Should You Buy a Home Warranty?

Wondering if a home warranty is worth it? Get the pros, cons, costs, and expert advice from a Central Iowa REALTOR® with real-world insight.

The Real Costs, Contractor Issues, and When It Might Actually Make Sense

When you're buying a home, someone will eventually suggest a home warranty. Maybe it’s your agent, the seller, or your cousin who’s had three water heaters go out in five years. A home warranty can sound like a safety net—especially when you’ve just spent a small fortune on your down payment, new locks, and a few dozen moving boxes you swore you wouldn’t need.

But is it actually worth it?

Let’s break down the pros, cons, costs, and workarounds—plus a few things most people don’t mention.

✅ The Pros of Buying a Home Warranty

Peace of Mind (Sort Of)

A home warranty can be reassuring if something breaks soon after you move in. You pay a small service fee—typically $75 to $125—and the company sends a contractor to fix or replace the item. That’s the idea, anyway.

Budget-Friendly Backup

The average plan costs $600–$800 per year. If you’re low on reserves after closing, this might feel like a smart hedge against unexpected repairs. Bonus: you can sometimes negotiate for the seller to cover part or all of the warranty in the purchase agreement.

Some Plans Let You Use Your Own Contractor

Not all home warranty companies lock you into their service network. Some allow you to choose your own licensed contractor—often a better option if you already know someone reliable.

Important caveat: many contractors won’t work with warranty companies due to slow payment or bureaucracy. In those cases, you can pay out of pocket and submit the invoice for reimbursement (as long as you follow the warranty company’s process exactly—no skipping steps).

A Small Benefit for Sellers, Too

If a seller provides a home warranty, it can help defuse future blame. If something fails soon after closing, the buyer is more likely to use the warranty than question whether the seller “knew something.” It’s not foolproof, but it can lower post-closing tension.

⚠️ The Cons (and Realities)

Coverage Isn't as Comprehensive as You’d Think

Many items are covered “in theory,” but plans have payout caps (for example, $1,000 for HVAC) and lengthy exclusions. Older systems, pre-existing conditions, and improper maintenance often void coverage. Read the contract closely—it’s about as fun as watching paint dry, but necessary.

Contractor Limitations

Warranty companies use pre-approved vendors, and the quality varies. Some are great. Others might diagnose your dryer as “tired” and leave. If you’re using your own contractor, make sure they’re willing to work under a warranty agreement—or expect to front the payment and seek reimbursement.

🧠 My Personal Take

I personally prefer to be self-insured. Home warranty companies operate on a for-profit model, so statistically, the average consumer pays more in premiums than they receive in benefits.

But if one major repair would crash your household budget, a warranty might be worth the peace of mind—especially if someone else (like the seller) is footing the bill.

🤔 Should You Buy One?

If you're buying an older home and like the idea of fixed costs, a home warranty could be a temporary safety net. But if you're financially prepared for repairs or buying newer construction, your money may be better spent starting an emergency repair fund.

Either way, go in informed. A home warranty isn’t a scam—but it isn’t magic, either.

Looking for more homeowner tips like this?

Browse my other blogs on seasonal maintenance, prepping your home for sale, and what to expect as a first-time buyer.

As a Broker Associate/REALTOR® at EXIT Realty and Associates, I specialize in buying and selling real estate throughout Central Iowa, including Norwalk, Des Moines, West Des Moines, Cumming, Indianola, Carlisle, Waukee, Urbandale, Grimes, Clive, Johnston, Ankeny, Altoona, and Pleasant Hill. I proudly serve Warren, Polk, Dallas, and Madison Counties.

📞 Call me, Jon Niemeyer, at 515-490-4675, and let’s find your dream home in Central Iowa!