Should I Buy a Home Warranty

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Eric in DC
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Should I Buy a Home Warranty

Post by Eric in DC »

All-

Just purchased on a condo. It's been renovated pretty much completely. Everything is new in the unit. I just completed the insurance process and now my insurance broker asked me if I'd like to purchase a home warranty. My realtor sort of dismissed this as not necessary citing the home being new as a reason for not needing the insurance. I'm looking for some perspective on this. In principle the idea of removing some of the risk of a big expense makes sense to me, but I've also heard that sometimes these warranties are not a good move. Any and all help would be greatly appreciated.

Thanks!
Cheryl604
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Re: Should I Buy a Home Warranty

Post by Cheryl604 »

In my experience, it wasn't worth it. I had a water heater break, and ended up spending as much on "service calls" and "non-covered parts" that I would have spent about the same if I had figured it out myself. Also, if you don't have a home warranty, you get to choose who you work with. My home warranty company contracted with a sub- par contractor, and there was nothing I could do about it.

If you are worried about a big expense, just add extra to your emergency fund to cover it. Forgo the home warranty. You will have more options in the end.

- Cheryl
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Toons
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Re: Should I Buy a Home Warranty

Post by Toons »

Owned homes for 45 years never purchased a home warranty,,never would :happy

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BruDude
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Re: Should I Buy a Home Warranty

Post by BruDude »

After renting a house that had a home warranty and was used 8 or 9 times in a one year period, I decided to buy one for my new house. Spent $1700 for 5 years of coverage, already claimed about $1200 in the first half of this year. They cover all of the high-end appliances (Viking, GE Monogram, etc) and having a 25 year old house in a hot climate where the AC could go at any time, I would say it's worth it.
kianajunior
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Re: Should I Buy a Home Warranty

Post by kianajunior »

If your appliances and major systems such as HVAC, etc. are new then I would not consider it.

Having said that, at one time we purchased a 50 year old home which included a warranty. In the first 8 months, a oven was replaced under warranty because the unit was so old that no replacement parts were available and an air conditioning unit went out and was replaced for the same reason. The warranty company will do everything in their power to repair rather than replace and this was confirmed by the local contractors involved. We just got very, very lucky that our appliances were so old that this was not possible.
reisner
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Re: Should I Buy a Home Warranty

Post by reisner »

The only reputable company is American Home Shield. We have used them for six and a half years. In that time they have paid for about $13,000 in work on our two successive homes, both of which were given rave reviews by the home inspectors.
BruDude
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Re: Should I Buy a Home Warranty

Post by BruDude »

reisner wrote:The only reputable company is American Home Shield. We have used them for six and a half years. In that time they have paid for about $13,000 in work on our two successive homes, both of which were given rave reviews by the home inspectors.
Old Republic is great, didn't deny a single claim in the house I rented and never gave us a hassle.
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swimirvine
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Re: Should I Buy a Home Warranty

Post by swimirvine »

I don't think it would be useful in your case. When we bought our house in 2009, the seller bought us a 1 year home warranty with American Home Shield and we used it several times. I've had it ever since and it's paid for itself every year. We have a large house with 2 kitchens, a geothermal AC/heating system, a heated salt water pool and all the appliances are high end. We pay around $100 per month and $75 per incident. We've had multiple issues with the geothermal system, sump pump and all of our pool mechanics replaced (filter, heater, salt water computer, etc). It has saved us thousands of dollars and we're always worried they're going to cancel our policy or raise our premium because we use it so much. So far this hasn't happened.

I get a sense of security that plumbers/contractors/pool guys can't screw me over on the price when they see how big our house is. They have to report the problem to American Home Shield and AHS has a standard amount they pay to fix certain issues. I don't ever have to worry about being charged too much since I pay $75 regardless of what needs to be done or how many visits it takes to fix it. Downside is that you don't get to choose the company that does the work.

In your case, with a condo and all new appliances it probably isn't worth it.
The way I invest my money is not the right way to invest, it's the right way for ME to invest.
Agwapijaw
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Re: Should I Buy a Home Warranty

Post by Agwapijaw »

BruDude wrote:
reisner wrote:The only reputable company is American Home Shield. We have used them for six and a half years. In that time they have paid for about $13,000 in work on our two successive homes, both of which were given rave reviews by the home inspectors.
Old Republic is great, didn't deny a single claim in the house I rented and never gave us a hassle.

