The home warranty is something we see a lot in San Antonio. It is common practice for the buyer to ask for a seller to purchase a home warranty, although it is not required that the seller pay for it (and the buyer can still purchase one on their own if they would like). The name home warranty is actually a bit of a misnomer, as they are actually called residential service contracts, and the word “warranty” in there can cause some confusion as they do not actually offer a warranty on the home. Instead, they help give the new owners some peace of mind that when something needs fixed or a major system malfunction occurs, they can get it done without some of the hassles associated with finding a tradesperson, getting estimates, choosing someone to do the work, etc. Instead of offering a blanket warranty on the home as some believe, each residential service contract outlines specific items in the home that will be repaired or replaced, should they break down. For a fixed service fee (varies among the companies offering them), the homeowner will have a repairman visit the home, determine what can be done (repair or replace), and perform the services on the item in question. They can be pretty handy when something breaks down, but are they really worth it?
As we mentioned earlier, asking the seller to pay for the home warranty is quite common and Paragraph 7.H. of the residential contract is specifically about that. Basically it states that the buyer will purchase one and the seller will reimburse them x dollars (fill in the blank). While a buyer can ask for this in the contract, they can also forgo it and purchase one themselves or not at all. The purchase of a residential service contract is purely optional (the paragraph in the contract even states (in bold print): “The purchase of a residential service contract is optional. Similar coverage may be purchased from various companies authorized to do business in Texas.“
Why Buy a Home Warranty?
Home warranties take a lot of worry out of owning a house. One number to call, one service fee to pay and you can get most items in your house serviced and repaired. Of course, you’ll want to make sure the item is covered. Most plans offer add ons like refrigerators, washers, dryers, and pool equipment, so make sure you understand what is and what isn’t covered in your plan (and be sure to check before you purchase it, so that if you feel there is a lack of coverage you can pay for the additional coverage). It seems like the minute you buy a new house, Murphy’s Law kicks in and some major appliance or system breaks down. With a home warranty, you can feel more secure and know that many of those items will be covered by a service fee, instead of shelling out hundreds before the item is even repaired!
Home warranties also typically cover some of the larger systems like your HVAC, plumbing, and electrical. No one wants to have to pay the big bucks for one of those systems and when a home warranty is there to cover it, it is a huge relief. Each company offers different coverage, so make sure you read the details before you choose which company to go with.
Remember, there are multiple companies offering similar services out there, so be sure and do your homework. Your agent can recommend some of the companies they’ve worked with. Most real estate offices have several different companies’ brochures around the office (they can be found online as well). Just remember, like anything in real estate, you are in control and can pick the company you feel will serve your needs best. The only time we do recommend going with a company being recommended by the listing agent is if the sellers paid for coverage during the listing period – this seller’s coverage usually extends certain benefits to the buyer (ie you won’t get a claim turned down as a pre-existing condition). We still recommend you weigh your options, even with this added benefit.
Overall, we find home warranties to be quite useful and based on feedback from our clients over the years, many have found a great benefit to them. They’re worth it, particularly in the first year of owning your home, as you’ll have just spent a lot of money and any added surprise costs of a major appliance or system could just be a little more than most people are comfortable with. If you can work it into your contract and save a few dollars that way, even better. After a year, you will be required to renew each year on your own and the prices will increase over time, so at that point you’ll need to weight the cost vs. the benefit.
image courtesy of ** RCB **