Home Warranty Paid by the Seller

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
biscuit
Posts: 88
Joined: Thu Dec 12, 2013 1:33 pm

Home Warranty Paid by the Seller

Post by biscuit » Fri Feb 23, 2018 4:32 am

We have an accepted offer on a house and we are in the middle of the closing process. Our seller agent is asking which home warranty we'd like to use for this property. And, I'm here to get some help on that.

What needs to be covered under home warranty? How much coverage? Do you have any recommendations on home warranty companies? I live in DFW area.

denovo
Posts: 4067
Joined: Sun Oct 13, 2013 1:04 pm

Re: Home Warranty Paid by the Seller

Post by denovo » Fri Feb 23, 2018 5:43 am

This is a custom to provide a home warranty for a year. To be honest, the warranty services all suck. The seller usually pays like $500-700 for it. I would just request a cash credit.
"Don't trust everything you read on the Internet"- Abraham Lincoln

Jeep512
Posts: 38
Joined: Fri Oct 13, 2017 4:34 am

Re: Home Warranty Paid by the Seller

Post by Jeep512 » Fri Feb 23, 2018 8:14 am

denovo wrote:
Fri Feb 23, 2018 5:43 am
This is a custom to provide a home warranty for a year. To be honest, the warranty services all suck. The seller usually pays like $500-700 for it. I would just request a cash credit.
+1

Unless you are seriously cash poor, then you should be able to use your emergency fund to cover any problem that the warranty would have covered. The warranty doesn't cover much, and there are copays. Take a cash credit, if possible.

You got a good home inspection, correct? That should help identify any potential problems with the expensive AC unit or other appliances.

Do I have to say that if you are cash poor, then you shouldn't be buying a house :happy .

User avatar
Top99%
Posts: 313
Joined: Sat Apr 22, 2017 9:30 am
Location: Austin, TX

Re: Home Warranty Paid by the Seller

Post by Top99% » Fri Feb 23, 2018 8:37 am

Jeep512 wrote:
Fri Feb 23, 2018 8:14 am
denovo wrote:
Fri Feb 23, 2018 5:43 am
This is a custom to provide a home warranty for a year. To be honest, the warranty services all suck. The seller usually pays like $500-700 for it. I would just request a cash credit.
+1

Unless you are seriously cash poor, then you should be able to use your emergency fund to cover any problem that the warranty would have covered. The warranty doesn't cover much, and there are copays. Take a cash credit, if possible.

You got a good home inspection, correct? That should help identify any potential problems with the expensive AC unit or other appliances.

Do I have to say that if you are cash poor, then you shouldn't be buying a house :happy .
+2 We ended up with one of these on a house we bought and when we needed service we burned so much time on the phone and waiting at home for missed repair dudes that we just gave up and arranged our own repairs. Take the cash if you can.
Use insurance for mitigating low probability high impact events.
Adapt or perish

User avatar
Watty
Posts: 13439
Joined: Wed Oct 10, 2007 3:55 pm

Re: Home Warranty Paid by the Seller

Post by Watty » Fri Feb 23, 2018 8:37 am

denovo wrote:
Fri Feb 23, 2018 5:43 am
This is a custom to provide a home warranty for a year. To be honest, the warranty services all suck. The seller usually pays like $500-700 for it. I would just request a cash credit.
+1

It has been a while but we got one when we bought our house and may have had two minor repairs that we tried to get done with it. The clowns they sent out to do the work were pathetic and tried to do the minimum work possible and the little they did do could not be trusted to last. The only repair people that they contract with are the people that can't get any other sort of work.

As I recall they were also very vague about when they could get schedule an appointment so someone had to be at the house all day long waiting for them.

It was clear that that their only goal was to patch the problem long enough to get to the end of the warranty.

We had to have at least one of the problems fixed correctly by someone else after the warranty expired.

biscuit
Posts: 88
Joined: Thu Dec 12, 2013 1:33 pm

Re: Home Warranty Paid by the Seller

Post by biscuit » Fri Feb 23, 2018 12:28 pm

Thank you. How much $$ to ask as cash credit? It's not a big home (under 2300 square feet), one story house.

adamthesmythe
Posts: 2024
Joined: Mon Sep 22, 2014 4:47 pm

Re: Home Warranty Paid by the Seller

Post by adamthesmythe » Fri Feb 23, 2018 12:47 pm

Ask for a credit if possible. If your emergency fund will cover an expensive replacement it's a good bet to do without.

If it's already bought don't expect much value. I suppose some companies are better than others, but the difference is only relative.

> Thank you. How much $$ to ask as cash credit? It's not a big home (under 2300 square feet), one story house.

