Do you suggest home warranties?

Do you suggest home warranties to every buyer or just some?  do you push them or do you simply meniton that they exist?  what's been your experience with them- are they worth the buyer's money some of the time, all of the time or never?

If you suggest them, do you suggest a specific one or just the idea of it?



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January 17 2012 - US
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Profile picture for Pasadenan
"...or water heater that is not in the best shape, I will write a home warranty, paid for by the sellers.." -

If the water heater is "not in the best shape" implying "rust" and implying filled with sediment, then why not just have it replaced instead of buying a warranty for something that has almost no life left?  It would be cheaper to just replace the water heater then to buy the warranty, then pay for the site visit, and the prorating on the replaced item.

And really, most water heater installations are simple enough for an average home owner, thus one may have a stronger offer not putting that as a contingency and just doing it oneself when one moves in, or when it actually does fail.
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January 18 2012
I think they're a bad deal, myself. However, our purchase & sale agreements advise buyers of their availability.

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January 18 2012
If it is an older home or a home with a furnace or water heater that is not in the best shape, I will write a home warranty, paid for by the sellers, into the offer for my buyers.  I believe it it gives them some peace of mind.  Of course, I tell them that they have to make sure they read the fine print of the warranty. 
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January 18 2012
Profile picture for hpvanc
As a buyer and now owner with a comfortable slush fund to handle repair contingencies, I don't think they are universally a good idea.  If I buy one I have to pay for marketing and administration expenses so in the long run I will come out ahead by not taking one.  Other considerations are exclusions, being overly conservative I actually took one the 1st year and wound up with the only repair I needed being excluded.  Repair versus replacement, the warranty company probably assumes you won't keep the warranty forever is going to be more inclined to repair when replace makes more long term economic sense. 

I don't think agents should push them or go with the line that they are a universally good idea.  I think that agents would be well served by offering them, explaining them briefly and providing brochures and suggesting that each buyer evaluate there reserves and make an economic decision that is right for the buyer.  That conversation probably needs to occur before the offer since in many cases the buyer is asking the seller to throw it in.

I did not have an agent that pushed one, but merely offered it, I was overly conservative and bought it, since I was not familiar with the house, but had no intention of renewing it.
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January 18 2012
Profile picture for Pasadenan
Remember, insurance companies are never in business to "lose" money.  They always take in more in premiums than they pay out in claims.

In most cases, it is cheaper to take care of the needs as they arise.  And don't forget the prorating on most of the items, such as "roofs".  You don't get a replacement roof for 20 year old roof for "free".

If it is newer appliances, they may still have the manufacturer's warranty.  But new appliances are not the ones that usually fail anyway.

If one has some minimal construction experience and is still mobile, most "repairs" can be done faster and cheaper than making the calls, filing the claims, paying the site visit, waiting for the service person, staying around while the service person works, cleaning up afterward...

I don't even consider it worthwhile most of the time contacting a home owners insurance about issues like "wind damage", or petty theft.  Due to the deductible, I find it faster and cheaper to just take care of it myself.  And then the quality of work measures up to my standards as well, instead of a potential to have a similar problem a year or two later.  Of course one "needs" a fire/wind/flood and liability policy for major loss, or prevent lawsuits for injuries, but that is entirely different.

The only "warranties" I tend to purchase are things like "lifetime brakes" or "lifetime alignment" for cars, as I tend to keep the car until it can't be used anymore, and these are a periodic maintenance items, thus it tends to be at "break even" in about 2 years, and all parts and service are "free" to me after that.

And if a seller is offering it???  Why should I pay a higher purchase price for a warranty I don't need and won't use?  If they are offering that, I'm obviously offering them too much for the purchase, which will also increase my property taxes for no useful purpose.
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January 18 2012
My company offers home warranties.  I use them in certain instances.  For example, if there is an inspection that proves some issues with the heating system, or if the ac cannot be checked because it's winter, I will suggest a home warranty.  If the ac doesn't work when it's turned on, the buyer is protected.  If the boiler/furnace is risky, the buyer is protected for one year from the day of closing.

Sometimes the buyer pays.  Sometimes the seller to keep the deal together.  And sometimes I split the cost with the other agent.
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January 18 2012

question is open to non pro's too.  

I am noticing more and more offers asking for the home warranty, it is getting more common and there is standard language on contracts here.  I don't push them, I offer brochures and keep my comments to myself because my comments will negatively influence the buyer or seller and I'd like for them to decide if they want it or not.  The last thing I want is to talk someone out of one and they end up wanting it later. 

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January 18 2012
Our Board of Realtors contract has a preprinted paragraph, asking if the buyer is requesting the seller to pay for a home warranty and how much $.
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January 17 2012
I love home warranties, especially for first time home buyers, and especially for older homes. 

I dropped by to say hi to a past client who had purchased a home about six months prior, and found him in his garage with his hot water heater, which had just blown. 

I really wish I would have told him to spend the $300 (for a year) on a home warranty, and it would have just been a $60 deductible to get that hot water heater replaced. 

Using your warranty one time makes it worth it, imagine what else can happen in a year!
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January 17 2012
I always explain home warranties to buyers including the terms and pros and cons, buyers in my area tend to go for them without much prompting. Usually it's a good idea, other times it's not appropriate (if the buyer is getting all new appliances and the HVAC is newer and recently serviced). If a buyer is tight on cash after a purchase and not planning on upgrading appliances then I ususally recommend they take a second look if the intial answer is "no thanks."

When I first became licensed I took a few hours over a couple days and reviewed about 7-10 companies. My choice was Old Republic since the policies are marginally less expensive for the same coverage, they have an easy to use online ordering system, a couple of value added features, and the local rep is friendly and does her job well.
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January 17 2012
I offer Home Warranty Co. to all my Selling clients.  I explain it's a selling tool, and with HW Co., it can be negotiated out of the contract to purchaseif the seller chooses.I'm surprised more agents in my area fail to use it. 
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January 17 2012
I have been using them for almost 27 years. Right now and for the last 15 years my favorite is Globe Home Warranty, due to the lower cost and having had no complaints from anyone.
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January 17 2012
I let every Seller know of their availability and suggest to most that it is a great selling tool. However, there are certain situations that don't warrant it for Sellers.

For Buyers, again, it depends on the situation. If the Seller is willing to purchase, take it. If the situation warrants it, then for sure the Buyer should purchase.

I used the same Home Warranty Co. for years. I had a great rapport with this company and if there was a time I felt my clients were being taken advantage of by servicers, I could call them and they would remedy the situation.

Now that same company is asking for so much information on the products in the home, that I would have to move appliances and such to retrieve that info (no exceptions!). I still have not been paid for one of their contracts that closed last June, because the Buyer was unwilling to pull out the range for the info needed (and no it was not on the front).

I have found another company that offers a better warranty, still wanting the same info. This company understands it is not always readily available. And takes as much as you are able to supply.
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January 17 2012
 
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