Home Warranties

Protect yourself – whether you are selling or not.

A few years ago, the buzz phrase “at the end of its useful life” started showing up in just about every home inspection report.  “This furnace is the oldest furnace I’ve ever seen.  It’s structurally sound, it’s not leaking, but it could fail at any time and should be replaced immediately.  It’s at the end of its useful life.”  What can I tell you?  Home inspectors don’t want to get sued for failing to disclose a potential problem.

Typically, in our letter representing sellers, we add, “the mere age of a functioning element shall not give rise to a buyer’s right to demand repairs or cancel under the inspection clauses of the contract.”  In other words, if something is working as intended, the seller will not be obligated to replace it, simply because it is old.

This makes sense to sellers- after all, they are not selling a new construction- they are selling a used home.  Buyers, however, become concerned when they see this language.  “What if that rusty hot water heater goes bad next month?  What if the air conditioner breaks during the summer?”  Good questions, but the fact of the matter is no one can really predict when or if there may be a problem.  It’s therefore unfair to make a seller replace something that is in good working condition, based upon the subjective opinion that something may be at the end of its useful life.  But in reality, if a buyer doesn’t want to buy, he’ll try to find some way to get out of the contract, and that’s no good either.

So what to do?

Sometimes, when buyers start to panic about all of the things in the house that are “at the end of their useful lives,” in lieu of making replacements, a seller will offer the buyer a one-year home warranty- an insurance policy on all of the mechanicals and appliances in the house.  The typical cost is around $500.00 for the year, and in many cases, the buyer is very satisfied with that.

But what if I’m not selling?  I purchased my home as new construction 17 years ago, and I’ve already replaced the the dishwasher and one of the air conditioning units.  Looking around the house a few months ago, I realized the financial implications of an aging home.  I looked around at the hot water heater, the kitchen appliances, the furnaces, the air conditioners- and I got worried.  So I did a little research, and found that home warranties are available not only in the course of real estate transactions, but also for existing homeowners.

There are many companies that offer these services.  I chose American Home Shield because of their reviews, pricing and the positive experiences I’ve had with that company on behalf of clients.  For $60.00 a month, I purchased a policy that covers all of our mechanicals and appliances- even the pool equipment.  Two weeks later, we came home from a weekend away to find that the hot water heater had burst.  At 9:00 pm, I logged on to the AHS website and requested service.  By 8:00 am, I had an email from AHS, assigning the job to a local contractor, with a note to expect a call the next morning.  The plumber called at 10:00 am, and was at the house by noon.  He checked out the problem, made a call to AHS and received approval to move forward.  We paid the required $125.00 service fee, and AHS took care of the rest.

Now think about this.  A new hot water heater costs approximately $1,200.00 and the service fee was $125.00.  That means that I saved $1,075.00 and that balance pays the AHS premium for the next 17 months!

If you own a home that has mechanicals or appliances older than ten or fifteen years, you may want to give consideration to one of these home warranties.  It’s no fun to pay fifty or sixty dollars a month- but it’s even less fun to shell out a couple thousand dollars when something goes wrong.  In the same vein, if you are selling a home with older mechanicals or appliances, consider offering a home warranty to resolve repair issues- or better yet, offer the warranty as an incentive in the MLS listing, foreclosing most repair/replacement discussions.  Your realtor can provide you with guidance and more information.

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