#our thermostat broke as well so we cannot use ac

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Why You Should Consider Getting a Home Warranty When Buying or Selling a Home in Fresno CA

Do you really need a home warranty?

I typically do not buy warranties when I purchase products.  But I’m going to tell you that when you buy or sell a home in Fresno CA you should consider getting a home warranty.

I really don’t like the whole 2 year service agreement pitches at the register when I’m buying a product.  I tend to always opt for the “no thank you” response.

Part of my reasoning is because I once worked for a large electronics retailer when I was in college.  We were rewarded more for selling service agreements and warranties than we were for selling the products themselves.  I thought it was a huge racket and somewhat of a scam.  That molded my mindset about extended warranties in general.

However, fixing small electronic devices is much cheaper than fixing homes.  Whenever I write up a purchase offer for a buyer of a Fresno CA home,  I almost always write in a home warranty.

Only in a very competitive sellers market may I not put anything about a home warranty in the offer, or at least asking the seller to pay for it.  When buying what will most likely be your most expensive asset you will ever purchase, you may not be too happy if you have to pay additional dollars to fix and maintain items on your property that go bad within the first few days, weeks, or months of the purchase.

My name is Jason Nenadov, bringing you knowledge and content like no other Realtor in Fresno County CA!  Let me share more about why getting a home warranty is something you should seriously consider.

My Home Warranty Representative

I’ve been using the same home warranty rep now for what seems like the greater part of the last decade.  I’ve followed her through various home warranty companies.  This is her 33rd  year in the industry and she said that before she started, Realtors® didn’t even know what they were because they didn’t exist in our area.

Her name is Susan Renaut Britter and she currently works for First American Home Warranty.  I interviewed her and asked her why a home warranty is necessary and this was her response.

“Home inspections, written disclosures, and property walk-throughs are essential for a buyer to understand the property they are purchasing.

All of those things provide information regarding the condition of the property at the time they are done, but none of them is a warranty or a guarantee that the condition of the home will remain the same for any length of time.

Even with relatively new properties, there are systems and appliances in the home that work mechanically, and those mechanics can fail at any time.

As much as we would love to have a crystal ball and see into the future as to what is going to happen to a home, we simply do not know, and a homeowner can be caught unexpectedly with the need for a repair or replacement of equipment in their home. This is what a home warranty is for, and it provides peace of mind for a homeowner whether they just purchased the home or they have been in it for years.”

My Home Warranty Experience

I had a home warranty for the first four or five years of owning my home.  I actually made money by having purchased a home warranty over those years.  Every year it seemed like something would break and the cost of the repair was equal to or greater than the premium that I paid for the warranty that year.

Near the beginning of owning our home the oven display went out.  The house and oven were about 20 years old at the time and these units were no longer manufactured.  To get the display fixed it needed to be mailed to Chicago and the wait time would have been 30 days or more before it was returned fixed.  That was too long to go without an oven.

So I chose the cash out option which was provided by the home warranty company.  The home warranty company will calculate their cost to repair or replace an item and the homeowner can choose to either have the item fixed or replaced or they can choose to be cashed out in lieu of the repair or replacement.  Since it was time to upgrade my 20 year old oven I pocketed the money that the home warranty company provided and went shopping for a brand new oven.

In a similar fashion our dishwasher broke the following year.  I chose the cash out option for that as well.  Each time I did the cash out option I put over $300 in my pocket to put towards new equipment.  I then upgraded and bought a nice Kenmore floor model dishwasher and installed it.

There was also the time that my garage door opener broke.  This time I had the technician replace the opener.  So I got a new garage door opener (motor) through my home warranty.  I paid the standard service fee of $60 or $75 dollars for the technician to come out and then received a $300-$400 brand new garage door opener installed, courtesy of my home warranty policy.

On a couple different occasions I had issues with my AC unit.  The first time I just had them fix a small issue that was preventing the AC from running.  It was a repair that was on the cheaper side, maybe $100 or so.  The second time my AC gave me problems it was a bigger issue.  Once again I chose the cash out option as my system had old refrigerant that was no longer manufactured in new units due to newer EPA regulations.

