There have been a bunch of times when I've included a homeowner's warranty to get a transaction done. And I'm constantly amazed at what I'm finding in the fine print!
Now, I am one of those nutty people who actually read fine print, at least some of the time. Most people do not. But if you are either purchasing a warranty as part of a listing agreement or including one as part of a sales contract, here are some important questions you should be able to answer:
- How much are service call deductibles? If the dishwasher is acting weird, how much will you have to pay out of pocket for someone to show up and determine whether it should be repaired or replaced?
- What does the agreement say about pre-existing conditions? If the dishwasher is really, really old and past it's prime and breaks down the first time you turn it on, is it covered at all?
- What about stuff like the Jacuzzi in the master bath, or the ice maker in the fridge? And the septic system? Sometimes a lot of items that are typically problematic are excluded altogether, unless you pay a bunch extra.
- What about structural elements of the home? A few warranty companies, for example, will include the roof. Most do not.
- If you are the seller, does it cover items that show up on the buyer's home inspector's report? And does it cover your heat and central air conditioning systems? Some leave these items out of the seller's coverage.
I've found that many of my buyers break things that were operating well at settlement, just because they don't quite understand how to use the systems or appliances in their new homes. And for this reason alone, a home owner's warranty can provide some additional peace of mind for today's somewhat edgy buyers.
Some of the major warranty providers in this area (and I'm not advocating any of these companies) are American Home Shield, Nationwide Home Warranty, Choice Home Warranty, and Home Warranties of America.
And, while a warranty can be a good idea, it's also a good idea to do some serious comparative shopping.
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Our central air went out right after we bought this house, and delays by the warranty company lasted two weeks. We finally broke down and hired an HVAC contractor, and the repair was minor - even less than the warranty deductible. Lesson learned. Home warranties are only as good as their response when needed.