Whatever the warranty costs. Usually around 500.

runner3081
Posts: 1331
Joined: Mon Aug 22, 2016 3:22 pm

Re: Home Warranty Paid by the Seller

Post by runner3081 » Fri Feb 23, 2018 12:56 pm

When the seller bought a warranty for us, we had OneGuard. They were actually a decent company and never tried to deny a claim. We had sprinkler, furnace, garage door and a hot water heater w/plumbing all done.

With that said, we maintain an emergency fund and there is no sense to buy one ourselves.

Afty
Posts: 732
Joined: Sun Sep 07, 2014 5:31 pm

Re: Home Warranty Paid by the Seller

Post by Afty » Fri Feb 23, 2018 1:10 pm

I have also had bad experiences trying to get our home warranty company to fix problems. I wish I had thought of asking for a credit instead.

garzjoh
Posts: 22
Joined: Wed Jun 29, 2011 5:48 pm

Re: Home Warranty Paid by the Seller

Post by garzjoh » Fri Feb 23, 2018 1:51 pm

When we bought our house, the seller's realtor threw in an American Home Shield warranty to help close the deal.

We used it twice in the first year and still feel like we lost money due to the time lost and 'limited' options for service/replacements.

EagertoLearnMore
Posts: 519
Joined: Wed Jun 30, 2010 4:05 pm

Re: Home Warranty Paid by the Seller

Post by EagertoLearnMore » Fri Feb 23, 2018 1:54 pm

I agree to take a cash credit. Usually you have to pay a $75 fee to even file a claim to get a technician to look at the problem. Then they want to patch the problem, not correct it. I was not satisfied with any of the guarantees that came with various houses. Realtors push it on sellers suggesting it will take care of all problems. They usually charge around $500 for the guarantee.

3feetpete
Posts: 222
Joined: Sun Dec 14, 2014 7:30 pm

Re: Home Warranty Paid by the Seller

Post by 3feetpete » Fri Feb 23, 2018 1:59 pm

I wouldn't purchase a home warranty myself unless I thought there was likely to be a claim. Taking a cash credit in lieu of the owner is okay as long as you understand that you are then self insuring for the replacement cost of whatever system might go wrong. Your financial status should be considered when deciding whether to take a warranty or not. If replacing a furnace would break the bank and you think the furnace is pretty old, then you might want to take the insurance rather than self insuring.

I had the realtors provide a home insurance policy as part of a final negotiating point when I purchased my current home. A few months later the furnace broke and the homeowners insurance made good on it. It still cost me a few hundred since there was a deductible and a couple of things the insurance didn't cover. Overall I was satisfied with them even though it took them a couple of days to supply the replacement. One caveat is that the homeowner has no choice as to make or model. They will give you a make and model of their choice for something roughly equivalent to what was there and nothing more. I had the option to take a cash settlement but the offer was so low it was a joke. So you are out of luck if for example the dishwasher goes out and you want to upgrade to stainless.

If you do end up with a policy remember to call the insurance company first if you think you may have a claim. They will only work through the plumbers and HVAC people that are signed up with them.

Most policies only cover mechanical systems they do not cover structural defects or foundations.

AndMan
Posts: 14
Joined: Tue Feb 06, 2018 7:14 pm

Re: Home Warranty Paid by the Seller

Post by AndMan » Fri Feb 23, 2018 2:31 pm

I may be the minority on here, we were in a similar situation and have more than gotten a value out of the home warranty. We had many major appliances that were well cared for but near the end of their lifespan so we requested a home warranty after the inspection. We actually had extra closing costs left over so the warranty was increased to two years.

We have american home shield. The first time we ran the washing machine it was clear something was broken. Repair man said it wasnt worth fixing but the home warranty gave us $700 towards a replacement. We had multiple furnace issues within the first few months that were repaired and some heat duct work that was done as well. That being said we have also had some instances where they refused to cover things and every interaction with them is a terrible PITA. Wait times are often hours to get through to a person, though I have heard if you call in the middle of the night it can be easier.

So I suppose this is far from a ringing endorsement, but for us it was been helpful. Without the washing machine issue I suppose I would be less positive about it.

jminv
Posts: 311
Joined: Tue Jan 02, 2018 10:58 pm

Re: Home Warranty Paid by the Seller

Post by jminv » Fri Feb 23, 2018 3:00 pm

I have bought and sold houses with home warranties. I have also had experiences with less than stellar home inspections and you often do not know they were less than stellar until after the fact. On older homes, the warranty can be valuable as a buyer. They can be a hassle to deal with but if you specify which one you want in the offer documents (look at reviews online, someone mentioned One Guard here) it might be a good idea. It's a one year insurance that protects against some of the information assymetry in home buying (the seller will often know much more about the condition of the house than you or your inspector will).

