Mortgage California Blog

If It Isn’t Broken...a Home Warranty Can Prepare for When It Is

August 16th, 2017

You have been on both sides of a sale that required a home warranty as a condition of the deal moving forward. Typically, the focus is on the visible "big ticket" items that come up in an inspection: an older water heater, furnace or central air conditioning system that is/are nearing the end of its/their useful lifespan. But a home warranty covers so much more - and advising buyers on how they work and the benefits of continuing their coverage beyond the typical one year paid for by a seller is a value-added service in your favor.

One policy to protect them all
Heating, cooling, plumbing, electrical - home warranties "cover the waterfront" of things that can break and require repair or replacement. Depending upon the age and condition of the seller's/buyer's house, you may encourage your client on whichever side of the deal you are working to include/request a one-year warranty covering some or all of the above. Policy costs are dependent upon what is covered and differ by provider - but regardless of what kind of coverage is offered/accepted, it is particularly incumbent upon the buyer to understand how their policy works and what it comprises. Encourage them to read any documentation provided and to visit the home warranty company's website to learn more.

Keep it covered, keep it safe
Where this becomes important is at the end of the one-year policy term when the buyer, now the homeowner, lets the policy expire through benign neglect or purposeful interest - and the next day something that was or could have been covered breaks to the tune of a lot of money.

Here is an idea for keeping in touch with your clients and adding value: put in a tickler to their file to email or call them when they are closing in on their new home's one-year anniversary...and the end of their home warranty. Perhaps they have been fortunate and nothing has broken in that year - but tomorrow is another day when anything can happen, which could be something not covered by their homeowner's insurance or their local municipality like an exterior sewer line or interior plumbing.

Understanding the coverage
Home warranty programs are billed as one-stop/one-call shops for repairs and, if needed, replacement of items under the terms of the selected coverage level. Most providers operate 24/7 and contract out with the appropriate, licensed repair people/companies, who the coverage company will call when the homeowner contacts them with an issue. As mentioned a moment ago, there will be different levels/tiers of coverage from which a homeowner can select, each with its own cost and deductible. Some home warranty programs also require a service call fee, in addition to the monthly/annual fee and deductible - and homeowners should also be aware that other costs may be associated with a repair or replacement.

Explore the options
Just because the homebuyer spent their first year protected by one home warranty company doesn't stop them from shopping around for another if they weren't satisfied with the service or terms. The thing for them to remember is that coverage doesn't begin right away: companies will require a waiting period - 30 days is the standard - primarily to protect themselves in the event that the homeowner is already aware of a problem and is trying to get immediate protection. Homeowners also have other coverage options. Many utility providers offer their own protection programs for the systems they serve: heating, cooling and appliances.

Lessening the impact of life's "bad breaks"
While there is no preventing an oven from breaking or a pipe from bursting, an ounce of protection can help minimize the financial impact. Home warranties are like umbrellas: homeowners buy them hoping that it doesn't rain - but are prepared when it does. They also give you an opportunity to keep the conversation going with your former buyers, reminding them of your value and ensuring that when a friend or family member needs a real estate professional your name is at the top of the list.

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