Is a Home Warranty Worth the Cost?

Real Estate

Is a Home Warranty Worth the Cost?

Home warranties frequently cost around $450.00. A listener asks Dave Ramsey if he thinks a home warranty is worthwhile to purchase. The point Dave made was that a home warranty company could not stay in business if each person that paid $450 for a home warranty had claims that were at least $450. In fact, Dave indicates that less than 25% of the funds collected from purchase of home warranties goes towards home repairs.

Dave maintains that if you have a 3-6 month reserve, it's more cost effective to use that reserve, if necessary, instead of purchasing a warranty.

Dave also indicates that realtors get a kick back from their client's purchase of a home warranty. That is definitely NOT the case here in Colorado. A realtor can not accept a kick back from a client's purchase unless that is disclosed in writing to the client. That is actually written into the listing contract.

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