During a recent broker forum hosted by BRR, questions arose about home warranties, and whether home inspections were required in order to purchase one, especially if a buyer waives that contingency. We reached out to BRR’s home warranty affiliate members for input — Dawn Crochet with Landmark Home Warranty, David Modrow with Acclaimed Home Warranty, Kelley Pasch with Old Republic Home Protection, and Summer Sweaney with innovate Home Warranty.
Q1: If a home inspection is waived by the buyer, are they unable to secure a home warranty as there is nothing to base the warranty on?
Crochet: A home inspection is not needed to purchase a home warranty.
Modrow: We still put a home warranty into the property even if NO inspection. We also can put a warranty onto the house even if it was purchased a number of years ago.
Pasch: We do not require buyers to get an inspection to order our home warranty product. We cover all systems and appliances that need repair or replacement due to normal wear and use.
Sweaney: We do not require a home inspection.
Q2: For buyers who have waived an inspection: What options do they have for purchasing a warranty after closing? Do they need a home inspection post-closing to receive coverage?
Crochet: They just need to purchase within 60 days of the closing to be able to purchase a warranty through me and receive the real estate pricing and not have a 30 day wait period.
Modrow: For immediate coverage best to do it at closing that way they get 13 months of warranty once we get the check from escrow. No inspection is needed, we are taking everyone’s word that the product or the appliance is in good working condition. Our trades if called out will let us know if it was probably a pre-existing condition before the sale of a home.
Pasch: Buyers can purchase the warranty at any time after the close of the home. If it is within 30 days of escrow there is no wait period. After 30 days, we do have a 30-day wait period on services calls. Our warranties are the same price before or after the sale.
Sweaney: Buyers can purchase the warranty any time after the close of escrow. If it’s within the first 30 days of closing, there is no wait period. If it is after the 30 days, there will be a 30 day wait period.
Q3: The first two questions were based on whether a pre-existing condition – that was truly not known by a seller – could be covered by a home warranty if the inspection had been waived. Considering inspections aren’t required to purchase a warranty, how does your company handle those situations as there wouldn’t be written documentation indicating the items were in working order?
Crochet: Everything must be in proper working order at the time the policy is placed. It is going to come down to how the unit or appliance failed and then whether it is pre-existing or not. It’s hard to give an exact answer since nothing has failed at this point and each issue is completely different.
Modrow: Our trades will let us know if it was probably a pre-existing condition before the sale of a home. Let’s say you put a warranty on our home today but call the warranty company 40 days later because the water heater is leaking. The plumber comes out and notices a lot of water and also rust. She/he notifies the home warranty company that due to the amount of rust, it’s obviously been leaking for longer than 40 days. In that case, the claim is denied. Home warranty companies are here to help reduce or significantly eliminate the major cost of the repair.
Pasch: For the most part, when a contractor comes out to do a repair, they can tell if it hasn’t been working for a while, or if it was broken due to unusual wear and use. We hope that any repairs are not waiting for the warranty to be in effect, or that people are not committing fraud by making such claims. As a home warranty company, we work to educate agents who to use explain and use the warranty correctly, and always encourage known repairs be done PRIOR to closing so the buyer walks into a fully functioning house.
That is also part of the reason there is a seller’s policy on all our contracts. This allows for those conditions to come up and be fixed so it isn’t a pre-existing condition, which are not covered.
Between the seller, the buyer, the inspector (if there is one) and the appraiser, most issues are caught and handled prior to the sale. However, there are some items that just break with time, or after the sale because the new owner uses things differently.
For example, I don’t run my air conditioning, but the next person might run it all the time. Although it was in great condition for me, it might go out because it is suddenly being used on overdrive. I think that is why home warranties are so important. Without a warranty the new buyer is livid that they move in then the AC breaks. Suddenly they are angry at their agent, think the seller lied, and so on.
A home warranty acts as protection with agents, too, because if it is just “bad timing,” the home warranty steps in and saves the day, or at least helps reduce the sting of a large expensive repair.
Sweaney: We cover items that are in good that are in good working order the time the policy is placed. We also cover items that fail due to normal wear and tear. If there is no home inspection, we go off the professional opinion of our contractors. They will be able to tell if it was pre-existing or not.
Q4: Switching to sellers… pre-listing inspections and offering home warranties was common a few years ago. Are you seeing that come back to the market, and is a pre-listing inspection required for a seller to purchase a home warranty?
Crochet: I haven’t seen many pre-listing inspections lately but that may change. We do offer sellers listing coverage. It is essentially free unless a claim is opened. Then there is a service call fee and the premium that gets paid at closing, which also covers a portion of the cost for a buyer’s plan.
Modrow: We do have a sellers’ warranty that is the bare basics that can be put onto a home. It is our standard coverage, and the premium is due at closing. It does transfer and go with the home.
Pasch: A seller can offer a home warranty during the listing period and receive seller’s coverage during the life of the listing (up to 180 days) then once the property closes the buyer will then begin a one-year home warranty. We don’t need the pre-listing inspection to do that. This is part of all of our products. In fact, should a buyer decide to purchase a home warranty on the purchase contract, the seller automatically receives seller’s coverage for the remainder of the listing should something come up during the inspection period.
Sweaney: We offer free listing coverage to the seller while the home is on the market. The listing coverage lasts up to 180 days and protects the seller.
Thanks to these affiliate members for their input. The information is provided for informational purposes only and reflects the terms of the products offered by these companies at the time this blog was published. If you are a BRR affiliate member at a home warranty company and would like to add your comments, please email pete@boirealtors.com.
BRR does not endorse or promote any specific product, service, member, or company. We do encourage members and their clients to seek advice directly from a home warranty provider to get answers to their specific situation, the property in question, and any contract terms if a warranty is being purchased as part of a transaction.
