Home Warranties – Buyer beware
Home warranties are a popular sales tool in the real estate industry, touted by sales agents as a low-cost way to make a house stand out in a crowded and tough market. A Gallup Poll commissioned by warranty companies found homes with warranties sell up to 27 days quicker and for up to 3 percent more than those without.
However, this largely unregulated industry has numerous complaints of poor service, questionable practices and alleged fraud, according to consumers, attorneys and consumer advocates across the country. Home-warranty companies were named the “most complained about” service in 2007, by Angie’s List, a consumer website that provides its members with reviews of local contractors and service companies.
Consumer message boards and internet sites such as ripoffreport.com, and scam.com buzz with angry tales of warranty companies refusing to replace equipment and delaying or denying claims for repairs.
The language embodied in home-warranty contracts is often too broad and vague. Terms such as “normal wear and tear,” for example, or “lack of adequate maintenance,” are highly subjective and often a matter of opinion.
Home warranties only cover items that malfunction as a result of normal wear and tear. Anything that’s broken before the contract is purchased or fails due to “lack of adequate maintenance” is not covered. Also not covered are items that show signs of rust, corrosion or sediment build-up which could be merely a matter of normal wear and tear and fail because of causes which are coverable but are not as a result.
Sadly in reality, most people don’t know the first thing about routine maintenance when it comes to their home’s mechanical systems and appliances. This can be trouble for one who submits a claim.
Prospective homebuyers should try to obtain any maintenance records for appliances from the sellers, especially if there is a home warranty offered by the seller or realtor, as you may need them in the future when filing a claim with the warranty company.
Do your research before purchasing a home warranty and be prepared in the event of any claims. Know your rights. Have your attorney review the warranty the seller or realtor is offering as an inducement to purchase to ascertain the value.
Warranties cost between $350 and $500.
Some companies are:
American Home Shield
United Home Warranty- Formerly of Oakhurst, NJ- Out of Business
National Home Protection