Silicon Valley Real Estate

Are you considering purchasing a home warranty for your Silicon Valley home? Most transactions in Santa Clara County do include the offer, by the seller, to buy a home protection plan for the buyer. The home warranty gives the buyer and seller both ˜peace of mind regarding any surprises after the close of escrow. It is a one year policy, so at the end of that year, the homeowner may want to renew it or purchase a new policy.

How do you make the best selection for your needs?

Its a good idea to get some basic information on plan coverage generally. The Home Warranty Association of California provides useful information on this subject. The link is http://www.warrantyassn.com/hwac/about_hwac.htm. Request brochures (or read them online) from a few of the companies listed below. There will be some differences in coverage, cost, and co-payment.

Member firms of the Home Warranty Association of California are:

• American Home Shield Corporation   www.AmericanHomeShield.com
• Buyers Home Warranty Company   www.BHWC.com
• Fidelity National Home Warranty Company   www.HomeWarranty.com
• First American Home Buyers Protection   www.HomeWarranty.FirstAm.com
• HISCO Home Warranty Co.   www.HiscoHome.com
• Old Republic Home Protection Company, Inc.   www.ORHP.com
• 2-10 HBW Home Buyers Warranty   www.2-10.com

What are some things you should consider when purchasing a home warranty in Silicon Valley?

(1) Like in other industries, some of these companies may be connected to each other or owned by a parent firm

(2) Some companies have better ˜track records than others. Realty Times did an article on this a few years back (http://realtytimes.com/rtcpages/20030115_haddreport.htm) .suggested  that the last warranty on this list has had some issues in the past. (2-10 HBW)

(3) If youd like to interact with other consumers, there are two chat groups online where you can discuss home warrantys further: www.hadd.com and www.hobb.org 

(4) Ask your Realtor, or people who have recently bought homes what their experience has been like with home warranty providers.

(5) My own provider of choice is Old Republic. I find that their service providers call in a decent amount of time and the coverage is good.

Whats the cost of a Home Warranty in Santa Clara County?
 
There are two main types of coverage,  Sellers and Buyers, and under the Buyers category there are sometimes sub- types of coverage (or add-ons) available .

Sellers Coverage :  Home warranties can be purchased for the escrow period (from the time the listing is signed to when it closes escrow and title is transferred). This is called  Sellers Coverage (the seller still owns the property). The cost is usually minimal - less than a dollar a day - but the coverage is normally not as extensive as buyers coverage (for after escrow is closed).

Why get sellers coverage? Sometimes things break before the home transfers title (dishwasher, disposal etc.) - these sort of items are usually fully covered (except for a small co-pay) by sellers coverage. Often there are big-ticket-item surprises when the inspections are done, though. For example, if its discovered during the home inspection that the furnace has a cracked heat exchanger, the seller will usually be stuck having to pay for a new heater. It will be about $2200 to replace most units, and it must be done (as a cracked heat exchanger can cause carbon monoxide poisoning.   With sellers coverage, many home warranty policies will cover $500 of this cost. The cost of sellers coverage is usually well under $100 and  provides good peace of mind for the ˜what ifs of the inspections. It may not always cover everything, but the seller will have saved money by having the warranty if something like this is discovered. (For this reason, I provide a sellers coverage on a home warranty with ALL my listings when my seller client agrees to providing buyers coverage for the purchaser)

Buyers Coverage: A Buyers Warranty usually ranges between $300 and $700, depending on the type and size of property (condo/townhome vs single family dwelling, the amount of square footage) and the amenities covered (it usually costs more to include air conditioning, a hot tub, etc.). It lasts for a year, from the time the home warranty company is paid (or close of escrow, check each company to verify).  There are many possible ˜add ons - some of which might be a very good idea for you to consider purchasing! If that cracked heat exchanger discovery is made during the buyers coverage, the home warranty company  may cover all of it.

On average in the US, for every home warranty purchased, there are between 1.7 and 2 service calls made - so homeowners with these warranties are making good use of them!

How Comprehensive Is Your Home Warranty?

Probably the most important thing for the consumer to know is how comprehensive the policy is. Read the document - and ask the sales rep ˜what isnt covered?  Also check to see if the policy includes the full replacement cost for appliances and other items.

Are you buying an older home? If so, an important aspect to know is whether ˜code compliance is included or not. For instance, imagine a 60-80 year old house in a lovely old section of San Jose. If the water heater was installed in a small closet and ends its useable life, it must be replaced - but cannot go back exactly like it was before!  The city of San Jose will require that it get a permit (and a final) for for that, it must be placed on an 18 platform, be strapped to todays standards, and so on. Even more, moving that water heater will mean also moving some plumbing around.  That can be expensive!  Standard  home warranties cover part of this job, but will not include these costly code compliance issues. However, many home warranty companies have additional coverage available (at a cost, of course) that includes code compliance. I highly recommend this for homes that are more than 30 or 40 years old! It may be called something like ˜Premium Coverage.

What is usually covered by a home warranty policy?

Plumbing - mostly in or under the home, but not beyond the foundation. Leaks from rust are often not covered too - will not include roto rooter type work or sewer lines.
Electrical Systems - when things were working but stopped doing so
Water Heater again, consider code compliance if a replacement is needed
Furnace   or other types of heating - radiant heating may not be covered by most providers
Air Conditioning - is usually an add-on option, but may be covered by some policies
Heating Ducts often not covered if the ducts have been lying straight on the earth and get rust
Water Pump
Kitchen Appliances such as the Dishwasher, Disposal, Oven, Stove etc. are usually included 
Refrigerator, Washer and Dryer may be an extra charge for coverage as its ˜personal property
Swimming Pool, Spa/Jacuzzi/Hot Tub - not covered by regular policy but may be an ˜add on

Foundations and roofs are not usually covered, but check!

Related Posts