Home sellers hoping to close a deal sometimes agree to purchase home warranties to give their buyers peace of mind.
Prospective homeowners, however, should do their homework to make sure the policies, which typically cover the major mechanicals and appliances in a home for one year after the sale, will actually help, say consumer protection experts.
The warranties generally range in price from $350 to $800. If purchased from reputable companies, they can help homeowners deal with broken appliances, malfunctioning air-conditioning and other problems, the experts say. The policies direct homeowners to contact the service company when something breaks. The company then sends out a repairman who provides an evaluation for a set fee, usually about $50 to $75. Once a professional has determined what the problem is, the warranty company pays for repair or replacement.
But homeowners may dislike transferring that decisionmaking power to a third party, said Angie Hicks, founder of Angie's List, the national consumer-rating service based in Indianapolis. Users of home-warranty or home-service companies have been the least satisfied group of reviewers on the site for the past six years, she said.
Homeowners oftentimes expect the companies to replace the item and are disappointed to learn it's going to be repaired, added Bob Miller, president-elect of the Ohio Association of Realtors in Columbus.
It wouldn't be economically viable to replace furnaces, washers and garbage disposals that can be repaired, said Art Chartrand, spokesman for the National Home Service Contract Association in Olathe, Kan.
Homeowners may end up surprised by the details of their policies because the contracts are often bought as closing gifts, so the person using the service is not the one who bought it, Hicks said. That means the user did not have a chance to research the company and carefully evaluate the policy before it was purchased, she said.
Sheila Adkins, a spokeswoman for the council of Better Business Bureaus, in Arlington, Va., recommends researching home-warranty or home-service contract providers before making an offer on a house. When it's time to buy, ask for a home warranty to be included by name in the offer, she said.