Everything You Need to Know About Home Warranties

What is a Home Warranty?
A home warranty is a service plan that protects a homeowner when their major mechanical systems and appliances break down, saving them from high repair costs. Home warranties are available on residential homes for both new construction and existing homes.

What it’s NOT:
Some people might get confused between a home warranty plan and a homeowner's insurance policy, but homeowners insurance is required by your mortgage company and covers your home and personal property in the event of an accident, fire, flood, or major system failure. Homeowners must maintain a homeowner's insurance policy, while a home warranty is optional.

How long does it last?
Home warranty service agreements can vary, but most last for a term of a year or sometimes more. Home warranties can be renewed.

What does it cover?
Home warranties cover normal wear and tear on a home’s systems and appliances.

Most new-home warranties furnished by builders cover the heating, ventilation and air conditioning (HVAC) systems of your home. These warranties also cover windows, plumbing, and electrical systems for workmanship and materials, but not the total replacement. Siding, drywall, paint, trim and stucco are also usually included.

However, one distinction to remember is that these MUST be in good working order when you sign the agreement with the warranty company, or else they are not eligible for repair. Most plans are customizable, so make sure to review your agreement before you sign it and ask plenty of questions to ensure that you're adequately covered.

What is NOT covered:
Consumers should be aware that standard home warranties don’t cover new home appliances. Unlike homeowners insurance, home warranties won’t cover the cost of staying in a hotel if you can’t stay in your residence (for instance, if a heater goes out in winter, your water heater causes a flood, etc.). Small breaks and defects like cracked tile, a scratched appliance, etc. are not covered, either.

The cost of a home warranty:
Home warranty policies range greatly based on the company, the level of coverage, the deductible, and the term. Most home warranty plans fall between $250 and $600 annually.

You’ll pay a deductible when you make a claim.
Any time you file a claim with your home warranty company, you’ll be required to pay a deductible, ranging from $50 to $100 per incident.
Different levels of coverage:
There is no one universal home warranty policy, so you’ll want to pick the level of coverage that best fits your needs. Basic coverage usually covers your furnace, A/C, and major appliances, while upgraded plans cover far more appliances and systems, albeit at a greater cost.

How does it work?
When an appliance or system in your home malfunctions due to normal wear and tear, the homeowner will call their warranty company and register a claim. The warranty company will then arrange for a contractor or repairman to come out to diagnose the problem and make the needed repairs or replace them all together.

Do age and condition matter?
As long as your systems and appliances were in good working order at the time you entered into the home warranty agreement, it won’t matter how old they are.

Home warranties also can help home sellers?
Home sellers can also purchase a home warranty plan and include it in the sale, transferring it to the new buyer. Studies show that homes that include a warranty sell 16% faster than homes that do not, with an average of 66.5 days on the market compared to 55.5, respectively. Homes for sale that offer a home warranty also sell for an average of $2,500 more than those without one!

Who does the repair work?
In the event of a problem, your home warranty company will ask you to submit a claim, at which time they will supply their own approved contractor to do the work. These contractors are often on their list due to pre-arranged discounts, so make sure to ask questions and get in writing that the quality of work, schedule, materials used, etc. won't be compromised.

The most common home warranty repairs:
28% Pool, pest, roof, etc.
26% HVAC (heating and air system)
22% Plumbing
13% Appliance
7% Rekey locks
4% Electrical

Customer satisfaction with home warranties isn’t a strong point.
Unfortunately, many consumers are caught unaware when things break in their home, but they aren't covered in their home warranty. Common customer gripes include the abundance of documentation the warranty company requires, the amount of reimbursement, and the fact that some items aren't included, and some claims denied.

It's always best to thoroughly review all agreements and ask plenty of questions before you pay for a home warranty, as well as keeping all receipts, documentation, and paperwork in case of an issue or dispute.

Should you get a home warranty?
Research shows that if your home new construction and homes less than ten years old, the chance of your appliances or systems failing is extremely small, rendering a home warranty an unneeded expense. However, for homes that are older than ten years and especially those with older big-ticket systems like HVAC, home warranties offer great assurance and save homeowners a lot of money.

The 15 most common problems reported in home inspections

When you’re buying or selling a home and the purchase agreement is freshly signed and you’re officially in escrow, things move fast. But it all comes to a head for one seminal event that could make or break a real estate transaction - the home inspection. In fact, home inspections (along with the appraisal and seller disclosures) are like a big flashing yellow right in every deal, with the buyer not feeling comfortable to move forward (by removing contingencies) until a full home inspection report is on hand – and usually the seller addressing any major fixes that need to be done.

Just how important are home inspections to buyers? An annual American Society of Home Inspectors reveals that 88 percent of respondents say home inspections increase their confidence about the condition of the property, 72 percent of U.S. homeowners said that a home inspection helped them avoid potential problems when they bought their home, and 64 percent of homeowners said they saved a lot of money as a result of their home inspection.

But home inspections don’t have to be nerve-wracking or a stumbling block to a home sale closing as planned. To avoid any unwanted surprises, pricy renegotiations, or even deals falling through, home sellers would be wise to do their own pre-inspection, by themselves, with the help of their handyman, or even by hiring a home inspectors themselves before listing the home, especially for luxury and high-end homes.

With a little planning and diligence, a clean home inspection report will encourage the happy buyer to proceed with a smooth transaction. In order for sellers to know just what to look for and proactively fix, here are the top maintenance issues found in home inspections:

1.    Electrical

Home inspectors make sure all outlets, GFCIs, and switches work properly, as well as check electrical breakers and fuse boxes. Some common problems include old wiring, wiring connections not put in a junction box, a lack of GFCIs in kitchens and bathrooms, outlets with reversed polarity (hot and neutral wires are mixed) and two electrical circuits wired through a single breaker.

2.    Water and plumbing

Smaller leaks around toilets, under sinks, and dripping faucets are actually pretty common and easily fixed, but bigger water damage issues can lead to mold and major structural damage, so home inspectors will look for telltale signs like discoloration on ceilings, rot, and cleanouts and drains that don’t work properly. Older homes may present a problem because galvanized water lines rust from the inside, closing the passageway which water can move through and reducing water pressure. Replacing all your water lines with new copper piping can be a huge expense – but necessary at some point.

3.    HVAC systems

Heat and air systems require regular maintenance and are costly to replace, so home inspectors will test both heating and cooling systems (no matter what the season!) thoroughly. Homeowners should be replacing their filters periodically and getting their HVAC system tuned up once or twice a year to keep the unit in good working order and prolong its life. Inspectors will also check the flow of ducting and making sure AC units outdoors are clean of debris and obstructions like high grass. Older homes or those in colder climates may have a furnace or boiler that also needs TLC.

4.    Smoke and CO detectors

This isn’t just nit picking, these detectors really save lives. In fact, studies show that fire-related fatalities are twice as high in households where no smoke detector is present or it’s inoperative. Regulations and safety codes for smoke detectors vary from state to state, but according to section 310.9.1 of the California Building Code, all residences must have smoke detectors installed.

Likewise, carbon monoxide poisoning shouldn’t be taken lightly, considering that more than 10,000 are poisoned by carbon monoxide and need medical treatment each year, and around 500 people die from carbon monoxide poisoning in the U.S. every year. California is now one of the 26 states in the U.S. that now mandates carbon monoxide detectors in private dwellings (and even schools) so it’s important you are in compliance not just to “pass” the home inspection but for the health and safety of your family.

Additionally, radon gas in the home is a growing health concern and testing is becoming more common.

5.    Windows

Home inspectors will check to make sure all windows open and close freely and aren’t painted shut, bent or warped, impeded by window ACs if they are the only egress in the room, and generally that they are up to standards of the home. Windowpanes should be free of cracks or splintering, and most people don’t realize that the dreaded fogging or trapping of moisture between double paned windows as the vacuum seal is breached will be an item the home inspector needs to flag.

