5 home warranty tips

Do your homework to avoid headaches

By Inman News Feed
Add Comment Add Comment | Comments: 3 | Posted Apr. 28, 2010

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Do your homework to avoid headaches

Mary Umberger
Inman News

If you've been trying -- without success -- to sell your house, it might be time to consider a little sweetener for the buyer. Offering a home warranty might amount to peace of mind for the home shopper who looks skeptically at your dishwasher, furnace or water heater and sees "old age" written all over it.

That's the theory, anyway. Each year, literally hundreds of thousands of home sellers toss a home warranty into the sale to assuage those fears. But lately, it isn't just home sellers buying them. With a market full of foreclosed homes that may have suffered from seller indifference or outright abuse, more homebuyers are purchasing warranties for themselves, according to some warranty companies.

But the warranties can vary widely in their worth and reliability. It can pay to shop around.

Five things to know about home warranties:

1. They're a kind of insurance -- but they're not, exactly. They're not like home-insurance policies, which cover loss and damage from accidents, fires, etc. Home warranties cover mechanical breakdowns for such things as appliances, furnaces, garbage disposals, etc.

"Every market is somewhat different," explained Mike Frosch, president of TWG Home Warranty Services in Chicago. "Some might or might not cover air conditioning or plumbing. But for the most part, you should be able to cover your major systems, and then there will be options available, programs for your pool or spa motors, or your septic tanks."

2. Frosch estimated that the typical warranty costs $400-$450, though he said there could be regional price variations.

Art Ansoorian, a spokesman for the Home Warranty Association of California, a trade group, said warranties in his state -- where nine in 10 home sales offer them -- average closer to $300.

Most home warranties cover breakdowns of these mechanicals for one year, though the contracts can be renewed. When a covered item, such as a refrigerator, breaks down, warranty companies typically require the homeowner to use their affiliated contractors for repairs.

The homeowner pays a fee that covers the service visit, usually from $25 to $100 though this, too, can vary by region.

3. As popular as they are, home warranties have their detractors. For several consecutive years, Angie's List, which compiles consumer-generated ratings of local companies, has put the industry at the top of its annual list of most-complained-about services.

Angie's List said that a common thread among the warranty complaints is confusion over what's covered or with the contractor sent to make the repair.

However, Angie's List said that its own poll in 2007 indicated that 82 percent of respondents who had issues with their home warranties said they had only a general idea of the terms of the contract or that they hadn't read it at all. So it can pay to read the fine print.

4. If you're buying a home warranty -- especially for yourself, as opposed to someone who's buying one as an incentive to pass on to the seller -- you'll need to do your homework.

"If it seems to be too good to be true, it probably is," said Frosch. "Some of these companies are going to try to find ways not to cover things."

So, a little comparison-shopping is in order, he said. A buyer should read several contracts and scrutinize what is and isn't covered.

"Pay attention to exclusions. Coverage is important," Ansoorian said. "We try to drum away at that."  

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Comments 1 - 3 of 3
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1. dennis said... on Sep 14, 2011 at 05:41PM

“I am trying a home warranty company out of Edison NJ that is about $200 a year cheaper and charge 45.00 per visit co-pay. They do not have a good BBB rating and they said that was because the BBB will rate you bad if you do not pay them to accredidate you. They have had quite a few complaints, but they seemed to fix each one of them to satisfy the customer. I hope I am not getting a bad company, I am trying to check everything I can about them. They say that there is a class action suit against the BBB in NJ for not accrediting businesses that do not pay them for that. But I just do not know where else to keep looking for anything about them. Again, they are called CHOICE HOME WARRANTY, if you hear anything please e-mail me. Thank You”

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2. Dennis said... on Sep 14, 2011 at 05:43PM

“I am going to try Choice Home Warranty out of Edison NJ. They have a bad BBB rating and I asked them why and they said that right now there is a class action law suit against the BBB of NJ because if you do not pay them they will not give you a good rating. This company has had a lot of complaints, but they have corrected all of them. They are about 200 dollars cheaper per year and 30.00 cheaper per incident co-pay. I am still a little aprehensive about them, but I am going to try them this year and see what happens.”

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3. sell your house said... on Feb 11, 2012 at 03:22AM

““Thanks for giving mi this useful information.””


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