If you own a property, you need a home warranty. At first glance, it may seem like just an additional expense. However, it will probably save you more money than you can imagine.
What is a Home Warranty?
A home warranty is essentially a comprehensive extended warranty for your appliances. You pay a fee coverage you request in an annual payment or monthly payments. If you make a service request, you will pay a fee directly to the service provider. The service provider will assess the situation and repair or replace the appliance.
Foreclosure
Foreclosures, new builds, and existing properties are eligible and I’ve had a home warranty with each. Some homes even come with coverage at the time of purchase. That’s what happened when I bought my first property. It was a bank-owned foreclosure but it included the warranty for one year. I had no clue what a home warranty was, but my realtor encouraged me to renew it every year. I was able to use it for various repairs during the five years that I owned the home. While I lived there, I rented out my basement and was able to write off the home warranty and repair expenses on my taxes.
Existing Home
After I sold that property, I vowed always to have a home warranty. In my second home, I didn’t expect almost all of the appliances to break down within two years. Thankfully, I made good on my promise and was able to use the warranty. I’ve had to replace the washer, dryer, dishwasher, air conditioner fan motor, and garbage disposal. In each situation, I only had to pay $100 for the service fee, or my home warranty company offered a credit to buy a new appliance.
The average cost of a new washer and dryer is around “,000. A new dishwasher can cost between $400 and $700, so I will estimate $550. The cost of an air conditioner fan motor is between $300 and $600, so I will approximate $450. The cost of a new garbage disposal unit can vary widely so I will say $200. I will estimate one hour of labor for installation at $20 per hour for each item for an additional $100. The total is $2,300 based on average costs and a very conservative installation estimate. I might have spent $1900 for everything, including my annual fee. I also have a renter in this property, so I have reduced my tax liability again.
New Build
In both of the earlier scenarios, the homes were about 30 years old. When I purchased a new build, it came with a 10-year homebuilder structural warranty through the same company I had been using for years. The structural warranty covers the foundation, framing, and load-bearing structures of the home. I was able to include the appliances for an additional $300 or so per year. As per my trend, this property also has a renter so that extra cost continues to reduce my tax liability while reducing my repair costs. I haven’t used it, but I will continue to renew it.
My situation may be unique, but my home warranty has proven to be priceless. I encourage you to research home warranty options and compare their costs to what you have been paying for repairs over the years.
Read More
How You Can Benefit From Downsizing Your Home
Life, Home, Auto: Types of Insurance Plans Everyone Should Have