumbing systems – including wear and tear.
You say: “I already have homeowners insurance, why would I need a warranty?” Homeowners insurance generally protects you and the structure in the event of fire, loss and theft but the policy will not pay to fix a broken dishwasher or leaky pipe.
New homeowners should especially consider warranty protection. It’s not uncommon for new buyers to discover issues as they start to become familiar with each appliance, fixture and system, and there is rarely a rainy-day fund for additional expenses after dropping thousands of dollars on the home purchase.
“A large percentage of our claims come within the first 60 days after close,” noted Ron Ballman, Senior Account Executive of American Home Shield in Western Washington. (Full disclosure: American Home Shield has a business relationship with John L. Scott Real Estate* and this blog post is not an endorsement of any one warranty firm over another or pressure to purchase a contract.)
If your sump pump backs up or dishwasher springs a leak, will your homeowners insurance policy pay to repair or replace the equipment? While most insurance policies cover damage to the home, the homeowner is responsible for finding a service company to examine equipment/appliance issues.
Whether it’s a sump-pump failure, leaky dishwasher or other mechanical breakdown, home warranties are there to give you peace of mind for years to come. Customers simply call the warranty company helpline to report the issue and, for a small service fee, schedule a visit from a licensed contractor. Not only do warranties protect your home, they protect your budget and (generally) have you covered.
I include “generally” because, just like homeowners insurance, each warranty company offers packages with different levels of protection. Most companies will also work with you to customize a package if, for example, you live in a home of more than 5,000 square feet or you want to add coverage for the mechanism powering your in-ground hot tub or pool. American Home Shield, for one, even offers coverage at an additional cost for a detached mother-in-law unit on the property.
“People generally assume everything is covered or sometimes a customer doesn’t understand the contract terms,” said Ballman. “One homeowner bought a refrigerator and submitted an invoice for $1,500 without placing a call to us to have a contractor check the appliance and diagnose the issue, so the claim was denied.”
It’s also true, unless agreed in writing, items outside the home are not covered by a warranty. That includes issues with the roof, fencing, decking or sprinkler systems. Warranty companies also generally do not cover smaller items in the home, such as security systems, voice-activated devices (sorry, Siri!) or televisions.
How much does a warranty cost? Basic coverage can start around $250 a year, with more comprehensive plans reaching the $700 level. Most companies will quote you a price online or over the phone – without seeing the property. New home buyers may even receive the remaining months from a seller’s home warranty, as contracts are usually transferable if the seller first notifies the warranty company.
Some companies, including American Home Shield, offer fee-based services anytime of year, such as a maintenance checkup on air conditioner or heating systems before the summer and winter seasons kick in. It’s preventive maintenance on critical systems in the home, just as you have your vehicle serviced twice a year. Some companies even offer services to have contractors anchor your big-screen TV to the wall and thread all of the related wiring through the wall.
So, ask yourself this: Without a warranty, how much will it cost you if one – just one – appliance needs service and a new part(s) … or, worse, replacement? Yes, you can do the math.
Inquire through your real estate broker about reputable home warranty companies in Seattle/King County and look at the options that best fit your needs.
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*John L. Scott Real Estate (JLS) performs advertising and data collection services for American Home Shield Corp. (AHS), which pays JLS fair market value for such services. A referral to AHS may provide JLS or one of its affiliated companies a financial benefit. JLS and AHS are separate and unaffiliated entities.