I had a chance to sit down with George Brockman our Regional Sales Manager with HSA Home Warranties to discuss what they cover and how they work.
What is a home warranty? What does it cover? What does it do?
A home warranty is going to cover the mechanical systems and appliances of a home that have normal wear and tear mechanical failures. Your home warranty is going to step in and pick up a lot if not all of the cost on the mechanical repairs.
How is this different than my homeowner’s insurance?
The homeowner’s insurance and the home warranty typically fit hand in hand. When we talk, let’s say a water heater fails and floods the house. Homeowner’s insurance is going to help cover the cost of the flooring repair, getting rid of the water, the clean up, those types of things. Then the home warranty is going to cover the mechanical repair. We’re going to come in and replace the water heater, and then the homeowner’s insurance is going to pick up the restoration charges.
If I’m a buyer and I’m purchasing a home, and I want to do something with a home warranty, does this cost me money? Is this something that’s going to be an added expense for me? Who pays for this?
It is. There’s a couple different options. In many cases, the seller will provide the home warranty. As a buyer, you can ask the seller to provide the home warranty. As a buyer, you can also purchase one as part of your real estate transaction.
We’ve asked for this to be covered for our buyers, so usually it’s a lower cost for them. The advantage obviously is for the buyer. They get coverage for a year.
If I’m a seller and I want to offer this, do I pay for it and then they pay for it again? How does that work? How does us sellers benefit?
The benefit for the sellers is that we’ll provide coverage during the entire listing period, and the seller doesn’t have to pay for it until the house closes. If for some reason the house doesn’t close or gets pulled off the market, the seller’s not responsible for the premium. It’s nice for the seller because it adds a little bit of peace of mind as buyers are looking at the homes, that the seller’s going to provide home warranty should anything happen after the sale.
How does it work? I came home one day, my air conditioner’s not working. I just bought this house a couple months ago.
The one thing the home warranty provides, and it’s a nice convenience for homeowners, is that when there’s a mechanical failure for something that’s covered under the warranty, they call us, we will dispatch a technician so they don’t have to search through and try and find somebody that can come work on it. We already have a list of approved and vetted contractors that’ll come out for the diagnosis and repair.
What if my neighbor’s a contractor? He wants to come fix it for me real quick and it be paid for by the warranty. Is that possible?
No, so that’s why we have licensed and vetted contractors, is that, so we can dispatch contractors that are familiar with how we work and we’re familiar with how they work. For something to be covered under the warranty, the homeowner does have to call us so that we can dispatch a contractor.
I’m a seller and maybe I used the warranty a few times and my house didn’t sell. Do I owe you anything?
No and that’s one of the great things about our product is that we assume a certain amount of risk for the sellers and we understand that those situations do come up from time to time. No, your seller’s not obligated to pay back any claims or pay for the warranty if the listing cancels.
What is some of the savings that a warranty has stepped in and covered for a buyer?
For buyers, we will cover the cost to repair or replace the mechanical systems. Let’s use a water heater as an example. We will dispatch a technician and if they’ve got to replace, say an element in an electric water heater or a gas valve on a has water heater, HSA will pick up the cost to replace the component. If we have to replace the whole system, then HSA will pick up the cost to replace the unit and the labor to install that.
The seven star buyer’s upgrade adds a lot of value to the buyers. Certain things that aren’t covered in the base warranty. For example, if we do a furnace replacement, the old furnace isn’t going to match up to the existing duct work, so there might be duct work modifications. There might be things like equipment disposal, vent modifications, maybe Freon refrigeration evacuation and recovery. Things that may be above and beyond the cost of the warranty.
Your typical homeowner might look anywhere from $100 to $300, it can be more, but in that range $100 to $300 of costs when we do a system replacement. Seven star will pick up almost all of those costs. Not always, but most cases they’ll pick up those costs in those system replacements, so it provides a lot of value. We’ll cover up to $250 in permits if a permit has to get pulled or if there’s code violations we’ll cover up to $250 of that. We will also cover, if there’s something that’s improperly installed or mismatched heating and cooling system. It provides a lot of value for the buyers.
I’ve run into this a few times with different transaction, maybe the listing agent says, “Oh, don’t worry. You have a home warranty, the air conditioner doesn’t work right now, it’ll be covered under your home warranty.” How should we handle that situation?
I would always, always, always recommend an inspection. Whether it’s with a general inspector or a licensed contractor. What that does for us from the home warranty standpoint is, if there ends up being a denial on a claim, we can go back to an inspection report, whether it’s again a general inspector or a licensed contractor, and at that point in time we can say, “No, it was in proper working order,” and in most cases get the denial overturned.
So the systems have to be functioning at the time of close?
Yeah, proper working order at contract inception is one of the key components of our contract.
What about a seller situation where they’re dealing with something that was completely unexpected. They listed the house, a couple days before closing AC quits. Are they still covered? Are they still good to go?
Sure. The sellers can file claims for what’s covered under the home warranty. You know, it’s good to know that, for heating and air on the seller’s side there is a seller’s option that needs to be elected. There’s a $60 add on for the sellers. That allows them to file heating and air claims during the listing period. Yes, the sellers can take advantage of filing claims if there’s a mechanical failure during the listing period. Even right up to closing. In many cases when you’re within a few days of close, it’s sometimes hard to get those repairs done by close. We can even offer an intent to repair letter, and that will help transactions close.
I know this covers the mechanicals and systems of the house. I’m guessing there’s limitations on, like, windows.
We don’t cover windows. Remember our acronym PEACH. Plumbing, electrical, appliances, cooling and heating.
All right, is there anything that a buyer or seller should know about HSA or home warranties that we didn’t talk about?
Well, the first and probably most important point is that they call us first. They call us first, we can get the process started and get a contractor dispatched. The other thing to know is that in the home warranty space, we’re part of the largest home warranty company in the industry, so when you’re dealing with us, you’re dealing with a company that, not only did we found the home warranty industry, but because of our size and scope we have more resources available to take care of the clients.
The newest thing that we’ve just launched is, and this is included on all buyer’s plans, is our re-key feature. What that means is a buyer, from the day of close on can call and file a service request and pay their service fee and we’ll dispatch a locksmith to re-key up to six locks and provide four new keys. It’s a great value. So many buyers probably lose sight of the fact of re-keying their locks, or they go to the expense to replace their locks. This offers them a great alternative, especially when they’re trying to get unpacked and settled. They call one number and then we’ll handle the rest.
If I wanted a home warranty for the first year but I had such a good experience I wanted a second, third, or maybe even further, can I renew it?
At the end of the first year our inside sales team is going to reach out to the homeowner and give them renewal options. It’s renewable year after year after year. The price on the renewal may vary a little bit from the original price, but that’s going to be based on how many claims we’ve paid, how many claims have been filed, and different things like that. Yeah, absolutely it’s renewable year after year.