Choosing The Right Home Warranty Plan

Choosing The Right Home Warranty Plan

When you put an offer in on a home, one of the negotiable items in the contract is a residential service contract, more commonly known as a home warranty.  It’s quite typical for the buyer to request that the seller contribute a certain amount of money towards the buyer’s home warranty purchase.  Why you should request a home warranty, how much money you should request towards a home warranty, and how to choose the right home warranty are all questions worth asking when you are purchasing a new home.


Why should you get a home warranty?  

A home warranty reduces the costs of home repairs by providing an insurance policy of sorts on the maintenance of your home.  If an appliance breaks, you will pay a service fee for the repair which is much less than the actual repair cost.  There are really only a few situations when I will not recommend my client get a home warranty.  If the home is a fixer upper or tear down, it doesn’t make sense to purchase a home warranty. New construction homes sometimes come with builder’s warranties.  It’s a better use of my client’s funds to hold off on the home warranty if the builder’s warranties are as good or better than those offered by a home warranty company.   If you know it’s a multiple offer situation, you may not want to request a home warranty.  The home warranty weakens the offer by requesting an added expense for the seller.  Otherwise, I will advise my clients to request money towards a home warranty.  My job is to protect my client’s best interests so I will usually write in that the seller will pay a certain amount towards my client’s home warranty.  If the sellers don’t like this part of the contract, they can always make a counter offer, but the initial offer is going to be skewed towards my clients’ best interests.  


How much does a home warranty cost?

Since you have to put a monetary amount that the seller will contribute towards the buyer’s home warranty in the contract, it’s a good idea to have a rough idea of home warranty costs before you submit an offer.  Home warranty costs vary significantly based on the type of home you are purchasing; a condo home warranty will cost less than a home warranty for a duplex with double the number of appliances as a single family home.  The average amount I recommend in the contract is $500, this will cover an extensive condo plan with extra money for added coverages, and it will cover a mid-level policy for a single family home.  Once we are under-contract on the home, I send my clients brochures from a few different companies so they can choose the policy that’s best for them.


Which home warranty should I choose?

Choosing a home warranty policy is challenging.  You need to determine what coverages are most important to you, compare annual costs as well as service fees, and take a look at the fine print to really determine which one’s the best.  There are a number of different home warranty companies out there, and they all have multiple products to choose from.  Usually they will have 3 service tiers, a basic plan, a mid-level plan, and the ultimate plan. did a great assessment of the options available for consumers looking to purchase a home warranty.  In their article, they point out some great tips for finding the best home warranty company for you, and they also made a key conclusion that rates may be negotiable.  Calling the home warranty company directly can often lead to obtaining the best rate. 

If you’re planning to purchase a home soon, it’s a good idea to understand the different home warranty options available to you.  Contact me today, and I can send you brochures for a variety of home warranty providers in the Austin area.  

This post originally appeared

Erika Albert Headshot
Phone: 512-779-7597
Dated: March 2nd 2018
Views: 178
About Erika: ...

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