I had nothing but issues with Old Republic. I've heard great things about American Home Shield.

My Personal Old Republic Problems -
2 Week wait and not willing to reassign to another HVAC rep when my AC died during a heat wave last year.
Sent a bathroom plumber to fix my hot tub in march 2013 Bathroom plumber could not fix
Sent a questionable spa guy to fix my hot tub after 2 weeks of back and forth in April of 2013
1 1/2 years later and 23 visits from the spa guy my hot tub is still not fixed. Old Republic will not switch to a different company.

To thier credit though BruDude is right... they have yet to deny any of the questionable spa guys billings. They just fail to get things fixed.
BruDude
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Re: Should I Buy a Home Warranty

Post by BruDude »

Agwapijaw wrote:
BruDude wrote:
reisner wrote:The only reputable company is American Home Shield. We have used them for six and a half years. In that time they have paid for about $13,000 in work on our two successive homes, both of which were given rave reviews by the home inspectors.
Old Republic is great, didn't deny a single claim in the house I rented and never gave us a hassle.

I had nothing but issues with Old Republic. I've heard great things about American Home Shield.

My Personal Old Republic Problems -
2 Week wait and not willing to reassign to another HVAC rep when my AC died during a heat wave last year.
Sent a bathroom plumber to fix my hot tub in march 2013 Bathroom plumber could not fix
Sent a questionable spa guy to fix my hot tub after 2 weeks of back and forth in April of 2013
1 1/2 years later and 23 visits from the spa guy my hot tub is still not fixed. Old Republic will not switch to a different company.

To thier credit though BruDude is right... they have yet to deny any of the questionable spa guys billings. They just fail to get things fixed.
If you talk to a supervisor they should be able to send a different company out. They were much better than my current company, but the price was too good to pass up and I can still cancel and get a prorated refund at any time.
madbrain
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Re: Should I Buy a Home Warranty

Post by madbrain »

It depends how thorough your inspections were.

When I purchased a huge foreclosed home 4 years ago, there were things we couldn't inspect in time for the bank's deadline, like the hot tub and sauna. We purchased a home warranty.

These things were fixed by the home warranty because there was no known pre-existing defect.
Same with the icemaker in the huge built-in fridge, which was missed during inspection.
These repairs more than paid for the premium.

I would recommend buying the home warranty for the first year, then checking every appliance. on the property, and having them fix everything you find. After that, IMO, dropping the home warranty is fine.

Since everything was renovated in your condo, there should not be a very high probability of having things like bad appliances. However, some new appliances have failures early on, in the first 3 months - that has happened to me. Unless you are getting some kind of warranty on the renovation from the seller (very doubtful), the home warranty could still pay off.
sscritic
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Re: Should I Buy a Home Warranty

Post by sscritic »

I don't buy extended warranties as a rule. (I did buy Apple Care, but when the offered to replace the hard drive, it was for everybody.)

It's like any other insurance for the most part; the companies make money or they wouldn't offer it. So you have to decide at what level you want to self insure. When my car was worth $2k, I didn't insure the car part of it. Now my car is worth $30k, and I do. Can you afford to buy a new appliance if one of yours fails?
In principle the idea of removing some of the risk of a big expense makes sense to me
An appliance is neither an expensive car nor a house. I don't insure at that level. How big is big to you? That's the question.
madbrain
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Re: Should I Buy a Home Warranty

Post by madbrain »

sscritic wrote: An appliance is neither an expensive car nor a house. I don't insure at that level. How big is big to you? That's the question.
The refrigerator we have is a huge stainless built-in Monogram . Last year the icemaker failed for the second time.
We no longer had the home warranty - we dropped it the second year.

I got several repair quotes which were in the $500-600 range.
I then priced what a brand new stainless refrigerator of comparable size cost and was shocked to find it was between $8k - $10k.

This probably doesn't apply to the OP's condo unless it's a luxury remodel. More likely if it was renovated just to be sold, expensive high-end appliances were not put in.

If the appliances are new, there might also be manufacturer warranty that applies, but it may not be transferable.
sscritic
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Re: Should I Buy a Home Warranty

Post by sscritic »

madbrain wrote: The refrigerator we have is a huge stainless built-in Monogram . Last year the icemaker failed for the second time.
We no longer had the home warranty - we dropped it the second year.

