Descriptions

The home warranty has become common place in real estate. Once it was a marketing tool to help sellers stand out from their competition by offering a home warranty. But now it's pretty standard that a high percentage of our sales will have a home warranty included.

So what is a home warranty? It's essentially peace of mind coverage. That if you wake up in your new-to-you home after moving in - and the water heater doesn't work, or the furnace is out, or you don't have AC during a heat wave - you can call the warranty company and they'll send someone out to repair the issue(s).

They'll do whatever they can to make repairs, and if it can't be fixed, they'll replace it. All that for a small deductible - whatever your plan covers. It's not the same as homeowners insurance. But it's similar. Think of it as a mechanical coverage of sorts. There are many different kinds of home warranties and they have different prices and coverage.

You could search "home warranties in Des Moines" and a lot of options would show up. The most common warranties that we've worked with are: Cinch - https://www.cinchhomeservices.com/ AHS - American Home Shield - https://www.ahs.com/HSA - Home Security of America - https://www.onlinehsa.com/ (I mistakenly called this Home Shield of America - whoops!)

If you decide you want to include a home warranty with the purchase of a home, you'll want to know that up front so we can include the information in the offer. Take market conditions into consideration to help you decide if you want to ask the seller to pay for your warranty or whether you want to take on that expense. We'll have recommendations and will happily provide guidance during the offer process too.

 Don't worry - we've got your back! Get a jump start on finding your next home: https://www.desmoineshousehunters.com/

Have you ever wondered what is a home warranty? What does it cover? Why do I need it? Who pays for it? What is the deal with the home warranty? That is me trying my Seinfeld impression out. What is the deal with home warranties? I don't think stand up is in my future, but seriously, let's get to the bottom of this and what buyers and sellers need to know about home warranties.

So first of all, a home warranty is not the same thing as insurance on your home. When you own your home, you're going to have homeowners insurance. If a tree falls on your roof, God forbid, then your insurance company is going to protect you. They're going to pay for the repairs. And you know, there's a lot actually involved in that process, but they're going to make sure that you're not financially devastated by whatever repairs are required from whatever happened to damage your home.

And so a home warranty is totally different because it is not insurance, but it does help you offset the cost of minor issues with your home when you buy a house. Well, sometimes you're kind of cash poor because you just use all of your savings for the down payment to purchase the house in the first place. And inevitably something is going to break the first day that you move in.

The first house that I bought, the water heater broke within a week or two of moving in. And I didn't really know how those things worked. And I didn't listen when my realtor told me about my home warranty. That's key that to listen to your realtor. So do, as I say, not as I do. So in this case I woke up, I did not have hot water and I'm like, what's the deal? And so I went downstairs to the basement and sure enough, I had water on the floor in the basement because my hot water heater had stopped working and it started leaking.

So that was not good. And let me tell you, cold showers, no fun. So what did I do? I called a plumber. This is where I went wrong. I called the plumber because why wouldn't I call the plumber when I had a hot water problem? And so the plumber came out and said, well, you know, I can fix this for this much money, but this problem is going to happen again.

And this was a small house, a long time ago, a small water heater. And I think it was like $700 to replace the water heater. So I said, well, let's go ahead and replace it. Cause I don't want to deal with it again later now. That's all well and good. And that's when you don't have a home warranty, that's what's going to happen.

If your water heater breaks, you call the plumber and whatever price they tell you, which the most recent water heater that we replaced four years ago was over a thousand dollars. So don't expect a $700 price tag on that water heater. But if you have a home warranty, you call the home warranty company instead of calling the plumber directly.

So you call the home warranty company and you say, I have a problem with my water heater. They'll ask you a bunch of questions of what's wrong. They'll put you on hold and they'll call somebody that they have contracted service with in your area. And it may be a company that you have never heard of. And that's okay because the home warranty company has contracted a lower rate for them.

They're going to give that contractor a business in exchange for a rebate on the work. They're not all set up like that, but that's a common way that a home warranty company does business. So you call the home warranty company. You tell them a water heater is broken, there's water on the floor. They put you on hold. They call a service or in the area, they come back on the line and say, okay, they can be out there Tuesday between one and three. Great. So you set the appointment.

You're there for Tuesday between one and three, the service provider comes out and he will do whatever he can to fix what is broken or she, it doesn't have to be a heat. They will do whatever they can to fix what is broken. And if they cannot repair it, then they will replace it. The expense to you is whatever the deductible is for the home warranty that you have purchased a common deductible amount might be a hundred dollars.

It could be $200. Every home warranty is different. So you have to know the terms of your home warranty. So let's say in this example, it's a hundred dollars deductible for you to get a brand new water heater. Well, that's a pretty good deal. That's a lot better than the $700 I had to pay 12, 13, 14.

