Are Home Warranty plans worth it?

10 Replies

I never really gave it a second thought until recently, but I kinda think Home warrantys are a waste of money. Am I right? What is the point? I guess if your appliance goes haywire, it may be worth it, but it seems like you spend more overall with a warranty. Am I off here?

Home warranty's are more a piece of mind for a buyer. They might help you sell a property, but as far as buying one for yourself I don't know if they are worth it or not. I suppose if you have lots of problems with the house and have the money for several $50.00 copays then they could be a good thing, because electricians, plumbers, etc all charge an arm and a leg just to come out not to mention the $75.00 an hour the charge; so I guess it depends on your circumstances.


Upon my return and going through my old posts, I saw that this one wasn't very popular when I posted it. I'd still love to hear everyone's feedback.

I am still not a fan of the home warranty, in case people care.

I've kept one on both my houses for years. Was planning to give one with my sale, but the sale price was lower than anticipated, so I told them at that price I would not include the HW.

I just cancelled the one on my residence, because I have to replace the water heater. It doesn't give enough hot water to do a load of dishes, but simce it DOES produce hot water, they won't replace it. They did, on the same policy, replace a 15 yo dishwasher because repair would have been more than the cost of the new one, and they did pay for the repair of a leaky water valve.
Which is beside the point: I paid them lots of money for several years, and this is the first expense on it. SO, in that sense, no. Since I am unable to do the work myself, it's insurance.
If I could do it myself, I probably would not pay for a policy. As an out of town owner, I would do it again.

I saw something some time ago, probably on BP, about writing into the contract that if the reason for calling the repairman was tenant caused, they would be billed.

I would think this would more depend on the age of the property and appliances in the home. If you are buying a newer/new home, it probably is not worth the money. If the property and its appliances have a good deal of age on them you might be looking at wiring, hot water heater, heating and a/c problems, etc. that could mount up into some serious expenses. In which case I would be more likely to consider it.

Also, if you do lease options, I like having a home warranty because in the agreement I have a clause that any repair under $400 the tenant must take care of themselves anything over $400 will be covered by the home warranty.

Since the home warranty is priced into the sales price, the tenant actually pays for it and it cover them with any large capital expenditures which could affect them making their payment.

Like someone said here before, it is simple insurance.

I had one on my home in Arizona; it was built in 1999 and I bought it in 2004. The original builder got sued out of existence due to shoddy workmanship. For $450.00 plus a $100.00 deductible per item, I got a new water heater, a new central a/c unit, a new heat pump, some roof work, and one other item that I forget right now.

The $950.00 I spent between the plan and the deductibles MORE than covered the price of the replacement central air unit alone, not counting the other three items.

That said, I'd say that the warranty depends upon your situation. How old are the items that you're worried about? How likely is it that they'll need replacing during the terms of the warranty?


Whether on pay for one depends on the deal. I remember selling my brothers home, a smart investor but a rotten do it yourself-er. I had him pay for a HW for the buyer, thank god I did. in the first six months there were 37 claims by the buyer in my file. The HW company would notify me each time they paid a claim.

A few years later when I found out the wife's maiden name and discovered she was the sister of 3 of the toughest attorneys in town, I could see where that would have gone without the HW and my company handyman doing favors on the property for them.

I have them on my buy and holds and paid for them to incent buyers.
While I am up in the air about ROI for them, I have used them for some expensive repairs(i.e. pool pump replacement, HVAC repairs, replace water heater).

On my primary house (built in 1930), the seller included a warranty from AHS (I think that's the company). The one time I used them was because the heating was not working and I decided to give them a shot. For a 50 dollar deductible I thought it was a good deal (seller had paid 465 I believe for the policy). They came out, and after 15 minutes, reasoned that the problem was a pre-existing condition--meaning they were not responsible b/c it had not broke during the time of the policy. I was upset, thinking you include a warranty with an old home to cover all pre-existing conditions??...needless to say, I did not renew the following year and have not used one sinse. Not saying this was their fault..perhaps it was my fault to not read the fine print more clearly, or perhaps they were a shoddy company...DON'T HATE ME..I SAID PERHAPS...anyway yes, they kept my 50 dollar deductible and all they did was tell me that it was not their problem..owell..I'm sure this doesn't always happen..just putting in my limited experience with one..good luck whichever way you turn. -Bryan

I have been in property management for 3 years and own 10 investment properties and I find home warranties to be a waste of money. In my experience, the home warranty companies normally do not repair the problem and the repair person they send out is always up selling a service for their company. This leaves an unhappy tenants and an investor still paying out of pocket to repair the problem. Not to mention, you end up wasting the fee for the home warranty and the charge for the repair person to come out and not repair the problem.

Instead of the home warranty, I would suggest build a list of vendors that will give you a reasonable price. You can check with your local REIA group for vendors or make a post on bigger pockets for vendors in your area.

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