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All Home Warranties Are Not Equal - Don't Let the Fine Print Get You by Surprise

By Kate Elim

Real Estate Agent with Dockside Realty VA 0225142975

May 20, 2009 12:13 PM

Have you ever taken the time to read all of the fine print in the application brochures from the various home warranty companies?

If so than you are one step ahead of me. I have perused them more than once but I must confess that I have not compared them item by item, one from another.

One thing I do know, some of the companies charge a substantial amount for houses over 5,000 square feet. In case you did not know this and have or may have been involved with the sale or purchase of a larger home you might want to be aware of this.

We settlled today on a great waterfront home I had listed. In the contract the purchasers requested the sellers provide a home warranty. Sellers agreed and then I began the process. Our home had 5,044 square feet, exactly 44 sq. ft. more than all but one of the companies would cover for the basic plan premium.

In order to receive a quote for a home of 5,044 sq. ft. I needed to phone which I did. I found out that the 44 extra sq. ft. would cost my sellers a whopping $200 on top of the $365. That seemed a bit much to me and so I found another company that had a price of $399 for the basic plan. This is the one I selected for my sellers who are currently living in London.

By spending $399 rather than $365 I spent $34 more but realized a net savings of $166. I felt good and when I shared this with my sellers via e-mail (what a blessing in long, long distance transactions) they were very pleased that I continued to look out for their financial interests even after the tough negotiation process was completed.

When talking about the sale of a home for $875,000 perhaps $166 does not seem like very much. I agree but it is the principle of the thing and everything that we can do to assist our clients to have the best transaction possible is what we should be doing each and every time.

Don't let the fine print get you by surprise.

____________________________________________________________________________________________________

If you or someone you know is thinking of buying or selling property at or near Lake Anna, Virginia please contact Kathleen "Kate" Elim, REALTOR®.

Contact Kate at 540-226-1964 or by e-mail at lakeanna.kate@gmail.com. Be sure to check Kate's Web site http://lakeannacountry.com/

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TIM MONCRIEF

Tim Monciref - Austin, TX

Over 2,000 homes sold…..

The key is to find a company that will be there and won't hire Nobody construction company to do repairs..... It is what it is. There is no great warranty service as price is pushed too hard. But there is good service out there......those that will make things happen even if they don't HAVE to.

May 20, 2009 12:20 PM

Kate Elim

Dockside Realty - Spotsylvania, VA

Realtor 540-226-1964, Selling Homes & Land a

Hi Tim...Thanks for bringing up that point as it is very important. The warranty is only as good as the service you receive.

Kate

May 20, 2009 12:23 PM

Patricia Kennedy

RLAH@properties - Washington, DC

Home in the Capital

Kate, I recentl included a warrenty, and I was amazed at the differences in terms and prices. It's all in the fine print.

May 20, 2009 12:27 PM

Laura Cerrano

Feng Shui Manhattan Long Island - Locust Valley, NY

Certified Feng Shui Expert, Speaker & Researcher

Kate, Good for you for persuing it and saving your clients some money! I wouldn't expect anything less of you, though.

May 20, 2009 12:31 PM

Joan Whitebook

BHG The Masiello Group - Nashua, NH

Consumer Focused Real Estate Services

I have yet to be convinced that these warranty cover major items.. e.g., heating system, septice etc. I would be interested in which companies you have found to give good coverage for the price. The exclusion usually take many more pages than the policy.

May 20, 2009 12:35 PM

Kate Elim

Dockside Realty - Spotsylvania, VA

Realtor 540-226-1964, Selling Homes & Land a

Hi Pat...And there's so much of that fine print. You need a law degree to figure out some of it.

Almost every house sold around here has a warranty. Buyers expect it.

Kate

May 20, 2009 12:42 PM

Kate Elim

Dockside Realty - Spotsylvania, VA

Realtor 540-226-1964, Selling Homes & Land a

Hi Carole...It seemed too high to me jumping from $365 to $565 because of an extra 44 sq. ft. I'm glad we didn't pay it.

Thanks for your comment. I appreciate it.

Kate

May 20, 2009 12:45 PM

Kate Elim

Dockside Realty - Spotsylvania, VA

Realtor 540-226-1964, Selling Homes & Land a

Hi Joan...You make a good point. There are a number of items that are not included. Buyers have to understand that and that is where their buyer's representative comes in handy.

The ones I've seen cover the first heating system but not additonal ones unless you pay for extra coverage.

