Thursday, October 18, 2012

Are Home Warranties Worth It?

One of the most shocking revelations for new home buyers occurs when something goes wrong, and there's no landlord to call. Ouch! Once you are a proud owner of real estate, the onus of repairs and maintenance is on you. Whether you've purchased brand new home boasting home warranties galore, or a post-war fixer-upper with no developer in sight, it's important that you understand the different types of home warranties available to you. Spending a little money now can save you thousands of dollars in the long run.

A Simple Real Estate Guide to Home Warranties

New Construction Warranties

If you bought a home which was just built, and you are the first owner, you probably signed several boilerplate documents regarding the developer's warranties. In addition, every appliance, faucet, and technological gadget will have its own manufacturer's warranty. In most cases, your developer will handle any customer service related to these devices for the first year. After that, you are usually responsible for dealing with vendors and/or manufacturer's. You will want to read any accompanying paperwork that comes with the home to decide if you want to spend extra for potential extended warranty options.

Most new construction real estate comes with a one-year warranty that covers basic plumbing and electrical malfunctions, as well as any initial issues with your options and upgrades. When the year's up, repairs become your responsibility. Keep in mind that major structural defects, such as water seepage, most window leaks, structural failures, faulty wiring or plumbing, improper grading defects, etc. are the responsibility of your contractor if your home was built on or after January 1 2003 (Civil Code Section 895 et seq.). If you feel the issue is a design/workmanship or earth settlement problem, hire an independent contractor to assess the situation.

After Market Home Warranties

There are a plethora of home warranty companies which you can pay to provide a certain level of home warranty. In most cases, these companies will cover normal wear-and-tear issues for appliances, plumbing, and electrical systems. They will usually pay for any resulting damages and will replace the faulty culprit if necessary. The terms of these types of warranties vary greatly. You may pay a little every month for minimal coverage, or a more substantial amount for more comprehensive coverage. Do your homework before choosing a home warranty company.

Too many people choose a warranty company based solely on rates. This won't do you much good if the company has poor customer service and/or goes out of business in the near future. Make sure to weigh things like:
  • length of time they have been in business
  • online ratings/reviews
  • local reputation/ratings and reviews
  • customer service
  • rates in comparison with services available
  • their representatives ability to answer your questions
This is one situation where you want to make sure you've read all of the fine print and understand exactly what coverage they do and don't offer in your budget margin.

As long as you shop around and perform due diligence ahead of time, the money you spend for a home warranty will be well worth it.

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