Ah, the good ol' days. I remember going to the dentist as a kid every 6 months for cleaning. I had so many cavaties that I stopped getting numbing shots because I was so used to the drill. 

As an adult, insurance changed and dental was no longer included in company sponsored packages. But the option was there. Have you ever looked at those options?

There is usually a pretty good premium for not much return and a pretty low cap of what would get paid out. My wife and I always found that the benefit didn't outway the cost in most cases. And they usually dictated who you could go to. Needless to say, we never took the dental option. 

Home warranty is a lot like dental insurance. In most cases, the benefit does not outway the cost.

WHAT IS A HOME WARRANTY?

Essentially and basically, it's a localized insurance policy against mechanical breakdown under normal wear and tear of something that's CHEAP. No...not inexpensive...but an acronymn.

C-Cooling H-Heating E-Electrical A-Appliance P-Plumbing

And some of those policies are cheap (and pretty much useless). Know this: it is in the best interest in the warranty provider to find a reason NOT to cover your repair. It's the only way they can stay in business. The trick is to understand what the policy is, what it actually covers, how it processes and approves claims and what it will pay out in the event that it will cover. You have to assess the benefit in light of the cost.

Some Home Warranties are actually worth the paper they are printed on. 

SHOULD I CONSIDER A HOME WARRANTY?

Maybe. Here's a few stats for you:

• 70% of new home owners will experience mechanical failure of some sort within the first year. Much of this is due to aged appliances in a home and a change of use by the new home owner.
• 84% of new home owners experience buyer's remorse! This is an insane number but with the market that we've had, many people have overpaid and even the smallest of mechanical failures can seem like "just one more reason we shouldn't have bought!"
• 63% of new home owners making less that $100k in income have ONLY $400 in savings after purchasing and (get this) 49% of those with OVER $100k in income have $400 or less in savings. (Nope, you read that right).
• 92%...that's more than 9 out of 10 seller's disclosure sheets are inaccurate. This is the form that every listing agent has the seller fill out to find out what condition all the C.H.E.A.P. stuff is in. Oh sure, the furnace worked last they turned it on 4 months ago!

So the stats tell us it's at least wise to consider a home warranty.

NOT ALL DENTAL INSURANCE (AND HOME WARRANTIES) ARE THE SAME

Just like with dental insurance, you get what you pay for. And the fine print means everything. Home warranties are offered by several different vendors and they are all a little different.

At Success Realty, we have done the research (and in the past used inferior home warranties). Today we use America's Preferred Home Warranty (APHW). Our research shows that it covers the most, pays the most, pays the most often, and offers the most customer service. It's a little more pricey that some others but you get what you pay for.

Like all warranties, there are caps to what they pay out. So it is rare that EVERYTHING is covered. And, like all warranties, the breakdown has to be normal wear and tear (if you take a sludge hammer to it or you don't do proper maitenance it won't be covered.

But it is decent coverage for at least the first year of owning your home so you have a little piece of mind when making a big purchase like a house especially if it is an older house, or has older appliances (shelf life on most is 8-12 years, sometimes less).

WHAT DO I RECOMMEND?

APHW is our preferred home warranty. It costs about $500-800 depending on some electives. Minimum payout is $250 for Sprinkling Systems to $2500 for heating and cooling systems. So it makes sense to consider it and asking myself or another trusted professional is a good way to wrap your head around it.

NOTE: There are a lot of in's and out's to a home warranty. You will have questions. I will get you the answers.

I always recommend to all my sellers that they include a home warranty. With all the closing costs that are involved in selling a home today, you hardly notice this small fee and it gives them an advantage to the buyer as they will be able to purchase this home with a little safety net included. 

If the seller doesn't offer it, I always recommend it to my buyer. For the same reason. We can start by writing it into the offer and see if we can get the seller to cover it for you. Or, for a little extra money, it can be easily rolled into the financing and you have a small umbrella for a rainy day. A little mint to go with the teeth cleaning.