Warranty's a good bet on aging home
Real Estate Adviser by Steve McLinden • Bankrate.com

Dear Steve,
What are your thoughts on purchasing a home warranty for a 15-year-old home in good shape? The sellers of the house I'm buying originally had one and felt like it was a waste of money.
-- Warren T.

Home warranties are relatively cheap ($300 to $600 per year) with deductibles of $25 to $100 and service-call fees that run an average of $60 per visit, depending on your location. Of course, rates can vary according to the levels of coverage you choose.

Typically, a warranty covers a home's mechanical systems such as plumbing, electrical, heating, water heater and sometimes air-conditioning, plus most built-in appliances. Added coverage for free-standing appliances, spas, pools, roof repairs, garage doors and other items and areas will likely cost extra.

You should know that warranty companies generally aren't regulated as tightly as insurance firms because they are only considered "risk-retention groups" in most states. Hence, a homeowner's claim-collecting rights are a little more limited under this structure.

Additionally, many warranty sellers include mandatory arbitration clauses in the fine print, and some homeowners feel the private "courts" that these go to move slowly and heavily favor the warranty companies.

Still, many provide excellent service and some homeowners have saved thousands by carrying them.

In your case, the age of the house may skew the equation in favor of one. A home that's 15 years old is starting to experience more wear and tear and is probably at the end of the life expectancy for its appliances, water heaters and heating/AC systems.

First find out which of these items, if any, has been replaced and when.

Although the sellers feel their original warranty was a waste of money, you should have your agent ask if they'll sweeten your purchase deal a little bit by buying you one. This is a commonly granted request in the purchase of a home that's older than five years, and sellers can often be sold on the idea because a warranty can minimize after-the-sale disputes. You might even want to extend the warranty into a second year yourselves when renewal time comes up.

Some feel a good home inspector can tell you if appliances or a central-heating unit are on their last legs.

Truthfully, they can only guess most times, especially if the equipment is still working properly. But by no means should you opt for a home warranty in lieu of an inspection.

But considering the age of the house and your need for peace of mind, a home warranty from a well-recommended, well-referenced company might serve you well in this instance.

Read the fine print. And good luck with the house.