When a buyer makes an offer on Utah Real Estate, they are usually presented with the option of purchasing a Home Warranty.
The purpose of home warranties is to protect buyers from financial expenses that might arise from unforeseen future complications associated with home ownership.
Home warranties generally last for one year and can offer financial assistance from home defects such as broken furnaces, electrical issues, plumbing problems, or even failure of air conditioning units or refrigerators. Home warranties are purchased from Home Warranty companies whose entire business is providing home warranties for home buyers and occasionally sellers. Some of the major home warranty providers in Utah are Landmark and Alliance Home Warranty.
A standard one year home warranty typically costs between $270-$350 dollars. A standard warranty will typically cover heating systems, pipe links, water heaters, toilets, dishwashers, ovens, built in microwaves, and ovens. There are also “upgraded” home warranty plans, or al-a-cart items that can be added for things like refrigerators, swimming pools, and septic systems.
If a covered item breaks down during the warranty period, home owners simply call the home warranty company, pay a service call (usually around $60), and the home warranty company will arrange repairing or replacing the problem.
In some instances buyers have no way to know if part of a house really works until after closing. When its 110 degrees outside, its impossible for a home inspector to tell if the furnace really is giving out heat. Home warranties offer a sense of protection to buyers who can’t be guaranteed that the home they are buying won’t turn into a money pit.
Is the Cost of Home Warranties Worth It?
If a problem happens during that first year of home ownership, people are almost always glad they have the home warranty. If nothing happens, they usually forget they ever purchased it.
Determining if you should purchase a home warranty or not really depends on the type of person you are. For people living paycheck to paycheck that could be devasted by a costly furnace repair, home warranties are highly recommended.
If you have a healthy savings account or a rainy day fund, then you’re probably better off without purchasing a home warranty. Think about how home warranty companies make their money, it’s not by servicing homes that need repairs, its by having a higher percentage of warranties issued that require no service. Home Warranties make their money by playing the odds that the warranty won’t actually have to be used. In addition, if a repair is needed, there is a good chance that the cost of the repair will be less than the cost of the home warranty plus the service call fee.
A home warranty can be a great protection for many Utah home buyers, but in most cases, it will never actually be used.