Home sellers hoping to close a deal sometimes agree to purchase home warranties to give their buyers peace of mind.
Prospective homeowners, however, should do their homework to make sure the policies, which typically cover the major mechanicals and appliances in a home for one year after the sale, will actually help, say consumer protection experts.
The warranties range in price from $350 to $800. If purchased from reputable companies, they can help homeowners deal with broken appliances, malfunctioning air conditioning and other problems, the experts say. The policies usually call for homeowners to contact the service company when something breaks. The company then sends out a repair person who provides an evaluation for a set fee, usually about $65. Once a professional has determined what the problem is, the warranty company pays for the broken item to be repaired or replaced.
Often, homeowners dislike transferring that decision-making power to a third party, said Angie Hicks, founder of Angie’s List, the national consumer rating service based in Indianapolis. Users of home warranty or home service companies have been the least satisfied group of reviewers on the site for the past six years, she said.
Homeowners often expect the companies to replace the item and are disappointed to learn it’s going to be repaired, added Bob Miller, president-elect of the Ohio Association of Realtors in Columbus, Ohio.
“They’re going to try and fix things before they give new ones,” he said.
It wouldn’t be economically viable to replace furnaces, washers and garbage disposals that can be repaired, said Art Chartrand, spokesman for the National Home Service Contract Association, headquartered in Olathe, Kan.
“If servicing it will take care of it, we’ll service it,” he said. “We certainly don’t want our product oversold.”
Homeowners may end up surprised by the details of their policies because the contracts are often bought as closing gifts, so the person using the service is not the one who bought it, Hicks said. That means the user did not have a chance to research the company and carefully evaluate the policy before it was purchased, she said.
When William Merritt bought his first house last summer in Leander, Texas, the seller purchased a warranty for him. He’s been satisfied with the service so far, but wishes he had had the opportunity to vet the company himself.
“When I go to renew, I’ll look at all the options,” said Merritt, whose warranty recently covered an $800 repair to his pool pump. “I’ll definitely do my research.”
Sheila Adkins, a spokeswoman for the council of Better Business Bureaus, in Arlington, Va., recommends researching home warranty or home service contract providers before making an offer on a house. When it’s time to buy, ask for the company by name in the offer, she said.
It’s a reasonable request, Miller added. Many home sellers are expecting to buy the agreements and should be willing to go with the company of the buyer’s choosing, he said.
“Depending on who you go with, you can get some really good stuff out of these,” Miller said.
Angie’s List members also have had issues with some contractors that warranty companies send on service calls, Hicks said. She suggests asking the company that holds the policy for a list of the plumbers, electricians and repair people it uses, and checking them out before a problem occurs. When something goes wrong, request the contractor with the best track record, she said.