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Old 05-12-2017, 12:57 PM
 
Location: North State (California)
35,513 posts, read 2,675,359 times
Reputation: 11596

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We had one & it was useless, you had to call them to make an appointment for an estimate. They get to pick who they send out, & of course, in out case, the broken a/c was not covered, I can't remember the details, but it annoyed the heck out of me, we had to pay the call out fee & some labor, & I think it would have been cheaper to call a more local repair person out. We cancelled it, as soon as we could. In our most recent home purchase, the agent wanted us to buy one, but we declined. A woman in her office was elling them & I definitely got the feeling, that there was some kind of commission involved.
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Old 05-12-2017, 01:13 PM
 
Location: Just south of Denver since 1989
10,822 posts, read 29,069,991 times
Reputation: 7016
I have sold lots of houses with warranties and without.

I bought a home warranty for my house when I bought - they replaced the furnace 5 months later, renewed it and replace the garage door opener ten months later.

Last October, the water heater went out on my listing replaced for $60. A/C was repaired after the sale $2500 for the Buyer.

It's the Buyer's choice to ask for the Seller to pay in the contract. It is the Seller's choice to offer one when the property is listed.

Any kickbacks must be approved by the client in writing. It's not offered, so it's not disclosed.
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Old 05-12-2017, 01:51 PM
 
Location: Columbia, SC
9,011 posts, read 17,847,365 times
Reputation: 6567
Quote:
Originally Posted by Jardine8 View Post
My general feeling about the subject (even without really being all that well-versed on home warranties and real estate) as a first-time buyer is that the majority of the time they have to be bad deals for the customers, just like virtually all warranty/extended warranty products.


The very nature of the warranty/extended warranty business is that the companies offering them have crunched the numbers and know what they need to charge the customer in premiums in order to make a profit (ie payout less in services to the customer than they receive in monthly premiums from the customer). They have people that almost certainly do nothing other than crunch the numbers behind the warranty deals to ensure that they win the vast majority of the cases. Sure, you will hear some stories here (and elsewhere) from people who think they got a good deal and avoided a major expenditure for a water heater or HVAC or dishwasher but those people are pretty much always going to be in the minority because the warranty company couldn't be profitable and stay in business otherwise if this was happening all that often (ie paying out more in services/repairs to a customer than they receive in premiums from that customer).


It basically is a calculated bet between the warranty company and the homeowner concerning who will win the deal; the warranty company is going to win the vast majority of the time because they are the experts and have done the math behind these deals. They wouldn't stay in business and even begin to offer the warranty deals unless they were pretty confident that they were going to win the deal. I would guess at least 80 percent of the time the homeowner ends up on the losing end of the deal (ie pays more in premiums than they receive in services). The part that baffles me is why I see realtors in my area advocating home warranties. A realtor (a buying agent in these cases) are supposed to be advocates for their clients (their buyers in this case) and look out for their best interests but they aren't doing that if they are really suggesting that their clients purchase a home warranty (and some of them are). The math behind the deal says that they are bad deals for the homeowner/buyer the vast majority of the time. It makes me want to not do business with the realtors in my area who are suggesting home warranties to their clients.
I'm probably somewhat uniquely qualified to comment on this since I'm an office owner and have to look at liability and we also require them on the rental properties we manage.
1-As an agents for liability reasons we have to offer them. Example-Bob buys a home and 6 months later his AC fails. Bob finds out a warranty would have covered repair or replacement but his agent never told him a bout warranties. Bob sues the agent for the cost of the new AC because Bob certainly would have gotten a warranty had he know about them.
2-Because of people like Bob I require that if the client declines a warranty they sign the form declining coverage. That way Bob can't come back later and say he wasn't offered a warranty. (And yes, those lawsuits have happened.)
3-We place warranties on the rental properties we manage. I'd say somewhere between 33-50% of the warranties recoup the cost. We use them in case of catastrophic failures of expensive parts such as HVAC or water heaters. Most owners of rentals can't afford a huge bill to replace an expensive item.
4-It's a bad deal for owners that don't recoup the cost but it's a good deal for those that do.
5-FWIW, I keep warranties on my personal home and the rental properties I own so practice what I preach. Again, not for nickel and dime stuff but for catastrhophic and expensive failures.
6-I suggest the upgraded policies as they remove many of the exclusions that cause denials on base policies.
7-Most owners never ever use their home insurance policies. Does that make home insurance a ripoff or a wise investment?
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Old 05-12-2017, 02:04 PM
 
1,312 posts, read 977,020 times
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Quote:
Originally Posted by Brandon Hoffman View Post
.
7-Most owners never ever use their home insurance policies. Does that make home insurance a ripoff or a wise investment?


Home Insurance is basically required by mortgage lenders, so it is kind of an apples-to-oranges comparison. I view auto insurance as a bit of a ripoff, as I am paying money to an insurance company because I am legally required to have coverage, even though it is basically a certainty that my auto insurance company will receive far more from me in premiums over my lifetime than they will ever have to pay out in auto claims. Even if I could legally drop auto insurance, I would probably keep it at a bare minimum level just to try to keep some moneygrubber from suing me in the event a wreck occurred.


