Can A Home Warranty Replace My Home Inspection?

In a real estate market where negotiating a home inspections might be the difference on winning an offer or not, there are a lot of realtors who might suggest that getting a home warranty is just as good.  But, is it?

In short, absolutely not.

A home inspection is a comprehensive evaluation of a property's condition. It typically occurs during the home buying process, before closing the deal. With the purpose ofto identify potential problems, such as structural issues, system malfunctions (plumbing, electrical, HVAC), or safety hazards, among others. This gives potential buyers an informed perspective on what repairs or improvements may be needed, which can impact the decision to buy or the negotiation of the purchase price.

On the other hand, a home warranty is a service contract that covers the cost of repairing or replacing major home systems and appliances. These can include plumbing, electrical, heating, and cooling systems, as well as appliances such as the refrigerator, oven, or washer and dryer. The coverage depends on the specific warranty plan and company. A home warranty is typically purchased for a set period (often one year) and can be renewed.

It's essential to note that a home warranty does not cover pre-existing conditions or issues that should have been revealed during a home inspection. Therefore, a home warranty should not be considered a replacement for a home inspection.

Instead, a home warranty is a type of insurance against future problems with major systems and appliances in the home, while a home inspection is a tool for discovering current issues and potential problems with a property. Both can be valuable, but they are not interchangeable and do not provide the same kind of coverage.

My recommendation to our buyers is that when we see major mechanical systems that are in need of attention in the next year or so, a home warranty may be the best option to help leverage against these potential large and expensive repairs.  

The number 1 system being the HVAC.  This can cost you upwards of 10k+ to replace, so being able to pay a low deductible to have replaced can be a huge money saver.  And even during the home inspection, just because the HVAC is nearing the end of life, doesn’t mean the seller will replace this, assuming it’s still functioning properly.

No one wants to forgo a home inspection if you don’t have to.  However  if you can’t and the major appliance systems are questionable items, a home warranty may be a very smart product to help pay for those costly replacements.