I claimed on home warranties every time I had one (why wouldn't you find something to claim on...?) and it was more than the cost to the seller (ie what I could have gotten seller to reduce further). This was after already getting the home sale as low as possible based on known issues.

Problem with home warranties is any fix they do will be an inexpensive fix or maybe a cash credit to you (which you can sometimes negotiate for if you want something better yourself or if you don't really want to fix it...). If you were to fix things yourself, you might upgrade at the same time.

hookemhorns
Posts: 65
Joined: Sat Jul 09, 2016 11:16 pm

Re: Home Warranty Paid by the Seller

Post by hookemhorns » Fri Feb 23, 2018 4:47 pm

Ask for cash credit instead. Home warranties are a rip off for several reasons:

1) You have to use THEIR repairman, which means usually the lowest bidder / least qualified person in the area that is desperate for business. They show up on their schedule which is often very inconvenient to you, or even impossible if you work full time.

2) Low repair quality. They do the absolute minimum to repair the issue. If they have to replace an appliance, they buy the absolute cheapest POS to replace your original unit. If you live in a mid to high end house you will definitely not want their appliance.

3) Exclusions. The warranty is full of all sorts of exclusions and outs for the company. Your A/C go out? Let's see all the maintenance records since the previous owner bought the A/C. Don't have them? Claim denied.

4) Deductibles. After you pay the initial deductible for the repairman to come out, plus whatever deductible for parts, you end up footing most of the bill.

On and on. Home warranty companies are extremely shady which is why they go to great lengths to indicate they are NOT insurers, since they don't want to be regulated.

fulltilt
Posts: 139
Joined: Thu Dec 01, 2011 2:23 pm

Re: Home Warranty Paid by the Seller

Post by fulltilt » Fri Feb 23, 2018 4:58 pm

hookemhorns wrote:
Fri Feb 23, 2018 4:47 pm
Ask for cash credit instead. Home warranties are a rip off for several reasons:

1) You have to use THEIR repairman, which means usually the lowest bidder / least qualified person in the area that is desperate for business. They show up on their schedule which is often very inconvenient to you, or even impossible if you work full time.

2) Low repair quality. They do the absolute minimum to repair the issue. If they have to replace an appliance, they buy the absolute cheapest POS to replace your original unit. If you live in a mid to high end house you will definitely not want their appliance.

3) Exclusions. The warranty is full of all sorts of exclusions and outs for the company. Your A/C go out? Let's see all the maintenance records since the previous owner bought the A/C. Don't have them? Claim denied.

4) Deductibles. After you pay the initial deductible for the repairman to come out, plus whatever deductible for parts, you end up footing most of the bill.

On and on. Home warranty companies are extremely shady which is why they go to great lengths to indicate they are NOT insurers, since they don't want to be regulated.
5) Class action lawsuits.

I had AHS and attempted to use it two times. Both times my claims were denied.

I would take the credit as cash and hold onto it or if you're really concerned about it, use the cash to have additional inspection done by qualified techs on whatever appliance or system is suspect.

solobuildingblogs
Posts: 49
Joined: Tue Aug 22, 2017 10:29 pm
Contact:

Re: Home Warranty Paid by the Seller

Post by solobuildingblogs » Sat Feb 24, 2018 9:11 pm

My suspicion (correct me if wrong) is that realtors get a financial incentive for selling a home warranty. Agree that you should negotiate it in and then change it to a cash credit.

I got "lucky" with my first house, my hot water heater actually broke, they tried to do everything they could to not replace it but finally they had no choice so I came out ahead.

User avatar
blaugranamd
Posts: 497
Joined: Wed Apr 11, 2012 1:57 pm
Location: D-lux apt in the sky

Re: Home Warranty Paid by the Seller

Post by blaugranamd » Sat Feb 24, 2018 9:26 pm

biscuit wrote:
Fri Feb 23, 2018 12:28 pm
Thank you. How much $$ to ask as cash credit? It's not a big home (under 2300 square feet), one story house.
BHs, pay attention to the OP postings. They're asking for recs on $$$ to ask for instead and everyone just keeps blindly ranting about home warranties...

I'd ask for the amount they were willing to pay for the home warranty. Seems most fair. If a policy would cost them $700 then ask for that.
-- Don't mistake more funds for more diversity: Total Int'l + Total Market = 7k to 10k stocks -- | -- Market return does NOT = average nor 50th percentile, rather 80-90th percentile long term ---

Post Reply