I don't remember how many years ago. And it's certainly a lot better than the thousand plus dollars that a water heater is going to cost today. So each home warranty company is different. They all have different coverages and they're all for-profit companies. So that's something to keep in mind because sometimes when you call into the home warranty company, you might feel like they're making it difficult for you to get the service that you're requesting.

And they probably are because that's their job to make money. And the more service requests that you have, the less money they're going to make, of course, but having the home warranty is nice peace of mind of knowing if your water heater goes out the day after closing the day after you wrote a gigantic check for down payment for this house that you plan on living in for 10 years, then the water heater goes out.

That is really a big unexpected expense. So the home warranty covers that in theory, some home warranty companies that we have recommended in the past would be cinch. That's the company that we're currently Recommending. We've also done work with American home shield. And I always thought that they had a really good product, but the price is very expensive now.

And then HSA home shield of America there. I think they used to be a separate company from American home shield, but then they merged. So it's almost the same thing, but it's still a separate product. So HSA H S and sinch are common home warranties. There's a lot though, if you were to just Google home warranties in Des Moines, there are a lot of options.

And that is something that you can certainly do some research on. And if you have a preference of what home warranty company you want, let us know, because it, we need to know that before we write your offer, because there's a line on the purchase agreement that we need to fill that information in thinking about who's going to pay for the home warranty is also important.

And it's, it varies depending on what type of market you're in. So I know when I work with sellers, a lot of times they misunderstand the purpose of the home warranty. They think that they're personally giving a warranty that everything is going to work for a year, and that's not what it is. Not at all the seller. Isn't going to come back and fix anything for you when you're done.

If you negotiate a home warranty into the contract and you request that the seller pay for it, then if they agree to that, then of course it comes out of the seller's proceeds at closing, and then that's it. The seller is done with the house. They don't have to do anything with the home warranty at all. Now the buyer on the other hand, well, they'll continue to benefit from the home warranty for whatever coverage time was purchased.

And so that is usually a year. It could be longer though. And then assuming you didn't abuse the home warranty by having too many requests, then you might get invited to renew your home warranty. When my husband and I bought our house, we were poor. We use all of our money for our down payment.

And so we had a house with a very old furnace and air conditioner. And we just, we knew that the minute we canceled our home warranty, that the furnace and air conditioner would both break and we'd be poor, even more poor forever. Now who pays for the home warranty is up to you when you're writing the contract.

So we'll need to know that too, if the market is really hot and maybe your offer is in competition with other offers, well, if you ask for that home warranty that might work against you, if you ask for the seller to pay for it, because they're going to be looking at their bottom line, and if your offer is just as good or better than somebody else's, but it has a home warranty in there.

They're going to subtract that from the bottom line and that might affect your overall offer. So, you know, we'll talk about the best strategy to approach this. And In a hot market, it might be paying for the home warranty yourself, but you know, it's several hundred dollars upfront that ideally will save you several thousand dollars on the other end, or at least give you the peace of mind that you won't have to worry that your furnace will go out the day after closing.

And then, you know, what does the furnace cost? If you had to get both the furnace and the air conditioning, that could be $13,000, it might be less, it could be more, but still that is a huge expense, especially when you just gave all your money to the bank for the down payment to buy your house. So that's the great thing about the home warranty is to give you peace of mind.

Now, if the market's not hot and you're not competing, well, maybe you want to negotiate the sellers pay for the home warranty. Buying the home warranty just means that the cost for that particular home warranty comes out of your proceeds out of your column on the closing settlement statement at closing overall, I think having a home warranty is a great idea in certain situations, if you're planning on gutting the house and renovating it, you don't need a home warranty because you're basically going to have a brand new house when you're done.

But if you're worried about having an old furnace and an old air conditioner, been there, done that. And personally, I thought the home warranty was worth not stressing about possible major expenses that might come up. If we had repairs come out of nowhere, it's a lot of worrying you just don't need to deal with and having the home warranty, whether you use it or not is a nice thing because peace of mind is wonderful.

Of course, if you're buying a brand new house, that's new construction that usually comes with a one-year builder warranty. So you wouldn't need to worry about getting a home warranty on it, unless for some reason you wanted to purchase a longer home warranty that covered it for several years.

For example, these are all great things to talk to your real estate agent with, talk to us about and to strategize in advance of writing your offer so that you do not feel like you have to make in the moment decisions on things that you're not actually educated about. But if you do have to make in the moment decisions, then we do have recommendations that you might just want to take.

So that's it, that's what a home warranty is. I do think in many cases it is worth it. And there's a lot of information that goes into the home warranty, especially depending on what type of warranty that you get. So if you have any questions, well, feel free to comment below and my team or I can respond.

 You can also schedule a call with us and we can go over your home warranty questions as well as helping you strategize on buying or selling a house. So that's all I've got and I'll talk to you soon.