I will probably view home insurance in the same light once I get it and get a little more familiar with what it does and doesn't cover, as well as seeing what it costs me each month.

Last edited by Jardine8; 05-12-2017 at 02:12 PM..
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Old 05-12-2017, 02:16 PM
 
Location: Raleigh
7,857 posts, read 5,823,134 times
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Just about any extended warranty product (or insurance) is a "rip off" in that it doesn't pay for itself. How else could any of the companies stay in business? Even auto insurance, I'm sure if you added up your annual premiums and deducted what was paid in claims, most people would come out on the short end of that deal, especially on a 20, 30, or 40 year timeline.

I think realtors push them because they don't like to be the ones that tell homeowners to pound sand after the AC breaks a week after they bought the house.

People fall in love with a house, or at least become satisfied that a house is good and shouldn't have major issues for awhile, but when something does happen, especially in that first year, they feel entitled and that someone else should shoulder some of that cost. Its no different than when you buy a used car and a week later the check engine light comes on, if it happens within a certain time period (an arbitrary time period completely of the buyers own invention) they feel that the seller or those otherwise involved in the transaction should be partly responsible.
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Old 05-12-2017, 03:49 PM
 
Location: Columbia, SC
9,011 posts, read 17,847,365 times
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Quote:
Originally Posted by JONOV View Post
...
I think realtors push them because they don't like to be the ones that tell homeowners to pound sand after the AC breaks a week after they bought the house.
....
Lord knows if something is going to break it's either right before or right after a closing.
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Old 05-12-2017, 04:07 PM
 
Location: Saint John, IN
10,962 posts, read 3,758,281 times
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Here in the Chicagoland area you mostly see the sellers offering a one year home warranty with the sale of their home. Instead of buying one yourself you could ask the sellers to include one. And let me add if the oven or fridge dies after 6 months you'll be happy you have it! When we sold our home last year we offered one to the buyers. If something needed to be repaired a serviceman would come out to the buyers for one year. If it couldn't be repaired they would replace it with new. Personally I suggest it! Inspectors don't catch everything and most likely will not even know if an appliance is on it's last leg!
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Old 05-12-2017, 07:03 PM
 
879 posts, read 618,081 times
Reputation: 883
Quote:
Originally Posted by MikeJaquish View Post
I took the kickback one time.

Referral deal, and I got a no-kickback warranty for my buyer.
With the $70 kickback out of the price, the referring agent got involved and demanded that I buy a more expensive warranty because she had never seen one that cheap.
Pushed me to the company she used, and there was no online option to decline the kickback.

Rather than rock the boat, I ordered the warranty and pocketed the cash. Yeah, it sucked.
This was before that particular kickback was eliminated.
Clarify this "kickback" arrangement. My understanding is anything of value received must be commensurate with the service provided. Anything in excess, is a "kickback" and is illegal under respa. I enjoy reading your comments. I can tell you are knowledgeable, experienced and understand your craft.
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Old 05-12-2017, 07:11 PM
 
Location: Cary, NC
32,836 posts, read 57,217,058 times
Reputation: 31640
Quote:
Originally Posted by SCguy81 View Post
Clarify this "kickback" arrangement. My understanding is anything of value received must be commensurate with the service provided. Anything in excess, is a "kickback" and is illegal under respa. I enjoy reading your comments. I can tell you are knowledgeable, experienced and understand your craft.
These were "commissions" and openly offered before RESPA.

It was pretty nuts, IMO.

And, thanks for the kind words!
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Old 05-12-2017, 08:12 PM
 
Location: Georgia
4,548 posts, read 3,978,785 times
Reputation: 15726
Personally, I would never get one.

I'd let my buyer know that they were available, but as far as encouraging them to buy one -- no. Sometimes, if the buyer and seller disagree on items to repair, etc., during due diligence, having a seller pay for a year's warranty will give the buyer a little peace of mind. It sometimes gets thrown into price negotiations, too, that the seller provides one.

But to go out and actually buy one? Eh. I've never gotten a kickback for one -- one offered to send me a "bonus" if I spent an hour filling out a two page systems inventory, including the serial number and year of manufacture of every appliance, HVAC unit, etc. Yeah -- not gonna happen.

We had one seller who had a "sellers warranty" that several companies offer free while the home is listed. She had a plumbing problem. The plumber the home warranty company sent was a complete joke, said the entire floor/ceiling (2nd floor bathroom) would have to be removed (a 100 year old historical house), and while he was writing up his "estimate", he got chatty and said that it probably didn't matter, because the home warranty company was probably going to find a reason to deny it, anyway. "They hardly pay ANYTHING that I've ever given an estimate on." We found a plumber with experience in historic homes and plumbing, and the entire job was $350, instead of the $5,500 the HWC's plumber estimated.
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