Real Estate in Bozeman

Real Estate in Bozeman
Buy and Sell with Jenifer Lower

Home Warranties: Buying Tips from an Expert

If you haven’t come across the term “home warranty” don’t worry, most Americans haven’t. While home warranties are definitely picking up in popularity, led by American Home Shield’s impressive $1bn annually, this service is a drop in a water of the world’s most advanced and active real estate market in the world. Unlike homeowner’s insurance, if the property owner uses mortgage financing, home warranties are not a necessity. It’s a type of a service agreement that fits some type of customers and is completely useless for others.

Let’s get down to the nitty-gritty and explain what home warranties are about. The most basic thing you need to know about a home warranty is that it’s a service that covers some appliances in your home (such as dishwasher, oven, stove, air conditioning unit and so on) as well as some systems (such as septic pumps, pools, sewerage, food disposals and so on). That coverage dictates that if any of these covered appliances or systems breaks, the home warranty issuer is responsible to send professional repairmen to fix within a reasonable time period, it or, alas, replace the broken component, if it cannot be fixed. These home warranties companies are, of course, charging a monthly premium to pay for their costs, and there might be added costs.

So how do you tell which provider is good and which is not?

James Edwin Surrey, the marketing manager of, a leading portal that reviews and compares home warranties, says that choosing a home warranty company is a tricky business, and has agreed to share his top 5 areas to look at before making a decision.

  1. Look for reliable companies. This industry is not regulated in the same way that the insurance industry is so it is very prone to scam. A reliable company, in my opinion, is one of the top notch companies that everyone in this industry knows and recognizes. A large firm with at least tens of thousands of clients which accepts clients from several states (as opposed to only one state). A company with a fairly good BBB rating and a lot of clients reviews online that you can read. The key with a home warranty is to actually get the service when you need it.
  2. Even reliable companies in the home warranty industry tend to have very sneaky terms and conditions (similarly to insurance companies). Before you commit to anything, read it all the way – top to bottom (or read expert opinions about this topic. At we did the work for you).
  3. Don’t compare apples to oranges when you’re comparing the pricing. Each company boasts in ultra-cheap home warranty plans but those are very basic policies with very low coverage. Make sure to find the plan that fits you, and then check the pricing you are quoted with.
  4. Don’t forget to include the cost of deductibles when you compare the pricing of two companies, or plans. Deductibles (service calls) cost $50-$75 on average, which means $100-$150 extra each year on average.
  5. Do not forget the renewal date. If you haven’t used your home warranty or you are unpleased with the company you have chosen, you should let the company know you are not interested in renewing your contract ahead of the actual renewal date, as most companies set the service on automatic renewal.

These 5 tips can and will help you find your way around the home warranty industry and avoid scams and bad deals which are quite common in there.

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