If you’ve been trying — without success — to sell your house, it might be time to consider a little sweetener for the buyer. Offering a home warranty might amount to peace of mind for the home shopper who looks skeptically at your dishwasher, furnace or water heater and sees "old age" written all over it.

That’s the theory, anyway. Each year, literally hundreds of thousands of home sellers toss a home warranty into the sale to assuage those fears. But lately, it isn’t just home sellers buying them. With a market full of foreclosed homes that may have suffered from seller indifference or outright abuse, more homebuyers are purchasing warranties for themselves, according to some warranty companies.

But the warranties can vary widely in their worth and reliability. It can pay to shop around.

Five things to know about home warranties:

1. They’re a kind of insurance — but they’re not, exactly. They’re not like home-insurance policies, which cover loss and damage from accidents, fires, etc. Home warranties cover mechanical breakdowns for such things as appliances, furnaces, garbage disposals, etc.

"Every market is somewhat different," explained Mike Frosch, president of TWG Home Warranty Services in Chicago. "Some might or might not cover air conditioning or plumbing. But for the most part, you should be able to cover your major systems, and then there will be options available, programs for your pool or spa motors, or your septic tanks."

2. Frosch estimated that the typical warranty costs $400-$450, though he said there could be regional price variations.

Art Ansoorian, a spokesman for the Home Warranty Association of California, a trade group, said warranties in his state — where nine in 10 home sales offer them — average closer to $300.

Most home warranties cover breakdowns of these mechanicals for one year, though the contracts can be renewed. When a covered item, such as a refrigerator, breaks down, warranty companies typically require the homeowner to use their affiliated contractors for repairs.

The homeowner pays a fee that covers the service visit, usually from $25 to $100 though this, too, can vary by region.

3. As popular as they are, home warranties have their detractors. For several consecutive years, Angie’s List, which compiles consumer-generated ratings of local companies, has put the industry at the top of its annual list of most-complained-about services. …CONTINUED

Angie’s List said that a common thread among the warranty complaints is confusion over what’s covered or with the contractor sent to make the repair.

However, Angie’s List said that its own poll in 2007 indicated that 82 percent of respondents who had issues with their home warranties said they had only a general idea of the terms of the contract or that they hadn’t read it at all. So it can pay to read the fine print.

4. If you’re buying a home warranty — especially for yourself, as opposed to someone who’s buying one as an incentive to pass on to the seller — you’ll need to do your homework.

"If it seems to be too good to be true, it probably is," said Frosch. "Some of these companies are going to try to find ways not to cover things."

So, a little comparison-shopping is in order, he said. A buyer should read several contracts and scrutinize what is and isn’t covered.

"Pay attention to exclusions. Coverage is important," Ansoorian said. "We try to drum away at that."  

5. Checking out an individual company isn’t necessarily a straightforward process. You may be able to check for a firm’s complaints and disciplinary actions against it with your state government –but not every state regulates warranty companies.

And in those that do, that regulator might be the department of insurance in one state, the department of real estate industry regulator in another, Ansoorian said. State attorneys general and state consumer-protection offices might be another starting point.

The Better Business Bureau, at www.bbb.org, tracks complaints about warranty companies.

Or, Ansoorian said, just ask around. "When so many people have them, as they do here in California, consulting your neighbor is a good way to do it. There’s a chance your neighbor has one."

Mary Umberger is a freelance writer in Chicago.


What’s your opinion? Leave your comments below or send a letter to the editor.

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription