Are Home Warranties Worth It? Insights from the Real World

Are Home Warranties Worth It? Insights from the Real World

Home warranties: they’re either the best insurance policy you’ve ever purchased or the biggest waste of money you’ll regret. If you’ve been in the real estate world long enough, you’ve likely heard polarizing opinions on the topic. So, we asked a diverse group of seasoned homeowners, landlords, and industry pros what they think about home warranties. Spoiler alert: the responses were passionate, and let’s just say… not everyone’s a fan.

This article dives deep into the pros, cons, and real-life stories of home warranties. By the end, you’ll know exactly when it makes sense to invest in one—and when to skip it entirely.

What Is a Home Warranty, Anyway?

A home warranty is a service contract that covers the repair or replacement of major systems and appliances in your home, like your HVAC, plumbing, and kitchen appliances. Unlike homeowners insurance, which covers unexpected events like fires or floods, a home warranty is meant to cover normal wear and tear.

Sounds great, right? But here’s the catch: what’s covered—and how much is covered—varies widely, often leading to frustration.

The Case Against Home Warranties: Why Some Call Them a Scam

It’s no secret that many homeowners hate home warranties. In our survey, more than 75% of respondents had a negative view. Let’s break down the main complaints.

1. “It’s Not Worth the Money”

One of the most common complaints is that the cost of a home warranty often outweighs the benefits. Most policies range between $600 and $1,200 annually, plus service fees for each claim (typically $75–$125). For landlords or homeowners with multiple properties, this adds up fast.

One respondent shared:

“With five single-family homes, I was paying over $6,000 a year for warranties. After three years of no major issues, I canceled and saved $15,000. Even if I had to replace an HVAC system, I’d still come out ahead.”

For many, the math just doesn’t add up. Why pay $1,000+ a year for coverage when the odds of a major system failure are low? And even if something breaks, there’s no guarantee the warranty will cover it (more on that later).

2. “They Find Every Loophole to Deny Claims”

The fine print in home warranty contracts is notorious for exclusions. A warranty might claim to cover your HVAC system, but if the failure is due to “lack of maintenance” or “pre-existing conditions,” the company may deny your claim. The result? You’re stuck paying for repairs out of pocket, on top of the premiums you’ve already paid.

One frustrated homeowner said:

“They find every reason NOT to pay for the repair. It’s always something—improper installation, misuse, or some clause I didn’t even know existed.”

This sentiment was echoed by multiple respondents who felt like the companies were more focused on denying claims than providing solutions.

3. “The Contractors Are Subpar”

Many home warranty companies assign contractors to do repairs, and homeowners have no say in who shows up. Unfortunately, the quality of these contractors can vary widely.

One respondent put it bluntly:

“The handyman they sent was clueless. He didn’t fix the issue and then ghosted me. I ended up hiring my own contractor and paying out of pocket anyway.”

For landlords and real estate investors, this lack of control over repairs can be a dealbreaker. You want skilled professionals who will protect your investment—not the cheapest option on a company’s list.

4. “It’s More Hassle Than It’s Worth”

Many respondents described the process of filing a claim as slow, frustrating, and bureaucratic. From long hold times to denied claims, the hassle often outweighs the benefit.

A homeowner shared:

“I feel that to my soul. The amount of time I spent arguing with the warranty company wasn’t worth the small payout I eventually got.”

The Case for Home Warranties: When They Work

Despite the complaints, some people swear by home warranties. In fact, about 25% of respondents had positive experiences. Here’s why.

1. Big Savings on Major Repairs

If you own an older home or appliances that are nearing the end of their lifespan, a home warranty can save you thousands of dollars.

One happy homeowner shared:

“It saved me a few bucks with my AC, dishwasher, and garbage disposal. I paid about $700 a year and got my money’s worth.”

Another respondent said:

“My HVAC system failed in the middle of summer. The warranty covered $2,500 of the $3,000 repair. Totally worth it!”

For those who face costly repairs, a warranty can provide peace of mind and financial relief.

2. Convenience and Peace of Mind

Not everyone has the time or expertise to handle home repairs. For busy homeowners, a home warranty simplifies the process by connecting you with contractors and covering most of the costs.

One respondent explained:

“I don’t want to deal with finding a plumber or figuring out repair costs. The warranty company takes care of all that for me.”

This convenience can be especially valuable for first-time homeowners or those who aren’t comfortable managing repairs.

3. Aggressive Advocacy Pays Off

While many complain about denied claims, some homeowners have learned how to navigate the system and get results. One person shared:

“My neighbor swears by it. He gives them hell and says it works in his favor. You have to know how to push back and make them pay.”

If you’re willing to advocate for yourself, a home warranty can sometimes pay off—but it’s not for the faint of heart.

Key Considerations: Should You Get a Home Warranty?

So, is a home warranty right for you? It depends on your situation, your tolerance for risk, and your willingness to read the fine print. Here are some factors to consider.

1. Your Property’s Age and Condition

  • Older Homes: If your home is older and has aging systems (like a 15-year-old HVAC unit), a warranty might be worth the investment.
  • Newer Homes: If your home is relatively new, you’re less likely to need major repairs, and the warranty might be overkill.

2. Your Financial Situation

  • Tight Budget: If you don’t have an emergency fund for unexpected repairs, a warranty can provide peace of mind.
  • Comfortable Savings: If you can afford to self-insure (i.e., set aside money for repairs), you might save more in the long run.

3. Your Tolerance for Hassle

  • Low Tolerance: If you value convenience and don’t mind paying a premium for it, a warranty might be worth it.
  • High Tolerance: If you’re willing to research and hire your own contractors, you might prefer handling repairs independently.

4. Your Willingness to Read the Fine Print

Home warranties are notorious for exclusions and loopholes. Before signing up, make sure you understand:

  • What’s covered (and what’s not).
  • Service fees and limits on payouts.
  • The process for filing claims and getting approval.

Alternatives to Home Warranties

If you’re on the fence about home warranties, consider these alternatives:

1. Self-Insuring

Set aside money each year for home repairs. For example, if you would spend $1,000 on a warranty, put that money in a savings account instead. Over time, you’ll build a fund to cover any unexpected costs.

2. Preventative Maintenance

Regular maintenance can extend the lifespan of your systems and appliances, reducing the need for costly repairs. Schedule annual inspections for your HVAC, plumbing, and electrical systems.

3. Manufacturer’s Warranties

Many appliances come with manufacturer’s warranties that cover defects and failures for the first 1–3 years. Check if your appliances are still under warranty before purchasing additional coverage.

4. Service Contracts

Some HVAC companies and other service providers offer maintenance contracts that include regular inspections and discounts on repairs. These can be a more targeted alternative to a home warranty.

Final Thoughts

Home warranties can be a double-edged sword. For some, they provide peace of mind and financial protection. For others, they’re a frustrating waste of money. The key is understanding your needs, your property, and the terms of the warranty before making a decision.

After 20 years in real estate, my advice is this: Do the math, read the fine print, and consider your options carefully. If you’re still unsure, start with preventative maintenance and self-insuring. And if you do go the warranty route, be prepared to advocate for yourself.

Keep it consistent, stay patient, stay true—if I did it, so can you! Ready to learn? Let me guide you at propertyprofitacademy.com – Jorge Vazquez, CEO of Graystone Investment Group & its subsidiary companies and Coach at Property Profit Academy.

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