In older homes with original windows, sash cords are often broken or missing, inhibiting the window from staying open, or closing correctly, and will need to be fixed.  Remember that focusing on windows being in tip-top shape isn’t just for cosmetic reasons but to ensure safe exit in case of a fire or other emergency in the home. 

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Look for part two of this blog where we'll cover the rest of the 15 most common maintenance items that are flagged in home inspections.

10 Things every homeowner should know about their roof.

1. How can you tell if it’s time for a new roof?

There are three ways you’ll be alerted to the fact that your roof needs replacement. The first two are the most innocuous – you’ll either see loose or missing shingles on the roof, or you’ll see other homeowners in your neighborhood, with homes built the same age, start replacing their roofs. The third option is the least desirable – your existing roof is leaking. If that’s the case, you’ll probably see brown spots on the ceiling or walls or it smells wet or damp along interior walls. Those are sure-fire signs of water damage, which is probably coming from your roof (unless it’s a plumbing leak.) Be sure to proactively investigate and fix the problem because water damage from a leaky roof can cause serious (and extremely expensive) damage to your home’s structure or even dangerous mold.

2. Permits?

Most local ordinances require you to pull a permit before you replace your roof. If you’re hiring a licensed roofing contractor, they’ll be able to advise you on local regulations and even obtain the permit for you before they start the job.

3. Shingling over your existing roof or ripping it off.

Sometimes, you have to tear off the initial shingles and roofing materials before you install a new roof. But it may be possible to re-shingle right over the existing roof. This saves you money but there are drawbacks; if you have defects in the old roof, they still need to be addressed before you cover them with nee shingles. You may still have condensation or ventilation issues that are masked when you put on a new roof, but not fixed. When you tear off your old roofing you get to thoroughly examine the condition of the wood deck underneath, as well as lay a new underlayment, which helps protect against water damage. Most municipal codes only allow a certain number of re-roofs before you have to rip it out and start clean, typically three.

4. Underneath your roof.

Under your finished roof lies a protective layer called the underlayment, or roofing felt. Its purpose is to add an additional layer of moisture between your roof deck and your shingles. This is very important in area where extreme cold temperatures and snow and ice can cause ice damns underneath the roof. Beneath the roofing felt is a “deck” of plywood sheathing, which is attached to the rafters underneath.

5. Ventilation.

Many homeowners don’t realize that a house’s roof and structure are not a “closed system,” but actually requires proper ventilation to allow it to “breathe” and dry out. Efficient ventilation will reduce attic heat, reduce attic moisture and condensation, and prevent weather infiltration. A roofing contractor will be able to inspect your current ventilation and advise you on best options, including building codes in your area.

6. Roofing penetrations.

Penetrations are the area where there are intrusion points through the roof. It may seem like a roof is one continuous plane, but in fact there are pipes, vents, chimneys, antennas, and skylights that breach the roof. It’s so important to have the right specialty flashing and proper instillation techniques to keep your penetration points weatherproof. The best roof in the world will do you no good if water still gets in!

7. Rafters.

Likewise, rafters are areas of the roof where two separate angles intersect and need to be laid out and sealed correctly. Usually a trough forms at this intersections, where debris and water can collect and sit, so it’s important there is proper angled drainage and a tight seal.

8. Pitch.

When choosing a roofing product, it’s also important to identify your roof’s pitch. The most common roof pitches are A-frame roofs (traditionally found in cottages,) gable roofs, hip roofs, shed roofs, and flat roofs. 

9. Slope.

Each roof has it’s own slope, or steepness (rise vs. run,) that makes different types of roofing materials a better choice. For instance, a roof slope below 2/12 (2 inches per one foot) cannot use shingles. But roof slopes between 2/12 and 4/12 (flatter roofs) require specific low-slope application techniques, including application of waterproofing underlayment. While roof slopes above 21/12 require steep-slope application techniques to install it correctly.

10. Types of roofing.

Metal roofing.

You find this usually on homes with flat rooflines or very steep rooflines. Metal roofs are particularly practical on homes in cold climates, where snow will slide off the metal grooved channels instead of sitting and accumulating, where weight, ice damns, and water when it melts can cause serious damage. Some luxury homes even have copper roofs. Metal roofs usually last up to 50 years.

