Buying a home is the largest purchase most people will make in their lifetime, therefore it makes sense to protect that investment with a home warranty.
A home warranty is similar to an insurance policy, it protects homeowners against the cost of repair and replacement of covered major appliances that can break down from normal usage.
Generally, home warranties cover water heaters, heating and air conditioning systems, plumbing, ceiling fans, central vacuums, ductwork, kitchen ranges, ovens, cook tops, built-in microwaves, dishwashers, garbage disposals, trash compactors, electrical systems, and doorbell wiring.
Such warranties often do not cover roofs, doors or walls, and items not built into  your home (i.e. a countertop microwave).
Getting such a warranty will help with costly bills later to replace certain appliances and fixtures.
“The average life expectancy of nine critical home systems and appliances is 13 years, and the likelihood of failure in any given year is 68 percent,” said Debbie Banducci of American Home Shield. “As a home buyer the home warranty provides you with the confidence of knowing that you won’t get stuck paying for costly surprise repairs.”
In most cases you can, however, add to your protection by purchasing an optional warranty that covers additional items such as: roofs, well pumps, washers and dryers, air conditioning units, swimming pools and spas.
Warranties exclude pre-existing conditions, which means it won’t pay to repair or replace an item that was not in working condition when the coverage was purchased.
Buying a home warranty is simple, ask your agent for details. In many cases, a seller provides the coverage to the buyer as part of the deal. If you want this to happen, ask for a seller-provided warranty when making an offer on a house. Even if this sort of coverage isn’t available, consider a warranty for your own protection.
A basic, one-year home warranty costs between $300 and $500 per year. Optional coverage is per added item, such as a pool, spa or well pump. The plan usually requires payment of a deductible or service-call fee (usually $35 to $50) from the claimant directly to the repair contractor. The warranty then picks up the cost of repair above that amount.
According to testimonials, home warranties are well worth the cost of coverage. Buyers should push for one as they negotiate the purchase of a home.
There are also plenty of good reasons to include a home warranty when you move to sell your home.
First of all, it’s viewed as a benefit to the buyer and something that will get shoppers’ attention. If you’re selling an older home, including a warranty might boost buyers’ confidence in your property and convince them to give you a second look along with new homes.
Furthermore, the warranty protects you as the seller, if something goes wrong after the buyer moves in. This means the new homeowner will call the service contractor, not you, when something breaks at your former home.
The purchase of a home warranty policy need not include an exchange of money between buyer and seller. The transaction can be completed at closing and is typically paid using money held in escrow.
Gene Thorpe is a California Association of Realtors director, the current secretary/treasure of the Placer County Association of Realtors, and broker/manager of Pavilion Realty, Inc. You may reach him at Gene@movingtoplacercounty.com.