The ins and outs of home warranties

Q & A with Renee Spahn of John L. Scott of Medford

Q: What is a home warranty?

A: It's a service contract that covers repair or replacement. In the event of breakdown, a buyer or seller can control their budget. A seller can put it on the listing as an added bonus because they are paying for it. It's an economical way to prevent potentially costly situations.

Renee Spahn has been a local real-estate agent for 12 years, including the past two

with John L. Scott of Medford

Q: How does it work?

A: If something goes wrong with a system, you can pull up your warranty and make an immediate claim. You have a membership or contract number, you explain your situation and you pay an on-site visit fee of $55 or $60. That's about all you will pay. They try to diagnose what the problem is on the phone before sending out a contractor.

Q: What can be covered?

A: They bundle the packages now. There's a core plan covering heating, duct work, plumbing and electrical. Then there is a service-plus program, adding a little more like ... garbage disposals, microwaves and ranges. The high-end is called a flex-plan; it's the most comprehensive coverage, taking in everything they cover. I like to sell that one because I don't like to tell a client that something wasn't covered in the warranty.

Q: What is the annual cost?

A: It varies from $300 to $500. Of course, some houses that are 6,000 square feet can go up a little higher, up to $600. The warranties are good for 12 months, and owners can buy extensions if they would like. Generally, the warranty company contacts them directly.

Q: How do existing conditions factor into the warranty?

A: If you are seller, even existing issues are covered if they come up during time of sale. It really benefits a seller to have a home warranty.

Q: How do you know what is covered when you buy your home?

A: If somebody buys a warranty after they bought the home, most of the time it's on a good-faith system. When they sell you the plan, they go over the house with you on the phone.

Q: Are roof systems covered?

A: Typically, a roof warranty comes from the roofer directly. Other things that aren't covered are pools — some warranty companies let you buy a separate plan for pools — ice makers and septic systems. Washers and dryers aren't covered.

Q: What are the biggest needs?

A: Plumbing, air conditioning, water heaters, trash compactors, ranges, ovens, dishwashers. A lot of people assume the washer and dryer are included, and they are not; I've never been told why.

Q: With home building down and more older homes on the market, is there a greater need for warranties?

A: Banks sell foreclosures as-is, making it even more important to have a warranty. The home has been through a number of things, and you don't know who was in it last and whether they were in it for 30 years or a year and a half. When the market was big, we used to see warranty-company people a lot, but we don't see them as often now. American Home Shields is one of the big ones, and First American Title offers one, too. We have just a few choices in this area.

Q: Who benefits more from warranties, sellers or buyers?

A: Typically, we talk to sellers about them, and that's who we predominantly discuss it with.

Q: Are people more apt to acquire warranties now than 10 years ago.

A: Yes. There is a feeling of security because people want to feel safe about what they are buying. When you sign the contracts, they do have limits on what they will cover. Plumbing might have a $1,000 limit for a one-year period. We encourage people to read the fine print and see the whole coverage rather than read it in five minutes.

Q: Are there many dissatisfied customers?

A: I hear more of the success stories when we talk about incidents. So far, it's been pretty positive, and when we get a call like that, it's an opportunity for us to shine. We can go back and work with the warranty company. The ultimate thing is to make happy clients — 19 of 20 times, we'll go to bat and win. If we can prove a case, we're going to do what we can.

Reach Mail Tribune business editor Greg Stiles at 541-776-4463 or email business@mailtribune.com. Follow him @GregMTBusiness on Twitter.


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