I got several repair quotes which were in the $500-600 range.
I then priced what a brand new stainless refrigerator of comparable size cost and was shocked to find it was between $8k - $10k.
So did you go for the $600 or the $10k?

I too have a built-in Monogram, but black, not stainless, about 12 years old. It's a 42 inch model, which now come only in stainless or custom panels for about $9k list (I assume you could get it for less at Pacific Sales). Recently it has been making noises I don't like (either compressor or fan). My ice maker is fine.

So repair or buy new? What was your choice?
madbrain
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Re: Should I Buy a Home Warranty

Post by madbrain »

sscritic wrote: I too have a built-in Monogram, but black, not stainless, about 12 years old. It's a 42 inch model, which now come only in stainless or custom panels for about $9k list (I assume you could get it for less at Pacific Sales). Recently it has been making noises I don't like (either compressor or fan). My ice maker is fine.

So repair or buy new? What was your choice?
Mine is a 48" model. About 14 years old. I chose to repair it. Actually it wasn't just the ice maker last year, there was an issue with frost in the entire freezer compartment.
And very large penis-shaped blocks of ice in the icemaker ;).
After defrosting the freezer 4-5 times last summer, I finally called for repairs. Apparently it's a very common issue. Several repair guys knew exactly what the issue was and stock the parts, I got it fixed the next day after calling without needing to get parts ordered. That was the good part about that repair. Of course $600 could buy you a brand new much smaller fridge...

The whole unit is noisy, but always has been. I think that's inherent to many built-in units. The built-in 48-bottle GE wine cooler is noisy as well, but that one has never failed yet.
arkerr123
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Re: Should I Buy a Home Warranty

Post by arkerr123 »

Bought my first house, a 3-family, early last year. Prior owner put in contract that she would give us $600 for a home warranty. Cheapest I could find was one for $744 that would cover the basics (all plumbing, all ductwork, basement leaks, appliances, AC/Furnace, maybe a few other things too).

Shortly after buying house, the AC for the tenants froze up.
1: I Called Home warranty people.
2: They sent someone.
3: They could not figure it out.
4: I was charged $65.
5: Repeat steps 1-4 five times.

In the end, I was able to get them to put in some new refrigerant. Issue went away. Their goal is to come out as many times as they can without fixing the issue.
You will do better searching google for help when you need it.

(Dont use angieslist. Businesses can pay to remove bad reviews)
Novine
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Re: Should I Buy a Home Warranty

Post by Novine »

When I bought my home, the previous owners covered a home warranty (American Home Shield) for the first year. I kept it going for a couple of years after that. It easily paid for itself with a hot water heater that was replaced, a broken furnace fan and some other items that were covered. In my experience, the service was decent. One way it was helpful was with cash flow and avoiding credit card interest. I didn't have much of an emergency fund at the time and if I had to pay for a major expense out-of-pocket, it would have gone on the credit card and that would have taken time to pay that off. But as we've built up our emergency fund to the point that we could cover any significant repair calls, I've let the warranty lapse.
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Eric in DC
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Re: Should I Buy a Home Warranty

Post by Eric in DC »

Thank you all for the amazing insight. Still mulling through what to do, but it's truly appreciated.
Topic Author
Eric in DC
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Re: Should I Buy a Home Warranty

Post by Eric in DC »

sscritic wrote:I don't buy extended warranties as a rule. (I did buy Apple Care, but when the offered to replace the hard drive, it was for everybody.)

It's like any other insurance for the most part; the companies make money or they wouldn't offer it. So you have to decide at what level you want to self insure. When my car was worth $2k, I didn't insure the car part of it. Now my car is worth $30k, and I do. Can you afford to buy a new appliance if one of yours fails?
In principle the idea of removing some of the risk of a big expense makes sense to me
]An appliance is neither an expensive car nor a house. I don't insure at that level. How big is big to you? That's the question.


I guess it's less about the appliance being a big or small purchase and more about the value. A $700 appliance isn't necessarily a lot to me, but if paying the yearly warranty of $300 and change saves me $700 twice a year then it's still worth it despite the $700 in actual dollars not being a lot to me in actual terms. Is that logic sound?
Novine
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Re: Should I Buy a Home Warranty

Post by Novine »

The flip side is some years, you don't "need" the warranty at all. It's a form of insurance. Some people self-insure, others prefer to pay higher premiums to avoid large out-of-pocket costs.
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