Do You Need a Home Warranty?

Buying a home in Albuquerque is a major milestone in life, but the decisions don’t stop once the papers are signed. One of the critical choices you’ll need to make is whether you need a home warranty. It might seem like a minor detail compared to mortgage terms or inspections, but a home warranty can significantly impact your experience as a homeowner.

While it’s common for sellers to offer a one-year policy with the purchase, what happens after that first year? Is it worth continuing the coverage, or are you better off saving that monthly premium?

Read on to take a closer look at what home warranties cover, what they don’t, and how to decide if one makes sense for your situation.

A home warranty is essentially a service contract. It covers the repair or replacement of major systems and appliances in your home due to normal wear and tear. Think HVAC units, electrical systems, plumbing, kitchen appliances, and water heaters. It’s different from homeowners' insurance, which protects against events like fire or storm damage. A home warranty is more about keeping everyday breakdowns from draining your bank account.

The idea is simple: instead of paying hundreds or thousands out of pocket when your air conditioning goes out in the middle of summer, you can pay a relatively small monthly or annual fee, plus a service call fee when something needs to be repaired. In exchange, the warranty company sends out a technician to take care of the problem.

The real value of a warranty depends heavily on your home and its appliances, your comfort level with repairs, and how well you understand the fine print.

In many real estate transactions, a home warranty is included as part of the deal. Sellers might offer a warranty to give buyers peace of mind or to make their home more appealing. Your real estate agent may also recommend negotiating a warranty into the contract to cover potential surprises during your first year of ownership.

That first year is when most homeowners feel the biggest adjustment. You’re still learning the features of the house, figuring out how things work, and trying to manage unexpected expenses. A warranty can act like a financial cushion during that learning curve. It’s a way to prevent an unforeseen repair from taking the shine off your new home.

However, when the policy comes up for renewal, you’ll have a choice to make — and that’s when you’ll need to take a closer look at the pros and cons.

Home warranties are designed to cover systems and appliances that fail due to everyday use. Depending on the provider and plan, typical coverage may include:

• Central heating and air conditioning
• Electrical systems and wiring
• Plumbing systems and stoppages
• Water heaters
• Garbage disposals
• Ovens, cooktops, and built-in microwaves
• Washers and dryers
• Refrigerators

Some plans offer optional add-ons for pools, spas, well pumps, or septic systems. However, not all warranties have the same features. What’s included in one company’s standard plan might only be available as an upgrade from another.

You also need to watch for coverage caps; these are limits on how much the company will pay for any given repair or replacement. For instance, if your $6,000 HVAC unit fails and your warranty only covers $1,500 for that system, you’re still on the hook for the rest.

One of the biggest misconceptions about home warranties is that they cover anything and everything that breaks. They don’t. Most policies exclude:

• Pre-existing conditions
• Improper installation
• Code violations
• Cosmetic issues (like scratches or dings)
• Routine maintenance
• Damage from pests or mold

You’re also responsible for making sure that all systems are properly maintained. If the warranty company determines that a repair issue is due to a lack of upkeep, they may deny your claim. That means that you can’t skip regular HVAC filter changes or plumbing inspections and still expect full coverage.

The exclusions can feel frustrating if you're caught off guard. That’s why it’s so important to read the policy carefully, especially the fine print.

For many homeowners, a warranty offers peace of mind. If you’ve just stretched your budget to buy your house, the thought of replacing a broken furnace or dishwasher right away can be stressful. A home warranty helps eliminate some of that worry.

It may be especially useful if:

• You’re not handy and don’t want to deal with vetting contractors or tackling repairs yourself.
• Your home has older systems and appliances that could be nearing the end of their lifespan.
• You want to avoid major out-of-pocket surprises.
• You appreciate the convenience of a one-call solution when something breaks down.

If just one or two covered repairs occur in a year, your warranty might pay for itself. And if nothing breaks? You still bought yourself some peace of mind.

While home warranties can be useful, they’re not always the right choice. If you live in a newer home where appliances and systems are still under manufacturer warranties, you may be duplicating coverage. The same goes for those who are comfortable managing repairs and have connections to a reliable local contractor.

The warranty might also not be worthwhile if:

• You prefer more control over who completes the work. Most warranty companies assign contractors from their own vetted network.
  
  
• You’re willing to self-insure — meaning you’d rather put the cost of the warranty into savings to cover any future repairs yourself.
  
  
• You don’t like service fees or delays. Even with a warranty, there are usually visit fees, and repairs can take longer than expected if parts or scheduling become an issue.

In some cases, homeowners find that the amount they pay in premiums and service fees over time outweighs the benefits, especially if they rarely make claims.

If you’re leaning toward keeping or buying a home warranty, don’t just go with the first offer you receive. Not all companies offer the same service, and some have better reputations than others.

Here are a few tips to help guide your decision:

• Read reviews and complaints. Focus on how the company handles claims and customer service, not just marketing promises.
• Compare sample contracts. Look for clear explanations of what’s covered and excluded.
• Ask about payout caps. Make sure you understand the maximum limits for major systems.
• Evaluate optional add-ons. Only pay for extras you’ll realistically use.
• Clarify service times. Some companies take longer than others to dispatch a technician.

In the end, there’s no one-size-fits-all answer — and that’s exactly why it’s worth evaluating. A home warranty can be a lifeline if you're faced with sudden breakdowns or unexpected repair costs, especially during your first year of ownership. It offers convenience, predictability, and a layer of protection during a time when you’re still getting to know your home.

But once you’ve settled in and understand what’s covered (and what isn’t), you might find that self-insuring or investing in preventive maintenance serves you just as well — or better. Take time to weigh the pros and cons, dig into the contract, and think through your comfort level with unexpected repairs.

If you’re ready to find the perfect home in Albuquerque or achieve a standout sale, team up with Realty One of New Mexico today.