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Home Warranty's - worth it or not?? Here are stats I collected....what is your opinion??

By
Real Estate Agent with Berkshire Hathaway First REALTORS®
This is Becky Burghart, Real Estate SALESPERSON out selling 90% of most agents in the Topeka area.  I think it is important to establish yourself as an expert in whatever job you hold and not be afraid to share your knowledge to benefit each other. 

Here are a few interesting statistics from warranty companies.  I was surprised by this data.

I am consistently asked if HOME WARRANTY'S are worth it so I started keeping stats of previous clients who had purchased a home warranty.   Here are the results of my study so far.

Of the 20 home warranties clients purchased that service calls had been received: 

11 were PLUMBING PROBLEMS. Expenses ranged from:  $128.95 - $853.55

4 were APPLIANCE PROBLEMS.  Expenses ranged from:  $136.89 - $189.31

2 were HEATING PROBLEMS.  Expenses were:  $116.60 & $194.22

2 were AIR CONDITIONING.  Expenses were:  $101.80 & $240.31

1 was ELECTRICAL PROBLEM.  Expense was:  $189.22

I was surprised by the number of Plumbing problems.  What have other's compiled on this topic???

IF YOU HAVE A BUYER OR SELLER MOVING TO NE KANSAS,  I WOULD ALWAYS HAVE TIME FOR YOUR REFERRALS.  CONTACT ME BECKY BURGHART AT: 785) 640-8811 OR VISIT ME AT:  www.beckyburghart.comOR my blog at www.activerain.com/bburghart

 

"Diamonds may be girls best friend but I prefer pearls-they are rare."

P.S. (Pearls are the things we share to improve the quality of each other's lives)

Comments (18)

Rich Kruse
Gryphon USA, Ltd. - Columbus, OH

I haven't compiled any formal statistics on this but it is something I recommend to buyers, especially for REO properties. I also recommend gas line warranties. I have had several clients who have definitely benefited from these.

Sep 24, 2007 02:23 PM
Chris Pollinger
Berman & Pollinger, LLC. - San Diego, CA
Consulting for Luxury Teams and Brokerages
Thank you for the statistics - I'll have to ask the Home Warranty rep next time they are in to see if they have numbers on what category is most used...
Sep 24, 2007 02:25 PM
John Holloway, Sr.
The Holloway Group, P.A. - Inverness, FL
CRS, GRI, ABR, ePRO

Hi.  I don't sell a lot of home warranty's but since our market has taken quite a dive lately, I might rethink that.  What I don't like about them:  They usually cover nothing on the outside of the home.  They're normally around $100.00 per incident per occurance.  By the time you back out the initial cost of the warranty plus the amount per incident, it's questionable whether it's a good buy for someone.  Plus, there are usually pretty hefty fees for additional insured items like pool pumps, etc. 

On the other hand, I've always said that if you can get a seller to provide one for you (a buyer), then it's a pretty good deal.  Years ago, I worked for an ERA Broker (in the early 90's) who insisted that their warranty helped a listing sell faster, for more money and less time than a non-warranted home.  The problem with that logic was that a lot of the agents didn't advertise the existence of the warranty and very often, the new buyer didn't even know that they had a warranty until closing.  Saying all that, perception is reality.  If a buyer believes that the warranted home is in such good shape, "they've even put a warranty on it...," then you might have a good argument for having one.  That could especially be true in markets where there is not a lot of difference in price between an existing home and new construction.  I'll be interested to see what others think.

Sep 24, 2007 02:31 PM
Toby Boyce
C.G. Boyce Real Estate Co. - Delaware, OH
MBA, Delaware Ohio
Great stuff Becky! I don't have the quantity of data with only three buyer's closed sales. However on one of my seller's side closings an astute buyer's agent had the warranty purchased BEFORE inspections and the results of the inspection were covered under the plan. May have saved the deal as it was a short-sale.
Sep 24, 2007 02:33 PM
Mary Warren
Las Vegas, NV

I have no formal stats...but when we bought our home we purchased a home warranty on it...it has more than paid for itself...we've lived in the house 4 years and paid approx. $400 per year for the warranty for a total of $1600....in 2006 the A/C-Heating unit had to be replaced (costing $7000); in 2007 we had a pipe burst in our ceiling...for a cost of another $6500....between insurance and home warranty all but about $1000 of this was paid. Home warranty of course covered the A/C-Heating unit and the broken pipe.

Sep 24, 2007 02:40 PM
Vicki Bishop GRI - Alabama Real Estate
Coldwell Banker United Realtors® - Bay Minette, AL

I had my son purchase a home warranty when he bought his house in May.  In july his air conditioner broke down. The bill would have been about $700 without the warranty. He paid $75 for the visit. It paid off for him.