Well pumps (and all of our homes out here are on well and septic) are not covered by the basic plan. There are a number of other items that generally are not such as jetted tubs, etc. All of these items have a separate charge.

It buys a certain amount of comfort for the purchasers and so they are almost always requested in the contracts we receive or write.

Kate

May 20, 2009 12:49 PM

Carol Smith

Casmi Photography - Mebane, NC

A home warranty is certainly a treasure ... at times ... but the devil is in the details. LOL I always urge my clients to read the information about the warranty very carefully. But all in all .... I'd rather have one than not.

May 20, 2009 03:04 PM

Diane Aurit

LKN Realty, LLC - Mooresville, NC

Lake Norman Real Estate

This is great information Kate, thank you for sharing. I had no idea there was a cutoff due to square footage!

May 21, 2009 12:35 AM

Kay Van Kampen

RE/MAX Broker, RE/MAX - Springfield, MO

Realtor®, Springfield Mo Real Estate

I had misgivings years ago about warranties. Today, they are so much better and cover more. I have the buyers look them over carefully to understand the value of them.

May 21, 2009 02:20 PM

Kate Elim

Dockside Realty - Spotsylvania, VA

Realtor 540-226-1964, Selling Homes & Land a

Hi Carol...It provides a level of comfort for the buyers and that helps with a re-sale.

Often the sellers/buyers ask us to suggest companies to them. That is why we need to know what they offer. I was so glad I caught the language about needing a quote for cost on larger homes.

Kate

May 21, 2009 03:36 PM

Kate Elim

Dockside Realty - Spotsylvania, VA

Realtor 540-226-1964, Selling Homes & Land a

Hi Diane...At least one firm, HMS, does not distinguish by size. I did not mention in the post because there may be a number of others that do the same. Hopefully that is the case.

I'm glad I realized before it was too late. Can you imagine thinking your client has coverage, even if it has some deficiencies, and then finding out that they don't have any at all.

Kate

May 21, 2009 03:39 PM

Kate Elim

Dockside Realty - Spotsylvania, VA

Realtor 540-226-1964, Selling Homes & Land a

Hi Kay...In our area the buyers generally request a warranty in the contract, to be purchased by the seller. Usually the listing agent is the one that provides the information to the sellers and many sellers defer to their agents.

Occasionally the contract will be written specifying a particular company. That is helpful and good for the buyer.

Kate

May 21, 2009 03:44 PM

Lisa Wetzel

RE/MAX Realty Affiliates - Carson City, NV

CDPE, SFR carsonvalleyland.com

Kate, Thanks for the heads up. We order them on occasion, or hand the brochure to the customer, but haven't really investigated them. Sounds like some evening reading is ahead of me.

May 25, 2009 03:45 AM

Gary Rogers

REMAX On The Charles - Waltham, MA

Recently, there has been dsicussion about being paid a commission from a home warranty being in violation of RESPA. Does anyone have any information on that? I typically put the $75 or whatever the amount is into a separate account to pay for follow up little items or pop bys, as Buffini calls them. This basically funds my past client follow up for a awhile.

May 25, 2009 10:36 PM

Anonymous

Tom

I hate to tell you this, but HMS DOES have a 5000 sq foot maximum for the basic cost. ALL home warranty companies have that. I can guarantee if you look at the contract for the homeowner, it will say home is 5000 sq feet or under. If anything does happen and HMS denies a claim, all they have to do is say that the homeowner gave false information about the size and that the contract is for under 5000 sq feet and the homeowner has NO recourse. Make sure you read the fine print. The money you THOUGHT you saved could cost you alot more than you think in the end.

Jun 11, 2009 01:36 PM

#17

Kate Elim

Dockside Realty - Spotsylvania, VA

Realtor 540-226-1964, Selling Homes & Land a

Hi Tom...I can not find anything about an additional charge for houses above 5000 sq. ft. nor does it say that they (HMS) do not cover homes above that size.

I called and spoke with a representative and was told that they do not differentiate because of size.

I just looked at the fine print and I do not see any mention of exclusion. Without that being a part of the Argreement it would not be valid for them to deny coverage.

Where did you get your information? If you have proof that what you said is true I would appreciate receiving it and I'm sure others would as well.

Kate

Jun 12, 2009 05:33 AM

Anonymous

Debbie

Kate,

The 5000 sq feet pertains to above grade and we don't have many of those. We used to use HMS but found that the customer service and the actual coverages were substandard. It seems that they have not upgraded their contract like the other warranties have.
Buyer Beware

Aug 13, 2009 03:12 PM

#19

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