A home protection plan, or what we manytimes call a warranty is a policy that typically costs less than $500 a year in our market. With one of these plans in place if the buyers air conditioning breaks down, or their dishwasher dies they pay a deductable (usually about $60) and the item is repaired or replaced.
When I take listings I inform the sellers that they will probably be paying for a home warranty on the property. They aren't marketed as warranties anymore, they are called protection plans. When I represent the buyer I tell them that we will be asking for a home warranty as well.
Do these plans really add anything to the transaction? Are they just the way for a company to make money and not offer service?
I've seen it go both ways. I've had clients get all new A/C systems for $60 and I've seen clients who never used the warranty at all. It comes to mind that if these companies weren't making money, they couldn't possibly be in business.
Do they add value? Well, to a seller whose a/c happens to die the day he closes, yes. Most buyers aren't going to think of that as an accident, but possibly go after the seller for damages. In the case of a protection plan being in place there is a simple and easy solution. They also give the buyer peace of mind that no inspection will.
Not all protection plans are alike, and not all companies offer the same services. My favorite is Old Republic. I typically choose Old Republic because the local rep is available and will get issues with the policy straightened out right away.
Typical coverage includes the heating system, plumbing system, a/d, appliances (not refridgerators, washers and dryers), and electrical system. There are many exclusions so read the policy carefully.
Go to http://www.orhp.com/ for more information about their plan.
Comments(3)