Home Warranties in Louisville, KY

OK, so you saw a listing for a home that said "Sellers are offering a one-year Home Warranty" -- what's that really mean? 

There are several home warranty companies out there -- ASW, Old Repoublic, HWA and many more.  They are basically insurance companies that collect a premium of a few hundred dollars at the closing of a home sale, and assume the risk for anything breaking in the home during the first year of ownership.  So, how does it work:

  • Usually these warranties cost from $325 to nearly $500 for a one-year warranty of a home under 5,000 square feet.  If you buy one,you will get a written confirmation of coverage in the mail -- just like your homeowners insurance or auto insurance.
  • Every warranty has a stated deductible -- usually from $60 to around $100.  This means the homeowner pays from $60-$100 each time they call the warranty company for a repair.  Usually, if the warranty cost more up front, the deductible is lower.
  • These companies have written agreemets with specific contractors in your area.  You have to call the warrany company when you have a problem, and they will ONLY use their contractors.  If you get the work done first, then call them, they won't cover the repair.
  • If you know the difference between a bumper-to-bumper warranty on a new car and an "extended warranty", these warranties are more like the latter.  They cover what the warranty brochure says they do, and ONLY those things. For instance, a warranty might cover a failure of your dishwasher (after you pay the deductible), but might NOT replace that faucet that's leaking.  However, most will replace your furnace if it can't be repaired, and almost all will fix or replace any appliance that fails in the home, clear sewer line clogs, correct a roof leak, etc.  The point here -- READ what the warranty covers, and understand that if the roof isn't mentioned, for instance, roof leaks aren't covered by this warranty.
  • These warranties do not cover pre-existing conditions.  For instance, if you close on your home in July and call them immediately to say the air conditioning isn't working, they will say that it wasn't working when you bought the home yesterday! So, if you know something isn't functioning as it should when you're working through the inspection/repair part of your home purchase, don't assume that the warranty will take care of it.  These issues should be negotiated with the Seller before closing.
  • All of these warranties have specific limits on high-costs repairs.  For instance, the company may promise to pay up to $1,500 to repair a leaky roof or fix a main sewer line, but they won't pay the full cost of replacing a roof, etc.  Also, be sure that the warranty you are buying COVERS roof repairs - some don't. Remember, they're only charging $325-$425 for most warranties - they can't afford to take all the liability for anything that goes wrong with your home -- just what they say they will.
  • If your home needs a simple repair -- a faucet washer or light switch replaced for example, you may still be better off getting a friend, handyman or other source to correct it, IF the cost is lower than your deductible.
  • In some cases, where the company is replacing a furnace, water heater, dishwasher or other large component, the contractor may charge a $75-$100 "haul-away" fee, which you will be asked to pay.

Quite often, these warranties are a part of purchase negotiations between Buyer and Seller.  In many cases, the Seller will offer to purchase the warranty for one year for the Buyers just to provide added peace of mind.  Buying a home with a warranty means the Buyers know they won't pay any more than the deductible (plus an equipment removal fee, in some cases) even if a major component fails or needs repair.

One more thing -- there are usually additional options that can be purchased with a home warranty.  If the home has a pool, pool equipment will only be covered if purchased additionally.  The same is true for roof repairs in many cases.  Many warranty companies offer "premium" or "platinum" protection, which simply covers more things in the home. So, read the warranty brochure to see what you're getting, and what you might want/need to add for additional protection.

Finally, these warranties are usually renewable by the owner for additional years -- usually at roughly the same cost.

Warranties make a lot of sense in many cases.  Please call us if you have any questions about them!

 

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