Home Warranties: What Buyers Should Know

When you're buying a home, "home warranty" comes up everywhere: in the offer, during the inspection conversation, sometimes right at the closing table. It sounds reassuring, and it can be a smart safety net. But plenty of buyers sign up without a clear picture of what they're actually buying. Here's what you should understand before you decide.

A warranty is not insurance

This is the first thing to get straight, because the two get confused constantly. Homeowners insurance covers sudden, accidental damage: fire, storms, theft, a pipe that bursts and floods the living room. A home warranty is a service contract that helps cover the repair or replacement of your systems and appliances when they break down from normal use and age.

Different products, different jobs. You'll want both, and one does not stand in for the other.

What's usually covered

Most plans cover major systems and appliances: HVAC, water heater, electrical, plumbing, and built-in appliances like the dishwasher, oven, and garbage disposal. Many offer add-ons for pools, spas, well pumps, and septic systems. On an older home especially, this coverage can take some pressure off that first year, when you're still learning the quirks of the house.

What's often not covered (read this part)

This is where buyers get surprised. Warranties typically exclude:

• Pre-existing problems the company decides were already failing
• Items that weren't properly maintained
• Code violations or improper prior installation
• Cosmetic issues
• Anything above the plan's dollar cap

Those caps matter. A plan might cover your AC compressor up to a set amount, but a full system replacement can run well past it. Read the limits, not just the list of covered items.

Who pays for it

In a Texas transaction, a home warranty is often part of the negotiation. It's common for buyers to ask the seller to cover the first year as a closing cost. Whether that's the right ask depends on the home, the market, and your overall strategy. That's the kind of decision we work through together.

Before you choose a plan

A few questions worth asking before you sign:

• What's the service fee each time you file a claim? (Usually a set amount per visit.)
• Can you choose your own contractor, or are you locked into their network?
• What are the coverage caps per item?
• How quickly do they respond to claims, and what do reviews say about denials?

The cheapest plan is not always the one that pays out when you need it.

The bottom line

A home warranty can be a real cushion, especially on an older home or for a first-time buyer who would rather not face a surprise repair bill in month two. It can also be a frustrating product if you skip the fine print. The right call depends on your home and your priorities.

If you're weighing whether a warranty makes sense for the home you're buying, let's look at it together before you commit.