Many times when I speak with a potential home buyer, they have neither heard of or understand the protection a home warranty provides to a homeowner. A home warranty is an insurance policy that provides financial reimbursement for equipment failure within the home. The policy will provide protection to such household items as: water heater, air conditioner and cooking range, etc. When there is equipment failure the provider will evaluate the failed equipment to determine if the appliance can be fixed. If it cannot be repaired, usually the policy will pay for a replacement including installation. Some states request the seller to pay the premium for the first year. After the first term, the homeowner can renew the policy for continuous coverage. These policies normally offer different levels of coverage in which buyer/homeowner can choose from. Most policies offer a one year term, costing from $250 to $600, depending on the options and level of coverage. In final analysis, the home warranty is a plus for both the seller and buyer. This allows the seller to assure the buyer that all appliances are in working condition and willing to provide financial assistance in case of equipment failure.
Hopefully with due diligence, the home buyer has been made aware of any structural/mechanical issues through a qualified home inspection. The home warranty definitely provides further piece of mind especially for those unforseen mechanical failures. Sellers should be made aware of how a home warranty can make the home more appealing as well. Way to highlight the pros of a home warranty.
Hello John, I'm encouraged also to see the Warranty Companies issuing these plans on REO and short sale properties where potential problems are unrecognizable or disclosed to the buyers.
I definitely still tell my buyers about home warranties, but I never recommend a company anymore since I sued Nations Home Warranty and WON!
There are too many "improper installs" and "pre-existing conditions" criteria that the warranties are becoming jokes.
I do not have faith in them and refuse to push them....one young couple in my neighborhood who I did not represent, (didn't know them at the time), bought their home 6 weeks ago. The dishwasher breaks. The call the home warranty company and they sent a Sear's tech out 3 times then finally gave the $175 towards a new one....Not the only horror story that I have heard!
John,
Just some clarification due to personal experience. The home warranty companies I have dealt with do not offer financial reimbursement. when you have an issue, you call the company, tell them the issue (dishwasher leaks, or whatever), and they call a plumber/servicer in your area that they work with. You then pay a deductible or service fee (usually around $50) for each visit.
Home warranties are something I do recommend to my clients. I have gotten 3 air conditioners paid for (except for my service fees). Considering these cost around $5k, well worth the cost. It's good peace of mind for both buyer and seller.
Of course, do your homework when getting one--ensure they cover what you want covered (I have a rental property that has a geo-thermal A/C system--I didn't read the fine print--the company doesn't cover those types).
Thanks for the reminder on Home Warranties!
Valerie
My brother owns an hvac company and does warranty work...and says that some of these companies, take money...but want the warranty work denied...so buyers need to be careful
I've heard mixed reviews. It's a nice piece of insurance, but there are a lot of limitations.
You may say I am the exception to the rule however my experience is much, much different.
-A home warranty is not, I repeat NOT an insurance policy.
-Anyone depending on a home warranty to protect them is just asking for trouble.
-Buy beware is an understatement.
I bought a house that was 20 years old. It had a few issues. I had a home inspection done and in my state the inspectors can open things but not unscrew anything. During their inspection they found roof issues (had a roof long crown vent that was loose), the AC would not start up and there was a retaining wall and fence issues that needed repaired.
We remedied for the AC unit to have the unit fixed and it was working when we moved in. The roof ended up leaking and we had to secure it down and tar down to stop the leaks. Now keep in mind I called back the inspector before we moved in however how is he going to know that the previous owner apparently just went up and nailed down the nails without doing any other work? We could not tell the difference until it rained hard the first time. (We had remedied that he pull up the crown, reset it with new nail holes, tar the old ones and seal it up- obviously he didn’t do that).
Now keep in mind the heater worked when the house was inspected. It was turned on and blew out warm air. The AC unit worked too when we took possession.
So about a week before it cooled down this fall the AC stopped working. We call the Home Warranty and they direct us to call out a technician from a local AC shop they work with. He comes out and says the electric switch was worn out (he put on a new one to get the unit to even start) and the compressor appeared to be bad. Now they said they would work out the details between the warranty and the repair and get back to me. No call backs. I call back and eventually there is a $400 disparity between what the warranty wants to cover and what the repair guy says it will cost. Well it isn’t hot so I figure I would give them a week or so to work it out.
I try to get the same guy to come out to check my furnace before we turn it on for the year, safety first after all, however he is unavailable. I call another guy out who tells me the heat exchanger is so carbonized he does not feel comfortable turning it on. There is also a burner that shows damage, likely from the heat exchanger. So I call the Home Warranty people with him standing right there. They ask me how long I ran the heater for, I say it was tested at inspection and passed and we were having it checked before the winter. They say, NOPE not going to pay to repair it as it is a pre-existing condition. They point to a clause in the contract that says the unit has to be in normal operation condition when their warranty takes effect. Now keep in mind to both a layman and a home inspector normal operating condition is that you turn it on and it blows out hot air.
They never require any HVAC inspector to come out and look at it before giving the coverage. This is like insuring a used car without even taking a look at it. They flat out shut me down. Told me I had to pay to have it replaced. No help at all. Needless to say I was a bit upset with them. They got off the phone telling me that they would review it and call me back. All that they did was review the AC fix and came back saying that they would not be fixing that until they had a copy of the repair order/receipt for the AC being fixed previous to us moving in.
HUH?
Ok so you are the home warranty. The AC unit is working when I move in. The heater works when I move in. When the AC stops working a few months of use later you say you will not fix it until you have proof of the last time it was fixed? Excuse me I think my brain just exploded.
Oh, and you will not fix the heater that tested fine but it now broken because it was not working long enough? It would seem if it was actually insurance, or worth anything, that they would be required to have the systems inspected they were covering and verify that they are indeed in working order. As it stands right now the only reason I do not have to buy a new heater is that the heat exchanger was still covered under the manufacturers warranty for about another week from when they found the issue. I still end up stuck with the expedited shipping charge of 50-100 bucks and the cost of the burner to be replaced. The warranty company did end up saying they would pay for the labor even though they are "not at fault" because one of their managers misspoke herself and said they would.
In the end I would have paid tens of thousands of dollars less on this house or walked away or made them professionally replace the HVAC system. The Home Warranty is a joke. A sick, horrible, twisted, incredibly unfair joke. And I do not think it is funny.
For anyone that reads this get a copy of whatever warranty they claim covers the place in writing and in advance. And it might not be a bad idea to find a specialist and get an extra inspection done. Or better yet run in the opposite direction from anything that isn’t newer or newly replaced.
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