San Carlos Real Estate Agent, San Carlos Realtor A Home Warranty: The Gift That Keeps On Giving. | The White Oaks Blog
San Carlos Real Estate August 16, 2011

A Home Warranty: The Gift That Keeps On Giving.

by Chuck Gillooley

Peace of Mind.

When it comes to move-in gifts for new buyers, some agents buy their clients flowers;  others maybe a dinner downtown.  I’ve seen some really creative gifts, too — such as a artist’s sketch of their new home, or a display case with all of their former house keys.  Well, I’ll be the first to admit that creativity has never been one of my strong suits.  When it comes to giving gifts, the analytical (and boring) side of my former-engineer’s brain overrides the creative side.  Utility usually wins over creativity.  So the house-warming gift I always buy for my clients is this:  A one-year home warranty.

It’s not as pretty as a dozen roses, and not as tasty as a dinner at Town, but long after those two are a distant memory, the home warranty is still hard at work providing new home owners with peace of mind.

No Home is Perfect.

Why a home warranty?  Because “Murphy’s Law” seems to be a hidden clause in every real estate purchase contract.  No matter how new or remodeled a home may be, something always always seems to break or malfunction during that first year you’re living in your new home.   And since the standard home insurance policy doesn’t usually cover a dead dishwasher or a hot water heater that burped all over your garage floor, the home warranty is a nice supplement to that plan.   It’s peace of mind that after you turned over every piggy bank just to make your home purchase, you won’t be blindsided with a potentially expensive repair during that first year of home ownership.

How They Work.

A home warranty is just like any other insurance policy.  You simply call the toll-free number on the policy, and they’ll arrange for the appropriate specialist to come out and fix the problem.  You normally pay a nominal deductible (about $50 or so) and the insurance company covers the rest.   So it’s easy to see how the policy pays for itself the first time you use it.  And if your agent is not a cheapskate and ordered you the premium package, most everything is covered in the house:  refrigerator, washer and dryer, plumbing, hot water heater, garage door opener….if it moves, it’s usually covered.    There are items like the roof that are not, so it’s important to read through your policy to understand what’s covered and what isn’t.

A Gift That Gets Used.

My clients have told me that they really appreciate the home warranty gift — because it gets used.  I would estimate that over 90% of the policies that I have purchased for my clients get used during that first year.  Recently, one client had to use their policy the first week after they moved in when their air conditioning unit decided it was full, and left 2 inches of water in the basement.

Hello, Murphy?
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Comments 2
  • The flip side is that sometimes the warranty issuer won’t cover the same issue twice. When we moved in, we found the sewage line was clogged. A plumber was sent out and the line was cleared. The warranty company then informed us that they only cover it once. So when the same line got clogged nine months later, we had to call our own plumber and pay a nosebleed fee. When a garage door spring snapped, a repair place was sent from Oakland to San Carlos. When the guy arrived, he insisted I should by a new garage door and that it wasn’t worth his time to just replace the spring. I called the warranty company and complained. They sent another outfit and the guy gave me the same pitch and complained how he hates service calls from these home warranty programs because he has to lower his service fee. It’s more proftable to upsell a total replacement. To me, this whole thing is a scam. Do us helpless homeowners a favor, Chuck. Can you recommend some reputable home warranty programs?

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    • Markus,

      Thanks for your comment. You do bring up a good point — it’s important to remember that home warranties are just another form of insurance. And last I checked, insurance companies normally don’t like to part with their money. I know this because I pay a gargantuan sum every month for health insurance, and they never seem to pay for anything.

      So there will be limitations on what they will cover, especially with repeat problems (unless the repeat issue can be pegged to workmanship issues on the first repair.) But generally speaking, if you can get a fridge repaired or replaced for just your deductible amount of $50, then the investment paid for itself on the first use.

      I have had the best luck with Fidelity National Home Warranty, and HISCO. They both have local contacts who can personally help out if questions arise about the coverage, or if there are service problems.

      Hope this helps. Thanks again for weighing in.

      CG

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