Do I need to pay for a home inspection if the seller is offering a Home Warranty?

A client of ours was recently home shopping. One home that she liked was offering a free Home Warranty paid for by the listing agent. Our client’s comment was “If I offer on this home, I won’t need to pay for a home inspection.” Let’s take a look at how home warranties work, and what a home inspection offers in order to de-bunk this assumption.

A quick search turns up several companies that offer home warranties:

American Home Shield

First American

Fidelity National

Old Republic

All of these home warranty policies have a variety of plans that cover everything from electrical and plumbing to heating, appliances and garage door openers. The lists are extensive and appear to safeguard the homeowner from future headaches associated with owning a home. Some very important areas, though, are excluded from the policies – for example roofing, structure, crawl space, exterior siding and attic space. All representing potential serious issues and expensive repairs.

When paying for a home inspection, the inspector will evaluate all aspects of the home – including appliances and systems (typically covered by home warranties) but will also call out issues, code deficiencies and any damage that they find in the attic and crawl spaces, outside the home and general concerns with the building structure, roof and drainage issues. They can call out latent issues (things that may be hidden or may reveal themselves at a later date). They provide guidance for maintaining your home and a baseline report of its general condition.

While a home inspection is not a warranty, it is a way to educate yourself on the condition of the home and as leverage to negotiate the purchase price of the home. The inspector’s time, advice and written report can run anywhere from a few hundred dollars up to around a thousand. Most home buyers see this as a worthwhile expenditure to provide peace-of-mind on their investment.

A home warranty may feel like worry-free safeguard, however a read-through of the fine print reveals plenty of caveats and exceptions. Some people have complained that the policies cover service fees to repair an appliance, but not replacement costs. They appear to exclude big-ticket items – such as water in the crawl space or roof leaks or faulty siding. Again, they do not provide assurance that your home is break-down free, and there are plenty of home issues that could potentially be left uncovered by a home warranty.

Bottom line – a home warranty can be a nice-to-have when offered by a real estate agent or seller, but should never be used in lieu of paying for a licensed inspector to give you candid feedback on the condition of your home.