Is a Home Warranty For You?

When you have found the home that fits your style, budget and wishes, you may want to contemplate whether purchasing a home warranty would be beneficial. An important aspect to consider is whether this investment would be worth it. Evaluating the condition of the home and the likelihood of needing to repair or replace items like appliances and systems should factor into your decision. How much would it actually cost to repair some of the main systems in your home, if they were to break down? Figure in systems like your heating and air conditioning, which may costs thousands of dollars to repair or replace. Next, think about items like a hot water heater that could also run several hundred dollars. After you evaluate how much it would cost to restore these items, compare that to the amount of money you are going to have to pay out on the annual premium and the fees for a service call. Comparing these figures will help you decide whether or not it is worth the money to get the home warranty.

Keep in mind that even when your home is brand new, things can go wrong. Appliances break down and systems fail. If you have just spent a fortune on your new home, the last thing you want is to invest more money. A home warranty extends peace of mind provided you have the right one. This type of insurance protects against some of the catastrophes which can and do happen in new and mature homes alike. Here are some tips on home warranties.

If you are purchasing new construction, check with your builder first. Many builders will offer some sort of warranty. In certain states, builders are actually required to offer a warranty that can last for as long as ten years. The potential problem with the builder’s home warranty is that it can very often be hard to track down a builder for warranty claims once they have begun to focus on a a new project. Even if your home comes with a warranty by the builder, this is often only for the actual structure and will not include things like your appliances or other major systems that can also be pricey to repair or replace. These builder’s warranties are usually included in the price of your home, so you won’t have the extra out-of-pocket expense. Another type of warranty is one offered by an independent third party company. This is a warranty that you purchase on your own, and they usually cost a few hundred dollars a year. This price can be a real bargain if your home is going to need repairs, because the policies usually last for at least 10 years.

When choosing home warranties, it is necessary to look at the fine print and see exactly what your policy includes – and, more importantly, what it excludes. It is essential to understand how a home warranty policy works. When an appliance or system breaks down you contact your specific home warranty company. The company then contacts the service provider, who repairs or replaces the system or appliance. It is your responsibility to pay for the service call charge, which is usually less than $100. Items typically covered by home warranties include air conditioning, heating systems, fridges, ranges, ovens, refrigerators, fans, indoor plumbing, electrical systems, garbage disposal and telephone wiring. Not all plans cover all these items, and many outdoor systems may be excluded. Check your individual home warranty for guidance on your duty to maintain equipment, as failure to do this or atypical wear may invalidate your policy.

Home Warranty Considerations

Home Warranties are an attractive incentive for prospective buyers. It provides them protection against exorbitant fees associated with major home repairs and the seller pays for the warranty. However, choosing the best warranty company is not as straight forward.

More of these warranty companies exist than I initially thought. The best known home warranty companies are American Home Shield, Old Republic and 2-10 Home Warranty. These companies are commonly referred to as the “Big 3”. Therefore, it reasons that they would have the highest rankings. I did my own research at www. homewarrantyreviews.com and found some pretty scary and interesting information. The ratings are done on a numeric scale from 1 to 10, 10 being perfect, and provided by “consumers”. Surprisingly, many companies I’ve never heard of are ranked much higher than the aforementioned companies.

Now how can this be? Is the ranking skewed by bogus reviews? Are the reviews being generated by competitive companies’ employees and friends? There is no way to prove my fears concerning the reviews are valid. But I ask, if these companies are so great, why have we not heard of them before? When you check out the reviews of home warranty companies on the above mentioned websites, you will see a lot of negative reviews and low scores (mostly 1’s) of the “Big 3” on the first pages that are displayed and on the first few pages displayed for some of the other companies have rave reviews and high scores (typically 5’s). I scrolled to page 3, 4, and 5 and found completely different ratings for the unknown companies (1’s and 2’s) and fairly normal (between 3 and 5) for the better known companies.

One company in particular, National Home Warranty, had exceptional reviews and high marks in early 2009. Go do some research on that company today. The New York Attorney General finally seized their assets and shut them down. They were total frauds. I’ll bet you they changed their name and are back in business defrauding unsuspecting home owners today, right now even. Before you finally pull the trigger to pay for a home warranty, Do your homework first. Check with fellow agents, family and friends and find out if they are satisfied with their home warranty company.
It is imperative to thoroughly research a company before selecting them as your home warranty provider. There are a couple of ways to conduct the search. One of the most popular is to complete an internet search on the subject. Just Google home warranty reviews and use the links that appear to do your research. The first few site links are good places to start. Another resource is to use Consumer Reports as a reference. And finally, ask friends and family members which company provides their home warranty and whether they are satisfied with their service.

As an agent, my personal experience with home warranty companies has been very good. I’ve had experiences with 2-10, American Home Shield and Old Republic. My clients, friends, and family that I’ve counseled to get a home warranty have informed me that they are pleased with their warranty service. There have been instances of delayed repairs and other minor difficulties but all problems have been resolved to the client’s satisfaction. I encourage all of my buyers and sellers to get a home warranty. It gives them a great sense of security and their feedback to me has been very positive.

Bottom line: Although you may not find a perfect company, there are reputable companies with good ratings. Read the warranty contract thoroughly and be sure of what is and is not covered. Remember, most state laws say “Buyer Beware” and provide no protection from unscrupulous people or companies.

The Ins and Outs of a Home Warranty

A home warranty is a contractual agreement between a homeowner and a private company that covers the maintenance, service, and replacement of household items that may breakdown over a period of time. A warranty can reduce unexpected expense and stress that often come with buying a house. Typically, basic warranties will cover the repair or replacement of kitchen appliances, washers and dryers, plumbing, HVAC, and electrical systems. A home warranty is not an insure policy, it is a service plan. It typically has a service deductible, which may be charged for each item repaired or replaced. The warranty also may require the homeowner to use the service contractors that are stipulated under the plan. Most warranties are for 12 months and only allow for approved service providers to be used for maintenance calls. Fees typically range from $50 to $100 per service call. Most service plans cost between $300 and $500. To understanding the true value of a home warranty, you should have realistic expectations about the repair or replacement service. A home warranty company will pay for the cost to repair or replace the system or appliance, if it has broken down from normal wear and tear. If the system or appliance failed because it wasn’t maintained, the service plan will likely not cover the repair. Buyers should read the warranty contract carefully to understand coverages, limitations, and exclusions.

Most contracts have limitations stating what items they will cover. Service contracts vary on what items are excluded from coverage, these items may include: intentionally damaged appliances and systems, appliances that have been misused, pre-existing conditions, and appliances that have not been properly maintained. Pre-existing conditions are typically noted in home inspections, usually the appliance or system issue is noted in the home warranty. Claims may also be denied because homeowners cannot prove the problem wasn’t pre-existing or that routine maintenance of the item was performed. The service plan may require detailed records on each item’s repair history. There are also limits which stipulate how much money the contract will pay towards the repair or replacement of a claim. Before purchasing a warranty carefully read through the contract to know what limits are set on the coverage. When buying a house, there is always the possibility of unexpected repair costs, home warranties offer added protection and peace of mind. Enhanced plans costs more and are available for add-on items, such as: spa and pool systems, trash compactors, septic systems, and outdoor kitchens.

A home warranty is not an insurance policy, but rather a home service contract that covers the repair and/or replacement costs of home appliances and major systems, such as: heating and cooling, and possibly other components of a home, structural or otherwise. Coverage varies significantly across home warranty companies and contracts do not cover all home repairs. Coverage and annual costs can vary greatly, so be sure to check and compare your home warranty options and choose the plan the best suits your concerns.