As a realtor, you've likely encountered various opinions and misconceptions about home warranties. These service contracts can be valuable tools in your arsenal, but misinformation can deter clients from considering them. Let's debunk some common myths about home warranties to help you provide accurate guidance to your clients.
Myth 1: "Home warranties are just another form of insurance."
Truth: While both offer protection, home warranties and homeowners insurance serve different purposes. Insurance typically covers damage from unexpected events like fires or natural disasters. Home warranties, on the other hand, cover repair or replacement of home systems and appliances due to normal wear and tear.
Key Differences:
- Coverage: Insurance protects against sudden, accidental damage; warranties cover normal deterioration.
- Requirement: Lenders often require homeowners insurance; warranties are optional.
- Cost Structure: Insurance involves premiums and deductibles; warranties have annual fees and service call fees.
Understanding this distinction helps clients see how warranties complement, rather than replace, their insurance coverage.
Myth 2: "Home warranties cover everything in the house."
Truth: Home warranties provide valuable coverage, but they're not all-encompassing. Standard plans typically cover major home systems (HVAC, electrical, plumbing) and appliances (refrigerator, oven, washer/dryer). However, they usually don't cover:
- Structural elements (foundations, walls)
- Pre-existing conditions
- Cosmetic issues
- Damage from lack of maintenance
It's crucial to review the specific terms of each warranty plan with your clients. Many companies offer additional coverage options for items like pools, spas, or guest units for an extra fee.
Myth 3: "Home warranties are too expensive."
Truth: While there is a real cost associated with home warranties, they can often save homeowners money in the long run. The average annual cost of a home warranty ranges from $350 to $600, with service call fees typically between $75 and $125. Their main purpose is to spread out the cost of expensive repairs over the course of the warranty term rather than suffer often inconvenient and unpredictable expenses.
Consider this: replacing a central air conditioning system can cost $5,000 or more. A home warranty costs $500 annually and can cover up to $1,500 dollars, instantly recouping the money spent on the warranty while still protecting appliances! For many, especially those with older homes or appliances, the peace of mind and potential savings outweigh the costs.
Myth 4: "New homes don't need warranties because everything is already covered."
Truth: While new homes often come with a builder's warranty, these typically last only 1-2 years and may have limited coverage which often does not overlap with components covered by the warranty. Home warranties can also provide extended protection after the builder's warranty expires.
Additionally, manufacturer warranties on new appliances often cover only specific parts, and no or limited labor costs. A home warranty can fill these gaps, providing more comprehensive coverage.
Myth 5: "Filing a claim is a long and complicated process."
Truth: Most home warranty companies have streamlined their claim processes. Many offer 24/7 customer service and online claim filing. The typical process is straightforward:
- Homeowner files a claim and pays deductible (some may not have a deductible)
- warranty Company assigns a service technician
- Technician diagnoses the issue
- Repair or replacement is completed
- Payment is reimbursed or the technician is paid by the company directly
While response times can vary, many companies pride themselves on quick service. It's important to set realistic expectations with your clients and encourage them to read carefully read their terms and conditions.
Myth 6: "Home warranties are only beneficial for older homes."
Truth: While older homes with aging systems and appliances can certainly benefit from warranties, newer homes can too. Unexpected breakdowns can happen at any time, regardless of a home's age. For new homeowners who may have depleted their savings on the down payment, a warranty can provide financial protection against unexpected repairs.
Myth 7: "You can't choose your own repair technician with a home warranty."
Truth: While it's true that many home warranty companies work within their own network of technicians, some do allow homeowners to choose their own service providers. This option may come with additional steps or costs, but it provides flexibility for homeowners who prefer to work with specific professionals or who live in areas with limited network coverage.
Myth 8: "Home warranties aren't worth it because they always find reasons not to cover repairs."
Truth: Like any contract, home warranties have terms and conditions. Denials can happen if:
- The item wasn't properly maintained
- The issue was pre-existing
- The item isn't covered in the plan
However, reputable warranty companies honor their commitments. To avoid disappointment or delays, advise your clients to:
- Read the contract carefully
- Understand what is and isn't covered
- Maintain their home and appliances properly
- Keep records of maintenance
Doing these can save a lot of headache when filing a claim.
Myth 9: "Sellers don't benefit from offering a home warranty."
Truth: Including a home warranty in a home sale can be advantageous for sellers:
- It can make the property more attractive to buyers
- The purchase price of the home can be adjusted for the added benefit
- It may help the home sell faster
- It can provide post-sale protection against buyer complaints about appliance or system failures
For you as a realtor, suggesting a warranty can demonstrate your commitment to both the seller's and buyer's interests.
Myth 10: "All home warranty companies are the same."
Truth: There can be significant differences between warranty providers in terms of coverage, cost, service quality, and claim processes. Encourage your clients to research and compare different companies. Factors to consider include:
- Coverage options
- Cost and deductibles
- Customer reviews and ratings
- Claims process and response times
- Contract terms and limitations
Responsibility to Inform
As a trusted realtor, you can help your clients navigate the world of home warranties by:
- Educating them on the basics of how warranties work
- Addressing common misconceptions
- Encouraging them to read and understand warranty contracts
- Helping them see the potential value in relation to the home's age and condition
- Providing resources for comparing different warranty companies
Remember, while home warranties aren't perfect for every situation, they can provide valuable protection and peace of mind for many homeowners. By debunking these common myths, you can help your clients make informed decisions about whether a home warranty is right for them.
Ultimately, the goal is to ensure your clients feel protected and satisfied in their new homes. Understanding the truth about home warranties is one more way you can add value to your services and build long-lasting relationships with your clients.
OnPoint Warranty is a Different Kind of Home Warranty Company:
OnPoint Warranty was launched in 2018 by tenured and respected experts in service and warranty.
Our Whole Home Warranty products offer comprehensive, low deductible warranty protection for appliances, HVAC, plumbing and electrical systems, utilities and more, within and adjacent to, a home’s four walls.
Fully underwritten, 50-state whole home plans, available to realtors and property managers, home and auto warranty companies, builders and affiliates, improve market share across the US, while increasing renewal rates based upon excellent warranty service experiences administered by OnPoint.
Our white-labeled and branded whole home warranty plans can be offered during the listing period, at the closing or post-closing, seamlessly, reducing administrative costs for realtors, while increase closing rates and commissions, reducing unexpected repair costs for buyers.
fixHomz also provides realtors with real long-term revenue through high plan renewal rates driven by our best-in-class homeowner service experiences with OnPoint!
