Do You Need a Home Warranty?

When you’re buying a home in Los Altos, there are many components to think about, from mortgage paperwork and inspections to moving day logistics and more. Somewhere along the way, you might begin wondering if you want to move forward with a home warranty, as these are sometimes included in the sale. 

This guide will walk you through everything you need to know about home warranties so you can make the decision that makes the most sense for your situation.

A home warranty is a service contract that covers the repair or replacement costs for certain systems and appliances in your home that fail due to normal wear and tear. It's not the same as homeowners insurance, which covers damage from unexpected events like fires or storms. Instead, a home warranty fills in the gap by handling issues like a broken dishwasher, a faulty air conditioning unit, or a malfunctioning water heater.

Most warranties last for 12 months and can be renewed annually. You’ll usually pay a monthly or yearly fee, plus a service call fee whenever a technician comes to your home to assess or fix a problem.

The idea is simple: if a covered item breaks down from everyday use, you call the warranty provider, they send out a technician, and you pay a flat service fee — typically between $75 and $150 — rather than the full cost of the repair or replacement.

If you’re buying a home in Los Altos, it’s worth having a conversation about whether a home warranty makes sense. Some buyers ask the seller to pay for a one-year home warranty as part of the purchase agreement. That’s a common request in real estate negotiations, especially if the home has older features or amenities. It can also help the seller move the sale forward without lowering the price. 

If the seller doesn’t offer a warranty but you’re concerned about unexpected repairs, you can always purchase a warranty on your own during closing or shortly after.

Coverage varies by provider, but most basic home warranty plans include essential appliances and systems. You can expect coverage for areas like your refrigerator, oven, dishwasher, washer and dryer, HVAC system, plumbing, and electrical components. Some plans even cover garbage disposals, ceiling fans, garage door openers, and built-in microwaves.

You should also have the option to upgrade or customize your plan. Add-ons can include coverage for a swimming pool, septic system, roof leaks, or even a second refrigerator. That flexibility is one major reason people consider home warranties — especially when buying a home that has aging components.

However, not everything is covered. Pre-existing conditions, cosmetic defects, and items that have been improperly installed or maintained may be excluded. Be sure to read the fine print of any contract so that you know exactly what’s covered and what isn’t.

If you're a homebuyer, especially a first-time one, the idea of something breaking down in your new home can be daunting. After all, you're already spending a lot on the down payment, closing costs, and moving expenses. The last thing you want is to pay thousands out-of-pocket for a new furnace a month after you move in.

In this scenario, a home warranty can provide peace of mind. It acts as a financial safety net, helping you plan and budget more seamlessly. If an appliance or system fails during your warranty period, you won’t have to scramble to find a contractor or research repair costs — you just make a call to the warranty company and pay a set service fee for the technician.

The answer depends on your situation. If you’re moving into a home with older systems or appliances, a home warranty might be a solid investment. Repairs or replacements can be expensive, and a warranty could save you hundreds — or even thousands — over the course of a year.

However, if your home is newer or the major appliances have recently been replaced, you may not get as much value from a warranty. Many appliances come with manufacturer warranties, and new homes may be under builder warranties for at least the first year or two. In that case, you might be doubling up on protection you don’t truly need.

It also depends on how likely you are to use the warranty in the first place. If you’re handy with repairs and like to fix things yourself, or if you already have a go-to contractor in mind, you might not want to pay monthly for a service you rarely use.

If you decide to move forward with a warranty, it’s important to choose the right provider. Some have better reputations, more responsive customer service, or more comprehensive coverage. Before you choose a provider, do your homework.

• Check Online Reviews: Look for reviews from homeowners who’ve filed claims with the company. Focus on their experiences with customer service, claim approvals, and technician quality.
  
  
• Read the Sample Contract: Don’t skip the fine print. Look at the list of covered items, exclusions, and any dollar limits on coverage.
  
  
• Compare Plans: Make sure you’re comparing apples to apples. Some basic plans cover fewer items, while others offer more value for the same price.
  
  
• Ask About Service Fees: Know what you’ll be expected to pay per service call and whether multiple fees apply if several issues occur at once or for the same item.

Whether or not you need a home warranty depends on your risk tolerance, the condition of your home, and your ability to pay for unexpected repairs out of pocket. For some, the peace of mind is worth the annual fee. For others, especially those in newer homes or with newer appliances, the warranty might sit unused. Make an informed decision that aligns with your financial plans and the condition of your home in Los Altos.

If you’re ready to begin your home-buying journey in Los Altos, reach out to Ryan Gowdy of The Agency Los Altos for expert insight.