This time around, I pocketed somewhere in the range of $1,400 – $1,700 and put that towards a new larger and more efficient AC unit, Heating system and an upgraded line in between the split system.  All of those upgrades to my HVAC system only cost me around $5,000 after I applied the cash out money from the home warranty company.

When you choose the cash out option it allows you to hire whichever company or technician that you want to do the work for you and you apply the money you received from the home warranty company to your new equipment.  You are not limited to only the home warranties network of service providers.  Now I have an extra large 16 SEER AC condenser and a 95% efficiency heating system manufactured by one of the top brands available.

Susan’s Home Warranty Experience

I asked Susan for an example of an extreme case where the warranty paid out the most money.  She responded by sharing an example of the benefits of her very own home warranty on her personal residence over the  years and how much it saved her.

“I could give you example after example of cost savings, but my own personal home can give an excellent example! I have been in my home for 20 years, and have had a home warranty the entire time.

Home warranty has:

Replaced the refrigerator

Replaced the stovetop

Replaced the dishwasher

Replaced the garbage disposal

Replaced the garage door opener

Replaced the microwave

Replaced the thermostats

Replaced a toilet

Replaced a water heater

Replaced two faucets

Replaced 12 outlets

Replaced two ceiling fans

Replaced pool filterAND

Spent over $1000 on plumbing repairs

Spent $500 on spa repairs

Spent easily $7000 on my two HVAC systems

I took the time to add up the premium I have paid on my home warranty over 20 years, and the home warranty has spent far and above what I paid! I wouldn’t be without it, and I’m not saying that because I work in the industry!”

Replacing vs. Repairing

Now that I have shared my personal experience with my home warranty, as well as the experience of someone who has been in the business for 30+ years, lets look at some of the costs associated with repairing and replacing items if they cannot be repaired within your home.

This information has been taken from the First American Home Warranty flyer and it is based on actual invoices paid by First American in 2015.  Since this information is a few years old, the costs will only have gone up more than these figures simply due to inflation alone.

The technicians that are sent out by the home warranty company will first attempt to repair whatever is broken.  If it cannot be repaired or parts are not made any more then the next option is for them to replace the item.

You see how expensive these repairs and replacements can be based upon the chart provided above?  Just about all of these repair costs are higher than the cost of having a home warranty for one year.

Cost and Coverage of Home Warranties

At this point you may be all asking yourself what does a home warranty cover.  There are a few different policies that First American provides, each with different options and price points.

There is the Basic Plan which costs $295 for a year for single family homes.  The Condo/Townhome/Mobile Home price is $260.  Here is a list of what is covered in the basic plan.  I’m not going to go over items or exceptions that are not covered.  You can contact a home warranty representative for those specifics.  All of these coverages are listed in the First American Home Warranty flyer.

PLUMBING

-Pressure regulators -Circulating hot water pump -Whirlpool bath motor, pump and air switch assemblies -Permanently installed sump pumps (ground water only) -Valves: shower, tub, diverter, riser, angle stop and gate valves -Leaks and breaks of water, drain, gas, vent or sewer lines (except caused by freezing) -Toilet tanks, bowls and mechanisms (replaced with white builder’s standard as necessary)

PLUMBING STOPPAGES

-Clearing of stoppages in sink, tub, shower drains and toilets up to 125 feet of point of access.

HEATING

-Heat pump-Heat elements-Radiators-Gas, electrical, oil furnaces-Gas valves to furnace-Thermostats-Baseboard convectors-Heat pump refrigerant recharging-Hydronic circulating pumps

WATER HEATER

-All parts except the holding tank, flues, vents, fuel storage tanks

ELECTRICAL

 -Wiring-Junction boxes-Conduit-Circuit breakers (including ground fault)-Panels and sub panels-Plugs-Switches and fuses-Telephone wiring

KITCHEN APPLIANCES

-Dishwasher-Garbage Disposal-Trash Compactor-Instant Hot Water Dispenser-Oven/Range/Cooktop-Microwave Oven (built-in only)

GARAGE DOOR OPENERS

-Switches-Motor-Receiving unit-Push arm-Capacitor-Track assembly-Carriage Then there is the Value Plus home warranty for $425 for SFRS and $375 for Condo/Townhome/Mobile Homes.  This covers everything in the basic plan plus central air conditioning systems and what is called First Class Upgrades (I won’t detail what that includes here).  Then there is a list of optional coverages which can be added to any plan for a fee per item.