Tile shingles.

Tiles shingles are extremely strong and durable, lasting up to 80 years. They’re usually found on Mediterranean or Spanish-style homes. However, it takes a very good roofing contractor to know how to install a tile roof correctly, and the cost will be much higher.

Wood shingles.

Also called, “shake” roofing, for a period around the early 1980’s, wood shingles were very popular among builders, and considered a high-end look. But they served to be impractical, susceptible to drying, cracking, and leakage. Most people have to replace their wood shingle roof after about 20 years, and choose a new material. However there are some areas where they still use good quality wood shingles – made out of redwood, not cheaper cedar.

Asphalt shingles.

Asphalt shingles are the most common type of roofing material. They come in many different colors and qualities vary. It’s important to do a little research and ask your roofing contractor for a recommendation, because some shingles are better than others and often they come with energy rebates. But be careful when it comes to believing audacious claims about warranties – the fine print usually disqualifies homeowners from ever collecting a dime in 99% of cases. A good asphalt shingle should last you 20-30 years.

Must-have real estate and mortgage apps for home buyers.

Wikihood:

If buying real estate is all about location then this neighborhood information app should be your best friend.  It allows you to take a mini tour of almost any neighborhood I the world and learn its history, culture, demographics, and what companies operate there.  Free.

Suburb Scout:

Another indispensible app to investigate your potential new neighborhood is Suburb Scout.  But this one will tell you the bad news that’s hard to find out until your first night – like if there’s an airplane flying low overhead, a landfill or sewage treatment plant down the block, or a prison in your backyard.  $1.99.

Dictionary of Real Estate Terms:

If you’re buying or selling a home for the first time, you might become confused by all of the technical real estate terms – and a little reluctant to stop and ask all the time.  So the Dictionary of Real Estate Terms app will be your favorite resource.  $1.99

Mortgage Calculator:

So you talked to a loan officer and got preapproved, but now as you see home after home with your realtor, all at different prices, you have a tough time calculating your future monthly payment.  If scribbling math on a napkin isn’t a sophisticated enough method and your loan officer is too busy to die along all day, try this app to easily compute interest rates, monthly payments, and even price per square foot and amortization.  99 cents.

Home Buying Power:

This great app goes further than your average loan calculator, allowing you to input different variables like your desired payment, down payment, percentage of your income, and loan term to figure out what price you can really afford.  $1.99.

Magic Plan:

This app allows you to create and manipulate custom floor plans just by moving your phone around and taking photos.  This smart technology assembles and maps the floor plan just by assembling the contents of those photos – pretty neat!  $2.99.

Photo Measures:

Will your massive sofa set fit in this home’s small living room?  This app lets you take a picture of a room and then save the measurements of the room’s dimensions on the photo.  Measure door widths, window placement, cabinet layout, or anything else you’d like and store them right on a photo of the room for easy recall when you’re back at your home.  Free.

Safe Neighborhood:

An unfortunate reality of buying a home is the potential that you live near a registered sex offender.  This app gives you access to the National Sex Offender Registry to research if any live in your neighborhood, and even pill up names and photos so you can be vigilant.  Free.

Crime Stats:

Sometimes looks can be deceiving or the thieves come out at night in an otherwise seemingly safe neighborhood you only toured during the day.  So Crime Stats will give you raw data on violent crimes, arrests, and property crimes nationwide, and allow you to compare against national averages and other cities.  99 cents.

Around Me:

This fun app let’s you know the distance your new home is from important amenities like banks, ATM’s, stores, the post office, restaurants, and coffee shops.  Free.

Houzz:

As you’re shopping for homes you might want some inspiration what remodeling you can do to spruce it up, and Houzz will let you flip through a million photos of redesigned properties with exterior and interior design ideas.  Free. 

Color Smart:

So you love the home but you just can’t get past visualizing the puke green and burn orange 1970’s colors in the living room?  Behr Paint’s ColorSmart app lets you take a photo of a room and then change the wall color to any Behr Paint sample right on your phone!  So cool!  Free.