Sep 24, 2007 02:43 PM
Donna Harris
Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com - Austin, TX
Realtor,Mediator,Ombudsman,Property Tax Arbitrator
In my market, it's very "traditional" for the seller to buy a one year home warranty for the buyer.  However, since I filed and WON a lawsuit against Nations Home Warranty, I no longer give any opinion about any of the companies and give my buyers about 6-7 brochures instead of just 3 like I did in the past.  Be careful of the "improper install" which is the most common excuse for something not to be covered.
Sep 24, 2007 03:08 PM
Patricia Kennedy
RLAH@Properties - Washington, DC
Home in the Capital
This is interesting, but the ones they sell on the east coast all have deductable of about $100 per problem.  There have been a few times when they've paid off for individual clients, but on the whole, I question their real value.  OK, the peace of mind thing really helps for buyers afraid to take the leap.  Nice post!
Sep 24, 2007 03:08 PM
Carolyn Galant
Coldwell Banker Residential - Madison, NJ
MBA - Coldwell Banker - New Jersey Real Estate

Becky,

 The sticking point for me has been the designer appliances like Viking, Miele, Thermador,Subzero, Dacor.  etc. Most of the warranty reps will say, Oh yes we are covered, then when you call the service desk to check it out, they do not service them. It is not that easy, even on the new appliances which cost mucho, to get aftermarket warranties. Most of the time the builders put the units in, then ....so long!!!. The problem I have run into is that the appliances are installed and that is day one of the one year warranty period. so if a house has been sitting on the market for a year, when the buyer closes, there is NO WARRANTY. If something breaks they have to call the Viking, Miele, Thermador guy. My appliances usually last a year, before they go on the fritz. It pays to check the coverage with the warranty company.

Sep 24, 2007 03:10 PM
Becky S. Burghart
Berkshire Hathaway First REALTORS® - Topeka, KS
President of Topeka Association of REALTORS®

thanks to all the comments.  I NOW have some great things to talk to the representatives. 

Carolyn:  Specifically your point about the high end appliances. 

Donna:  your comment about "improper install" thanks!!!

I thought this was a GREAT conversation and I was surprised by the Plumbing issues.  FYI if you utilize the services of a home warranty company you might ask if they can send you notification when someone utilizes their services.  This is how I received this data and just kept the postcards and compiled the data.  thanks for all the great comments.

Sep 24, 2007 03:30 PM
Cris Burlew
Beach & Luxury Realty, Inc. - Saint Pete Beach, FL
Broker ~ St Pete Beach FL Real Estate

Becky,

 That is great that you actually surveyed your past customers...I had not thought to ever do that. I just believe and have always believed that a home warranty makes perfect sense! I have sold them and bought them as a closing gift for my customers and now try to instill that knowledge into my agents. Keep on selling them!

Sep 24, 2007 03:52 PM
Brandon Hoffman
RE/MAX Connected - Irmo, SC

We have AHS and I'm very happy with them. I don't know all the #'s but 9 out my 10 listings get the HW and all of my buyers get them. I've had plumbing, septic, appliance, and HVAC issues taken care of and they are definately worth it. Most recently, I had a seller get the upgraded HW and after 2 months on the market the HVAC went out and it was replaced with only a $55 service charge.

Listings also sell for 2.2% higher with the HW. As a buyer, how much less would you pay for home b which is very similar to home a to make up for the lack of a HW?

Sep 24, 2007 03:55 PM
Becky S. Burghart
Berkshire Hathaway First REALTORS® - Topeka, KS
President of Topeka Association of REALTORS®
Brandon:  i also utilize AHS and most recently 2-10 warranty that covers a little more, costs a little less and trade fee varies.  Let me know if you need a contact person to check it out.  I have only sold a couple of them and no data from the company to date.
Sep 24, 2007 04:00 PM
Brandon Hoffman
RE/MAX Connected - Irmo, SC
My company works with AHS and we have a good relationship. We are the #1 ERA franchise (ERA Wilder) in HW sold. I am definately a believer in AHS becuase we switched over them about 18 months ago. I was skeptical because I liked our previous provider but AHS has proved to have better coverage and better customer service.
Sep 25, 2007 04:07 PM
Tchaka Owen
Galleria International Realty - Hollywood, FL
I like home warranties however they aren't popular in all areas.  They're very common back in the DC area however here in S.Florida they do pop up once in a while, but not nearly as much as back home.  
Sep 25, 2007 04:21 PM
Christina Cavins
Irongate Inc. REALTORS - Centerville, OH
www.BuySellOH.com Search Ohio Homes For Sale

I'm guilty of giving home warranties as closing gifts in the past because from my PERSONAL experience they are valuable. You may want to check out my post as well "Is a Home Warranty Worth It?"

Happy Selling,

Christina

Jul 09, 2008 05:02 PM
FRANK LL0SA Esq.- Northern Virginia Broker .:. FranklyRealty.com
Northern Virginia Homes - FRANKLY REAL ESTATE Inc - Arlington, VA

I dont get it.

You listed a ton of repair costs, but all (but one) were under $400.

 

WHy would somebody pay $400 for a warranty that paid for a $135 issue?

Maybe you can break out your plumbing stats. How many were over $400.

 

I think this post proves why people should not get them. Just pocket the $400

 

I also tried reading this 10 times, I don't get it: "Of the 20 home warranties clients purchased that service calls had been received"

Does that mean you are not counting another 10-30 people that paid $400 for a warranty and never made a service call?

Frank

Sep 09, 2010 06:30 PM
Anonymous
Jason

I agree with Frank.  Buyer agents are really good at insistingon a home warranty from the seller.  It's a very generous gift (with other people's money)  In most scenerios, the buyer pays $400 for the warranty.  Depending on the plan, there's also a deductible that has to be paid if a repair is needed.  So everyone must pay something except the realtor and the insurance company who has paid nothing, but benefitted and made money from the whole deal.

Nov 14, 2011 03:00 PM
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