Should I just not have a home inspection and instead use that money for a home warranty?

Money is tight and you’re trying to cut costs during your home purchase.  It has been suggested to you not have a home inspection and just use the home inspection money instead to buy a good home warranty.  That might sound like a good idea but it can, and typically is, a costly mistake you will learn down the road.

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I heard yet another story last week from an Austin Home Inspector who was told by a Real Estate Agent that they always advise their clients not to bother with a home inspection.  Instead the Agent stated “I always advise my Buyers to never get an inspection but rather invest in a home warranty instead”.  Without a doubt I was surprised when I heard that any Agent would give such bad advice!  Obviously this Agent knows very little about home warranties, their purpose, and value if any.  The Agent must also know nothing about the value of a home inspection.

A home inspection and a home warranty are two distinctly different things, used for two different purposes!  The home inspection is used to provide you with an unbiased view of the home’s condition to help you decide if you even want to continue with the purchase, and how you will proceed if you do.  A home warranty, on the other hand, is used to help protect you for the unforeseen problems that can occur after you already own the home.  The home warranty is not there to buy the house back from you if major issues are found that the warranty does not cover but could have been found during the home inspection.  Once you own the home it is yours along with any problems it has.

I always tell my clients it is a wise idea to purchase a home warranty if they do continue with the home purchase, can afford the warranty, and it the warranty meets their needs.  I also advise them to use the inspection report to help them determine if a home warranty is even worth buying.  After all a home warranty is no different from an insurance policy and insurance companies are in the business of making money and not paying out on claims.  You have to watch out for all of the exclusions these home warranties have to help prevent paying out on a claim.  Here are some examples of exclusions that can bite you and make the home warranty worthless.  These are excerpts from actual home warranties with my commentary after them.

This contract only covers those items that were confirmed to be in good working order at time of inspection and excludes all others, regardless of their condition at the time of inspection or if they were repaired.

In this warranty they never define “good working order” and if you have one minor problem, or even a major problem, that has been properly repaired the warranty on that item is useless!

This contract excludes all appliances, climate control systems, and fixtures over 10 years old.

This seems to be a very common exclusion in home warranties either in this language or similar.  As an example you can have a perfectly operating heating and cooling system, very well maintained, expected to last many more years, and yet they will exclude it.  Unexpected problems with these systems are one of the biggest costs and biggest value of any warranty yet they exclude them.  I’ve seen other warranties that very craftily word that to include many other items in a home.  The home inspection could have revealed that those water heaters or heating/cooling system would not meet this requirement.

……not responsible for upgrading failed systems to meet current codes or local ordinances.

This one exclusion can be a very big cost factor if it occurs.  Typically permits are required from the local Building Inspection Department to perform a major system replacement.  They do this as a safety factor to ensure the tradespeople are properly installing the equipment.  I have found systems during home inspections that currently installed do not meet minimum building codes, should have, but can not without extensive and expensive additional measures.

I can go on and on about these home warranties and their potential flaws.  But the important thing is you might not even have had to worry about them if you had a home inspection in the first place.  So the next time somebody advises you to “never get an inspection but rather invest in a home warranty instead” you should forget that advice and get the home inspection.  Then you can worry about buying a home warranty if you continue with that home purchase.

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PS Inspection & Property Services LLC is a full service home inspection and light commercial inspection company servicing the entire Dallas/Fort Worth metroplex.  We strive to for the satisfaction of our customers in everything we do.  Our services offerings include:

Buyer home inspections
New Home Warranty Inspections
New Home Draw Inspections
Home Maintenance Inspections
Home Remodeling Inspections
Investor Inspections
Rental And Renter Inspections
Infrared Thermal Imaging Inspections
Energy Audit Inspections
Whole Inspections Or Inspections Customized To Your Needs

If you have an inspection need we can customize an inspection for it.  Please visit our main site at PS Inspection & Property Service LLC.

 

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