by Ken Miller
09/18/2006
In all the excitement of moving into a new home and the blizzard of paperwork that comes with it, it’s important to keep track of all the warranties for the myriad appliances and gadgets that come with the house.
But besides the warranties for such things as your new refrigerator, range, microwave, and everything else, industry experts caution against ignoring the most important warranty of all – the one on the house itself.
“Most builders carry a one-year warranty on homes,” said Wendy Rhodes of Holton Homes in Nampa. “We do an 18-month warranty. It has been a selling point for our homes and it encourages buyers.
“Most of the time,” Rhodes said half-jokingly, “if something’s going to happen to a home, it happens in month 13.”
Home builders, real estate agents and consumer protection groups say home warranties generally aren’t complicated, but they can vary dramatically in terms of what they cover, how long they cover it, and the overall hassle factor in resolving issues that can arise with new homes.
One-year builder warranties on new homes are the industry standard, although some builders, such as Holton, find extended warranties an attractive lure for buyers.
In the case of existing homes, warranties are almost always recommended. Sellers like to include them as a plus in attracting buyers; buyers typically demand them whether they pay for them or not. Often, the seller and buyer will split the cost of a one-year or 13-month warranty on an existing home.
Beyond the standard warranty is an array of additional products that cover problems out to 10 years or more.
Just because a home is new doesn’t mean it’s less prone to leaks, cracks or other headaches. In fact, new homes are more likely to develop problems related to settling than older ones.
So how do you know how much warranty is enough, and whether you should consider buying additional insurance to cover problems after the warranty expires?
For starters, basic problems such as foundation settling and wall cracks, basement leaks and electrical and plumbing flaws are generally covered during the life of your 12- or 18-month builders warranty. When that warranty expires, the builder is generally only liable for significant defects in the home, and even that can be up to dispute. That’s why many buyers opt for additional insurance products that generally run $300 to $400.
“When people are getting ready to purchase a home, they should always make sure they get an inspection done,” said Beve Bryant of the Better Business Bureau in Boise. Bryant said inspectors can identify existing problems in new or older homes, but they can also warn buyers of issues that may turn into problems later on.
Beyond the standard new-home warranty, “in buying an insurance policy, know who you’re dealing with,” Bryant said. “The obvious thing people tend to forget is to check out their reliability report online at our Web site.”
A quick stop at the Idaho BBB Web site at www.askbbb.org can help home buyers check out a home warranty company’s history, among other things.
“It’ll tell you how long they’ve been around, if they’ve had any complaints, what the complaints were about, and how they took care of them,” she said. “Having a complaint isn’t necessarily bad; that’s part of being in business. How they deal with it is more important.”
Real estate agents should also be considered a resource in helping home buyers determine whether the standard warranty that comes with a house is sufficient, or whether it’s a better bet to purchase additional coverage for problems that crop up after that critical first year.
“The builders give a one-year warranty usually, and within that one-year warranty they pretty much take care of most tings,” said Chris Findlay at Holland Realty. “They don’t do paint touch-up and that kind of thing. Some will do house-settling issues, but some don’t do any of that.”
Findlay recommends obtaining a copy of the warranty in advance and studying it closely before buying a home so you’ll know in advance whether the coverage meets your comfort level.
Problems, especially with new homes, are almost inevitable, he said. It’s how the builder handles them that makes the difference, and that’s why it’s a good idea to ask the builder for references from prior customers to attest to how the builder resolved any problems.
“But it’s not the first year that’s the problem,” Findlay said. “You want the builder to be really on the hook for the first year. That first-year stuff should be taken care of by the builder, and if you have a Realtor, that’s part of our job.
“I’m always in contact with the buyer’s agent when they have a problem. And I’ll tell the buyer, if you can’t get hold of your Realtor or the builder, then call me. The quicker you can get it nipped in the bud, the better.”
Back at Holton Homes, Rhodes said her company sends customers a letter nine months after the new home sale to schedule an appointment to check the house for any problems. Holton does the same after 18 months, at the end of the standard warranty.
Holton also provides a 10-year structural warranty that covers such things as cracks from foundation settling, she said.
“Before we close, we have a final walk-through,” Rhodes said, noting that Holton also provides home buyers with a list of all subcontractors who worked on the home, so owners can reach the subs directly for such problems as a plumbing issue.
Just in case, Holton has an employee who does nothing but warranty work on the company’s houses, she said.
“Some companies take longer to get out to you,” said Holland’s Findlay, adding local companies such as First American Title that offer additional home buyer’s protection plans are good bets because they’re easily accessible.
Findlay said home buyers should be aware that if they buy additional coverage such as a 10-year warranty, that policy should be scrutinized because the coverage may diminish over the life of the warranty.
Warranty tips
For those in the market for a new or existing home, here are some tips from industry experts on what to look for and what to ask in looking for home warranty protection.
• First and foremost, determine what the warranty covers. New homes should come with standard one-year warranties; some 18 months or more. These warranties should cover such essentials as appliances but more importantly the home’s plumbing, heating and cooling, electrical and other systems. For existing homes, warranty policies that last 12 or 13 months typically cover these major mechanical systems, but also major appliances that come with the home.
• Those buying policies for existing homes should also make sure they know exactly what’s covered, particularly for such things as a swimming pool or septic tank or even roof problems.
• In the case of existing homes, warranties are popular both among buyers and sellers. Since the builder’s warranty has lapsed on an existing home, sellers often find including a warranty with the home an attractive addition in the package. In some cases, buyers of existing homes split the cost of a warranty product with the seller. Regardless of which side of the transaction you’re on, it’s worth asking your real estate agent about.
• If you buy additional home warranty insurance, what are the deductibles? Who will you call if something goes wrong? Can you have the problem fixed and submit the bill, or must you clear it with the warranty company for them to send someone to help? Know how the problem will be addressed.
• Buyers of existing homes should always have the home inspected, which is typically required regardless by the lender. That inspection should flag the kinds of problems that may arise down the road. Increasingly, new-home buyers are also paying for an inspection just to be safe.
• For new-home buyers, make sure to keep all your warranties for such things as appliances and whatever else comes with protection together. This warranty protection lasts beyond the life of your builder warranty, but you generally need to contact the manufacturer to resolve complaints.
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