POOL/SPA EQUIPMENT

$170 -Salt water cell-Circuit board-Pumps-Timers-Filters-Pump motors-Heating units-Pool sweep motor and pumps-Valves-Above ground plumbing and electrical

KITCHEN REFRIGERATOR

$50(limit up to $5,000) -motorized parts

CLOTHES WASHER AND DRYER

$80 -motorized parts

WELL PUMP

$85

SEPTIC TANK PUMPING/SYSTEM

$75 -One time pumping per contract-Jet pump-Aerobic pump-Sewage ejector pump-Septic tank line from house to septic tank

SEWAGE EJECTOR PUMP

$35 -All parts not associated with operation of septic tank

LIMITED ROOF LEAK

$100(Limit up to $1,000) -Leaks caused by normal wear and tear as long as roof is water tight at time of contract purchase Wow, that is quite an exhaustive list of items that a home warranty will cover!The list is not everything that is covered but the majority of items that are covered by the First American Home Warranty.  There are exceptions to most of the items covered.  A home warranty is like an insurance policy and it is not designed to cover items that are already broken or malfunctioning.  So the items covered in a home warranty need to be in operational order at the time the policy is purchased in order for those items to be covered. The First American flyer goes on to say “This contract provides coverage for unknown defects if the defect is not detectable through visual inspection or simple mechanical test.  Items include malfunctioning systems and appliances due to lack of maintenance, rust, corrosion and chemical or sedimentary built-up.” Often times when people sell their homes they are planning to buy a move up home or a bigger and more expensive Fresno CA home. The majority of homeowners are on tight budgets and don’t have excessive amounts of discretionary income.

Susan Renaut Britter had this to say about home warranties and how they can benefit sellers too.  “Most of the time when home warranties are discussed, it is for the first year after close of escrow for the buyer.  A home warranty can also offer what is called “seller’s coverage” for the property prior to the close of escrow. This coverage can begin any time prior to the close of escrow and provides the same peace of mind to a seller that a buyer can experience.

Because things can break down at any time, it might be when a home is listed and on the market, or it could be in escrow.  This type of coverage is sold by the day, is not paid for up front, and is only paid at the successful close of escrow, which is a wonderful feature for a seller!”

For less than a dollar a day a seller can order a home warranty policy and not pay a dime unless their house sells.  This comes in very handy since selling a home is very expensive once you add up the realtor fees, escrow, and title fees and any other repair fees that a buyer may negotiate. Having to pay additionally hundreds and maybe thousands of dollars to fix or replace a mechanical system on the property could be a huge burden to a seller.  That is why sellers should consider getting a home warranty when they are ready to sell their home if they don’t already have one in place.

The Bottomline

No, a home warranty is not a lottery ticket where you can make exuberant amounts of money.  However, I’ve seen them more than pay for themselves in my 14 years of being a licensed real estate agent and broker. I hope this causes you to ponder and see if a home warranty is something that could benefit you.  These warranties are complex and this article only shares a fraction about what they can and can’t do.  For more detailed information please call Susan Renaut Britter at (559) 269-9191. My name is Jason Nenadov, your trusted Realtor in Fresno County CA! I would be happy to assist you with all your real estate needs. Call me now at 559-246-8991.

In case you can not view this video here, please click the link below to view   Why You Should Consider Getting a Home Warranty When Buying or Selling a Home in Fresno CA on my YouTube channel: https://youtu.be/8DKKnIkiIgw.