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What is home warranty and is it worth it? (what first time home buyers need to know)

“Always pick your yard based on your Summer lifetstyle.”


October 22, 2018 - Karl Yeh

Planning to buy a new construction home? What are some safeguards to protect you from any physical issues that can come from a new build? In this episode, we discuss what is new home warranty and is it really worth it? We also explore what it covers, associated costs, if it covers upgrades and if it's transferable.


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Karl Yeh:

Hi, everyone. I'm Karl Yeh. Welcome to another Homebuyer's School video, a channel where you get the latest strategies, tactics and tips from home buying experts.

And remember, if this is your first time on this channel and you only get the latest strategies from the experts, hit the subscription button below. Hit the little notification bell so [00:00:30] you don't miss anything.

Today, I'm joined by Kristy Seibert, Area Manager with Brookfield Residential, and the question we're going to answer today is:

What is home warranty and really is it worth it?

So Kristy, is it worth it?

Kristy Seibert:                   


A home warranty is going to help protect you from any errors going on in your home, any construction defects. That's fantastic to have. It's good peace of mind.

Karl Yeh:                             

What are some things that it covers?

Kristy Seibert [00:01:00]:                   

Your home warranty covers basically workmanship defects, material defects, any structural issues, and it also provides you with deposit insurance, as well.

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Karl Yeh:                             

Okay. And how much ... so I guess the big question is

How much does it cost, or how is it included in the price of the home?

Kristy Seibert:                   

There is no additional cost to the home buyer for the home warranty.

It is mandatory for a new [00:01:30] home to have a home warranty, so it is included in the purchase price.

Karl Yeh:                              

And how long does it last for?

Kristy Seibert:                   

There's different categories with a warranty. There's a one year workmanship and materials, two years delivery and distribution systems.

That's like your mechanical systems in your home. Five years for your building envelope, so the exterior roof, walls, doors, windows, kind of the seal of your home, and then 10 year structural.

Karl Yeh:                             

And obviously when [00:02:00] you say the envelope, within the year that you're covered, it doesn't include anything that you build, right? 

Kristy Seibert:                    Correct. It would be based off of your home-

Karl Yeh:                             That you build, that you bought.

Kristy Seibert:                    Yes, yes.

Karl Yeh:                              Okay, okay.

Kristy Seibert:                   

Still being accurate to the home that you purchased and that was built by the builder with no additions added.

Home warranty and upgrades

Karl Yeh:                             

Does the home warranty impact any of the upgrades that you might want to include, like exterior-wise, interior-wise, or it includes everything [00:02:30] that you actually bought?

Kristy Seibert:                   

Everything that you purchased with your home.

If it's part of your home, then it would be included. So your flooring, as long as that was purchased through your builder, would be covered.

Karl Yeh:                             

Can I purchase this any time? Does it have to be at the onset of buying a home, or could it be let's say I want to wait a year and buy it, or it immediately comes with the house?

Kristy Seibert:                   

It does come with your home, It's not something that you can say no to and purchase later.

The Government [00:03:00] of Alberta actually here has implemented that, so it is something that's included with your home. It can't be added on later or not included.

Is your home warranty transferable?

Karl Yeh:                             

Okay. And what happens if I sell my home and I still have whatever many years, whether it's the envelope or the structural, does that transfer over to the new owner, as well?

Kristy Seibert:                   

Absolutely. For sure, it will transfer over.

Your 10 year structural coverage, if you sold your home five years after you moved in, [00:03:30] then the new owner would still have five years of structural coverage on the home.

Karl Yeh:                             

And I guess the final question I have is, it's required whenever ... the question is when is it required? You actually have no choice. It's part of the buying process, right?

Kristy Seibert:                    Yes.

Karl Yeh:                              Okay.

Kristy Seibert:                   

But it's absolutely a good thing to have. It's not something that you want to say no to.

It's a fantastic resource to have, [00:04:00] knowing that your builder has to comply with this, and that they're building you a home that you know for sure is well built and is something of quality that they have to stand behind.

Karl Yeh:                             

Perfect. Do you have anything else to add?

Kristy Seibert:                   

I don't think so.

I think it's a great rule that has been implemented for new home builders, so great peace of mind for you as a home buyer to know that [00:04:30] your home is covered and that there's a third party involved with that.

Karl Yeh:                             

Perfect. Question of the day for you is:

How is your experience with a new home warranty? Did you actually use it?

Let us know in the comment section below. Anyway, thank you very much for joining us and we'll catch you next time.


Your turn:

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About Kristy Seibert:

Kristy graduated from the University of Alberta with a Bachelor of Arts double majoring in Sociology and Human Geography & Urban Planning. After building a new home of her own, she learned more about the process of buying and selling homes and wanted to explore career options in the housing industry. Kristy has been working with Brookfield Residential for 4 years and has sold homes in five different Brookfield communities. She has experience with Single Family, Duplex and Multi-Family homes and enjoys building relationships with her homeowners and guiding them through every stage of their homebuying journey!

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