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Home Care & Ownership Tips
Home Warranties: Penny Wise or Pound Foolish?

When you ask homeowners – new or existing – about whether they think a home warranty is necessary, you will get a mix of definitive “yes” and “no” responses followed by some that shrug their shoulders. The reaction seems to mirror the answers related to whether or not a person should have a life insurance policy – that it is a security blanket; that it is a waste of money; and that it is great to have if you knew if you actually would need it or not.

This article explores the benefits of and issues with a home warranty as well as provides you with ways to maximize the investment if you do decide to purchase a home warranty, including the use of an online home maintenance record to substantiate maintenance and repairs.

Understanding a Home Warranty

A home warranty can be defined as a service contract that can be purchased to help a homeowner with the cost of potential repairs or replacement of home system components and appliances. These items can include dishwasher, trash compactor, central vacuum, garbage disposal, oven, cook top, stove, and built-in microwave as well as the water heater, plumbing, electrical system, and heating. Other items may be included or can be added for an additional cost, such as doorbell wiring, duct work, ceiling fans, garage door openers, air conditioning, washer and dryer, and swimming pool/spa.

The policies range anywhere from $300-$500 per year, depending on the company, and the homeowner is required to pay a trade service call fee of $50-$60, on average, if they request a contractor to come out for a potential problem.

While a person selling a home tends to include a home warranty as part of the sale of the home, the buyer then has a conundrum when that year is up whether or not to renew the policy. Free is one thing but paying for something you do not know if you will need is another matter. Further complicating matters is the possibility that you may own multiple properties as an investment and have to consider the costs of putting them all under home warranty or taking a gamble that nothing will go wrong in terms of repairs or replacement costs. How will the dice land?

A Security Blanket: The Benefits of a Home Warranty

Since your home is likely the biggest investment that you will ever make, you will want to make sure that it receives the proper care. However, there can also be some pretty expensive costs involved in maintaining that investment – especially as the house ages and certain aspects of your home may need a replacement. There are a number of benefits to purchasing a home warranty and many of these are attractive to those of you that do not like to gamble. The home warranty:

  • Protects you from unexpected repair and replacement costs. Most appliances tend to only last about ten years, so the replacement of just one item can more than pay for the warranty.
  • Offers access to insured and tested contractors so you do not have to be concerned, and, if there is a problem, you have immediate recourse.
  • Works as an excellent selling tool because it alleviates some of the fears that a buyer may have in relation to whether the house is really in as good as shape as the seller states. Similarly, it helps the seller avoid getting sued by the new owner in case something does go wrong with the home.

Buyer Beware: Warnings about Home Warranties

You need to know that there are some downsides to a home warranty that will help you weigh your decision:

  • A home warranty does not prevent systems or appliances from breaking down.
  • If anything does break, there is no guarantee that the home warranty company will replace it. In fact, they will go out of their way to find a reason to not replace it.
  • Be aware that there are many items that a home warranty does not cover or certain aspects of something that is covered will not be included. For example, some items not included in a home warranty include the roof, walls, doors, or items that are not built into a house. Make sure you read the policy carefully and ask specific questions.
  • Know that the company may charge you for certain things, such as disposal fees.
  • Do not assume that you will get a repair person that does quality work or provides any level of customer service. Unfortunately, these companies cannot personally screen or interview all the contractors, so they hired sight unseen and may not provide the best representation for the company, leaving you with a bad experience.
  • Do not expect personal service from these home warranty companies, which are usually national and deal with millions of homeowners each year. They tend to be more interested in selling the warranties rather than helping fix your home, so be prepared for a level of service that you would expect from the Department of Motor Vehicles.

It All Comes Down to Maintenance

One reason that prevents them from approving any repair or replacement is any sign that there has been a lack of maintenance. This is probably the number one reason a warranty company will not fulfill its side of the agreement. Contractors work for the warranty firms are trained to look for any signs that the homeowner has not conducted regular maintenance on the system or appliance.

For instance, if it is obvious that filters have not been changed on the furnace, lint has not been cleaned from the dry in a decade, or the pool filter has not been cleaned or the water is not topped up in the swimming pool, then the home warranty company states that this voids any approval of repair or replacement work. Making matters worse is that you would still have to pay the trade service call fee for taking the contractor’s time to come out to your home.

So, whatever way you decide to go in terms of purchasing a home warranty, it pays to keep a comprehensive maintenance record with receipts, photos, dates, and details on the work. This can be supplied to the home warranty company as proof that you have stuck to a regular maintenance schedule. This can also provide a good basis for the buyer and provide further peace of mind. If it comes to closing a sale, it might be good to throw in the home warranty as well.

Whether you decide to purchase a home warranty or not, it is always good to keep a detailed record of your home’s maintenance and repairs. Ownersite Technologies is making it their business to help you maximize the investment in your home through a valuable Web portal where you can record and track all types of information related to the maintenance and care of your home.

Ownersite Technologies is happy to offer a free 30-day trial of Home Ownersite, the comprehensive, web-based tool that simplifies home inventories and recordkeeping. With plans starting at only $29.95 per year, Home Ownersite is the perfect tool to manage the complete ownership lifecycle for your home and valuables. To start your free, no-obligation trial or to review the different plans available, please click here.

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