Get a Home Warranty! (Video)

Get a Home Warranty! (Video Transcription)

Hi, everyone. My name is George Belleville. I’m a realtor in Maryland, and I’m creating this video because I wanted to explain the benefits to sellers and buyers and homeowners, for that matter, of purchasing a home warranty on your property. There are a lot of pros with it. There are a few cons, but I wanted to go over those. I talk to people a lot about these and I recommend them a lot. I have one in my house. So I just kind of wanted to walk through the pros and cons of this from a couple of different perspectives.

So, first of all, if you are a home seller, you can purchase a warranty from most of the warranty companies do it this way. So you sign up, tell them you want the warranty, you have coverage from the time you do that until your house sells, but you don’t pay for it until closing. So it’s a line item on your settlement sheet. So you get the coverage. And then when you go to closing, that’s when you pay for it. So that can be great. And it protects you from surprise breakdowns of major components. A home warranty covers plumbing, electrical, a lot of different things. Very few of them cover the roof, but other than that, they cover pretty much anything that’s electrical, mechanical, or moves, things like that. They do have dollar limits and things like that. I’ll talk about that later. But anyway, so if you’re putting your house on the market, you’re doing staging and painting and all those other things. If in the middle of that, your furnace breaks or needs some work, that’s an unexpected expense that you can avoid by having a warranty. And most of them do have a $100 to $200 copay. But still, last year I got a new furnace and it cost me $400 out of pocket, all said and done. So I saved about $8,000. So I’ll take that all day long. And I’m assuming you would too. But it relieves some of the pressure of what might happen while you’re getting your house ready for sale. And then you can use that as a marketing piece towards the buyers, or you can keep it to yourself and just not tell them that. And then when they do their home inspection, you can use the warranty to pay for some of the things they might find that might be broken. You can do that. Or you can tell the buyers that in lieu of doing repairs, we’re going to give you this warranty. It can happen a lot of different ways.

From the buyer perspective, it’s great because you’re putting all your money into the down payment. You have moving expenses. We need to buy blinds and paint or whatever you’re going to do. It’s nice not to have to worry about a catastrophic failure of an HVAC or something like that. That can cost $10,000 or even just a refrigerator, a dishwasher, all those things, right? It just takes away some of that concern that you’re going to have a big ticket item that’s going to need a repair or replacement when you’ve just put all your money into a house and you have a lot of other things to worry about.

And for a homeowner it’s the same thing. I’ve had a warranty on my house for probably twelve years now, probably. And they lose money on me every year. I guarantee you they repair more for me than I pay in that warranty, because things just break. Dishwashers. Ours has been the dishwasher, the washing machine and the refrigerator several times, plus the new furnace. So I’m just waiting for my air conditioning to go so I can get that replaced, too. So those are all good things.

One of the downsides to it is you don’t necessarily always get the, I call them the varsity repair people. Sometimes you kind of get the junior varsity. So you do have to be a little bit careful about watching the work that they do and making sure that it was all done properly. Because sometimes the warranty companies don’t pay these contractors a lot of market rate, but the contractors are doing it to get the business and then they meet the user and then now they have an option for a new client down the road. So you do have to watch that a little bit. But I will tell you, I’ve had a couple of very minor issues where I’ve had to have them come back. And obviously, if you work with us, I have very close relationship with the representatives of those companies because I work with them so much. So I can usually call them and get a pretty quick response and get it resolved pretty quickly.

And one other thing that a lot of people don’t know about, the major big warranty companies do this, and if you have a warranty through them, they allow you to purchase appliances basically at cost through them. When we renovated our kitchen, I don’t know, ten or twelve years ago, we bought all of our appliances through the warranty company and it was about 40% off. We saved a good bit of money doing that, so you can save money with that, which can honestly, if you’re replacing a lot of appliances you can almost pay for the whole warranty that way.

And one other way that’s a creative way to use a warranty that people don’t think about is if you own an investment property, you can put a warranty on the investment property. You can put in your lease that some people do 50 50, some people do it all, but you can put in there that the tenant is required for a portion of the cost of the visit, of any repairs. So if it’s $100 copay, the tenant has to pay 50 and you pay 50. And that way tenants aren’t calling about everything all the time. But if something is broken, if the water heater stops working with that copay, you could get a new water heater and it doesn’t come out of your pocket. So if you’re an investor and you’re trying to net the most money on the property, obviously not having to buy a water heater or a furnace or whatever the case may be, really helps with your net or your cash flow because you’re not paying for these big ticket items. And I know a handful of investors that do this. And by putting it, like I said, in the lease, it eliminates, because some tenants will just call about everything and it puts some of the onus on them. And then if it does turn out to be something that’s really the landlord’s responsibility, a lot of them will waive the tenant paying a portion of the fee, but it does kind of temper them calling somewhat. But it’s a great way to mitigate your costs and expenses as an investor.

So hopefully that helps you. If you have any questions about warranties or how they work or recommendations for companies, our contact information is below. We would love to chat and have a great day. Bye.