Home buyers remain in a tough bind, chasing after homes amid steeply rising prices.
The average price per square foot in Chicago is up more than 25% in the past year. In Salt Lake City, the average price per square foot has increased more than 20%. In Dallas, the price per square foot has increased more than 25% in the past year. And let’s not even discuss what is going on in coastal cities.
That’s led to buyers doing whatever it takes to stand out in what they perceive to be a bidding war. The National Association of Realtors reported earlier this year that one in four homebuyers didn’t insist on a home inspection before closing a deal.
A home warranty is a lousy replacement for an inspection
To state the obvious, taking on a debt of a couple of hundred thousand dollars (or much more) without fully understanding the condition of what you’re buying is sort of nuts.
If you’re considering waiving the home inspection contingency on a bid, that’s your risk to bear. But don’t be fooled that the home warranty the seller advertised with the listing is any sort of meaningful protection.
Home warranties: marketing for sellers
A solid home inspection will look for structural defects and give you a detailed report on the remaining life expectancy of big-ticket items such as the roof and the HVAC.
A warranty typically won’t cover those big-ticket items.
The trade association for home service contracts (that’s what a home warranty is) points out that, “Home service contracts are specific and do not include everything in your house and most do not cover home foundations, walls, structure or finish.”