Is a Home Warranty Worth the Cost?

Dewayne: 

Is a home warranty worth the cost?

Interviewer: 

Hi, Kirk. Hi, Dewayne. Thanks again for another episode in your series of 60 Lessons in 60 Years. So, today we want to discuss your lesson on the benefits of a home warranty. A common question that consumers have is, is a home warranty worth the cost?

Kirk:

I say, of course it is. You’re going to get a warranty that’s going to cover typically your three biggest systems. It’s going to be your hot water heater, it’s going to be your air conditioning system, and it’s also going to be replacing your appliances. So, refrigerator breaks down, it’s going to get replaced. Yeah.

Dewayne: 

Yeah, and it’s kind of like asking the question, “Is insurance worth it?” Well, of course it is if you make a claim.

Kirk: 

If you need it. Yeah.

Dewayne:  

Yeah.

Interviewer:   

Well, how does it work?

Dewayne:   

Well, a home warranty can be purchased anytime during the course of a listing or during home ownership. Typically purchased for buyer or by the buyer at closing. You can go into whatever it covers.

Kirk:  

You’re looking at a cost of $500 to $1000. So, it’s a pretty minimal cost. Whether the buyer pays for it, the seller pays for it. If your refrigerator poops out, it’s $1,000 or $2,000 just for the refrigerator. So, you have your refrigerator, you have your air conditioning system. The air conditioning system, sometimes we come across those, they’re older, they’re working fine, but they may not last another year or two. Well, if you have a warranty on it, it’s going to cover that.

Dewayne:

Yeah. Then they just make a claim, they pay the service fee, and then that covers all repair replacement and anything to get it working again.

Kirk: 

Yeah. So again, I want to reiterate, the cost is usually around $500, $600. But if you want to add pools, you want to add other stuff to it, you can add other things to it and probably get up closer to $1,000. So, just depends what you want in that coverage.

Interviewer:   

For a year?

Kirk: 

For a year, correct.

Interviewer:

Okay, great. Well, would you say that the seller or the home buyer is responsible for paying for that home warranty?

Dewayne:

It depends on the deal and what’s negotiated, but no one’s required to purchase one.

Kirk:

No. And again, you just want to make sure you’re covered. So, if that water heater breaks down, there’s water heaters that’s $1000. So, you’re going to pay a deductible like you would for any service call. All of a sudden, now they get a new water heater. That’s a great deal.

Interviewer:

Okay, well thanks Kirk. Thanks, Dewayne. All of that is great advice. So, what do we get to hear from you next week?

Kirk:

Next week we’re going to talk about the six pricing mistakes home sellers make. We’ll see you next week.

Dewayne:

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