There’s a little section in the real estate contract here in Tucson where a Buyer gets to decide if they want to ask for a home warranty or not, from which company, with what coverage, and who will pay for it.
A home warranty is different from your home owner’s insurance. Home owner’s insurance protects your house and stuff in case of a loss, in general. A Home Warranty is an annual service where if something breaks, you call the home warranty company and they send someone out to see if the repair is covered by the warranty, and if so, fixes it. The service call (as of today in Arizona) is $60, regardless if the repair is covered or not.
Home warranties can be purchased at the time you buy the home, and can be renewed every year.
I tend to use American Home Shield, who’s base policy is $350 per year, and then you start adding on a couple hundred for things like pool equipment coverage, or refrigerator coverage, things like that.
There’s a whole booklet that gives an overview of what is covered and what is not.
I’ve had clients with both very good and very bad experiences with home warranties. Sometimes, people get a new air conditioner covered by their warranty. And some people keep making service calls and whatever is broken is never covered by the warranty.
So should you ask for the home warranty when you’re negotiating to buy a home? If you think you’ll use it or need it, by all means. In general, the home warranty request isn’t a deal-breaker. In fact, some sellers offer it up front in their listings. It’s a side benefit for them as well - they get the benefit of using the warranty themselves (with some restrictions) while on the market, and then can pass on a full year of coverage to the new buyer.
February 12th, 2008 at 5:26 pm
i’ve gotten AHS twice now. the first time i got a new dishwasher out of it, but it was really crappy, wasn’t installed properly, and then i had to fight to get them to cover the ensuing water damage. on the current house i got bit by the fine print that anything that is attached to the house, but outside the foundation, is not covered. like water shutoff valves. so i had to pay them and the plumber. weak.
i likely won’t ever use them again. i can envision some circumstances where they may be worth it. like if you have serious concerns about a central a/c system. however, if they replace things, they only replace with el cheapo “builder-grade” stuff generally. and the $350+service fee is a long way towards replacing most of the common appliances that can fail. especially with craigslist around if you need something cheap in a pinch. at least with central a/c they’re required to replace it with a 13 SEER unit if it fails which can be a significant upgrade in most cases.
as always, caveat emptor. pay your money, take your chances….
February 12th, 2008 at 6:10 pm
Hi Tim - I always warn people that it IS insurance, but that it may not cover the things that break! I have several clients with experiences similar to yours - especially the one about stuff outside the foundation. Most common that I run into is not covering sewer backups if they’re between the main and the foundation. But every once in a while, I have a client where the warranty really comes through and they couldn’t be more happy. (shrugs) I’d encourage their use more if the coverage seemed more consistent.
February 13th, 2008 at 7:25 am
Kelly - Good advise to get the coverage. Like any insurance, not everything is covered. It depends on the vendor the insurance provider uses as well. A fellow Realtor advised me years back to use the AHS Ultimate for another $60. Glad she did.
One client had plumbing repaired after the poly-b burst in the wall, another a dishwasher repaired, another had their A/C repaired, one had it replaced. The best was paying for the tree routes to be cut in the sewer line outside the house. AHS admitted it was outside the coverage, but, paid for it anyway. The alternative, no insurance, and having to pay for all the repairs. Guess I have had good luck.
February 13th, 2008 at 10:49 am
You might also look into Old Republic Home Protection. I have had them on my last 3 houses and have always had great experiences. I know they cover sewer backups between the house and street because I had that same situation and they took care of it.
February 13th, 2008 at 1:49 pm
I think this sounds like a great investment for a relatively small fee. The cost of fixing just one thing a year should pay for it. If you should need it more than once then your absolutely made the best move.
February 13th, 2008 at 5:04 pm
Some warranty companies have got bad reputation, but still there are some good ones. Refer to this website when you do your research and compare the providers.
http://www.homewarrantyreviews.com
http://www.homewarrantyreviews.com/reviews
John
August 6th, 2008 at 12:45 pm
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