Are home warranties worth the cost?

Homes that come with warranties sell 11 days quicker and for an average of $2,300 more than those without, according to a recent survey by one of the country's largest warranty providers.

But one consumer organization says such warranties aren't worth the cost, which is $400 to $600 a year.

"Instead of buying one of these policies or placing any value in the one provided when you buy a home you'll do better to place that money into a home-repair fund," says Consumers' Checkbook, an independent nonprofit that publishes local magazines in seven locations, including Boston, Chicago, San Francisco and Washington, D.C.

Home warranties have been vilified before, but never by an organization with a solid reputation like that of Consumers' Checkbook, which has won the National Press Club's First Place Award for Excellence in Consumer Journalism. Like Consumer Reports, the D.C.-based nonprofit does not accept donations from businesses and its publications carry no advertising.

The warning about warranties does not include those comprehensive warranties provided by home builders on brand-new houses. Rather, it is solely about those on existing homes.

Actually, they aren't really warranties but service contracts that insure against the repair of a home's major appliances, heating and cooling systems, plumbing systems, circuit breakers and a few other things.

But while the potential breakdowns covered by home warranties might be unpleasant, Consumers' Checkbook says, they are often not catastrophic. Those bigger, more expensive repairs are what insurance is for to cover stuff you can't afford to repair yourself.

"When you buy insurance against risks you can afford to cover on your own," the magazine says, "you end up paying for sales commissions and expenses and company profits rather than for claims paid" by the warranty company.

"Buying a home warranty is like buying a (very) limited extended service contract on a bunch of appliances," says the group.

Nevertheless, warranties have become almost universal in today's market. Not only do they appeal to would-be buyers, who believe they're covered should the air conditioner break down or the refrigerator kick out during their first year of ownership, they also appeal to sellers, because they, too, are covered during the listing period.

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Are home warranties worth the cost?