Photograph by Kathy De La Torre
Home warranties help assure home sellers that buyers will not come after them to fix broken appliances and other operating systems in a home.
Warranties minimize buyer's remorse
By Sue Stone
Ten years ago, according to the Home Warranty Association of California (HWAC), less than 25 percent of home sellers offered a home warranty as part of a sales contract. Today, eight out of 10 existing home sales in California include a home warranty. Why?
"Home warranties offer the sellers reassurance that a buyer is not going to come back to them six months after the sale for payment on a broken furnace," said Bill Jensen, president and COO of Fidelity National Home Warranty & Chicago Home Warranty. "For about $300 the seller buys himself a buffer against 'buyer's remorse.'"
A home warranty is a service contract for an existing home that covers its major operating systems and appliances for one year from the close of escrow. The contract provides for the repair or replacement of covered home systems and major built-in appliances, with the buyer paying only for the service charge to fix the problem.
Covered systems and appliances typically include electrical, central heating, interior plumbing, water heater, ductwork, dishwasher, oven/range/stovetop, trash compactor, garbage disposal and garage door opener. Some insurance agencies offer additional coverage on the air-conditioning system, pool and spa equipment, washer/dryer and refrigerator.
"Not all policies are alike, so the buyer should read over the warranty carefully that the seller is offering to ensure that every system that is of concern is covered," commented Jeff Sundquist, insurance agent of Farmers Insurance in Palo Alto. "Buyers should pay special attention to the warranties on older homes because many times properties built 30, 40 or 50 years ago require code upgrades before the coverage is effective."
The Home Warranty Association of California recommends that people contact California's Department of Insurance to check on insurance agencies of record to ensure that the one selected is in compliance with the department's regulations and guidelines.
"What the buyer wants to be careful of is home warranties that don't cover the basics of system breakdown," adds Jensen. "A good plan will cover all standard repairs or full replacements during the first year the buyer owns the home. Those plans that only cover certain nonessential items on various appliances are probably not going to mean anything to the new homeowner when the thermostat on the furnace breaks in the middle of winter."
To help homeowners get the most from their appliances and systems before contacting a service repairman, the Home Warranty Association of California recommends using the following checklist to extend the life of home systems:
Furnace
* Change the filter twice a year.
* Turn the furnace on 15 minutes per month throughout the summer to keep the unit lubricated and problem-free when winter arrives.
Dishwasher
* To help keep dishwashers healthy use soap specifically for dishwashers. Dry detergents are recommended by most technicians, since liquids and gels tend to leave behind residue on the dishwasher interior and heating elements or it may clog the spray arm;
* To help ensure clean dishes, it is best to run the faucet at the kitchen sink until the water flowing is hot to the touch. Then immediately turn on the dishwasher for hot water in ALL cycles. Even if the dishwasher comes with a soft food disposer, solid food particles should still be removed from dishes before loading;
* To clean and deodorize dishwasher components, pour one small bottle of white vinegar into the bottom of unit, close and latch door, and allow to set overnight. The next day, run the unit through a full cycle.
Disposal
* Always use lots of cold water before, during and for a full minute afterward to clear the drain line of food particles. Disposals are not intended to grind bones, fibrous vegetables, such as celery and artichoke leaves, or citrus rinds. These damage the disposal and clog drain lines.
* Plumbing stoppages can be an expensive item in warranty repair costs, the most common causes are from foreign objects such as toys, pencils, diapers, tissues, hair, and even over-rim type bowl deodorants. Materials most detrimental to kitchen sinks are grease and coffee grounds, which should be discarded with regular household garbage.
If, after all the preventative steps have been taken an appliance or system still breaks down, the new homeowner with a home warranty policy makes one phone call to a local service center, then a repairman will be dispatched to either repair or replace the broken unit and the homeowner's cost will be a service charge typically ranging between $40 and $100.
"The primary benefit to the buyer of having a home warranty is 'piece of mind' and to the seller it is the knowledge that not only will the home sell faster, possibly for more money, they reduce their risk of liability once the sale is final," explained Jensen.
Home warranties in California range from $225 for basic coverage on a mobile home or condominium to $350 for a single-family residence under 4,500 square feet. The seller's Realtor can usually supply coverage options, prices and recommended agencies.
"For those people who think that a warranty is very rarely used or an unnecessary item, I would have to disagree with them," said Art Ansoorian, spokesman for Home Warranty Association of California. "Our figures show that customers use their warranties on average 1.7 times a year, with many of those for full unit replacements. As the new homeowner, a warranty takes the stress out of routine maintenance and failures that can occur at any time but just happened to come soon after the purchase."
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