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Thursday, May 1, 2008

Getting excited by a warranty…

As long time readers of this blog know, I do not generally endorse products here, nor have I gotten all that excited about most of the “new and improved” products that have come out lately for the real estate business. However, American Home Shield (AHS) has just rolled out a product in this market that is different enough and has enough meaningful new features that I’ve gotten excited about it.

The new product is called Home Warranty FlexPlan. Like most home warranty products it has a base-level plan and then offers upgrades to that base level. AHS calls their base level plan the Core Coverage Plan and it covers most of the core mechanicals – heating, Air Conditioning, duct work, Plumbing, Plumbing Stoppages, Whirlpool Motor and Pump, Water Heaters, Electrical, Exhaust/vent/Attic Fans, Built-in Microwaves, Dishwashers, Garbage Disposal Units, Ranges/Ovens/Cooktops and Trash Compactors. That is a fairly standard list of things to cover, although there may be a couple of things on that list that you won’t find in other warranties.

AHS includes the somewhat standard 13 SEER replacement coverage if they have to repair an older defective air conditioning unit. What is not standard in the industry, is that AHS includes in what is covered under this Core plan, the need for repairs to these units that may be caused by sediment, rust, corrosion and insufficiently maintenance. Think about it. What causes a lot of problems with the items on this list is neglect by the previous homeowner. This policy appears to cover the issue that might be caused by that neglect.

AHS also introduced two levels of upgrade to the Core Plan that are really noteworthy.

The AHS ServicePlus Package is available for an extra $79 and covers six critical areas that all home sellers and buyers should be covered for: Refrigerant recapture, reclaim and disposal (should they have to repair your air conditioning unit or a refirergator), removal of defective equipment, pulling permits (up to $250) for any repair work that requires a local permit, code violations (bringing things up to code, with a max of $250/coverd item), covering undetectable pre-existing conditions (a major potential issue in foreclosed homes)covering repairs to correct improper installations, past repairs or modifications (in other words correcting the mistakes of the not-so-handy-man previous homeowner) and correcting issues caused by mismatched systems (likely another handyman-caused issue). This coverage covers a multitude of past sins and should give the buyer much greater peace of mind, especially when dealing with a foreclosed home, where the previous owner is long gone and the bank has included 40 pages of “we know nothing and are liable for nothing” language in the deal.

For an additional $55, AHS has what they call their CoveragePlus Package, which adds coverage for a number of niggling little items that most buyers just don’t want to deal with, including: ceiling fans, garage door openers, telephone wiring, built in food centers, doorbells, instant hot/cold water dispensers, central vacs and smoke detectors.

To these coverage plans and packages it is possible to add up to 11 more coverage items from refrigerators w/ice dispensers to swimming pool and spa equipment to well pumps and septic systems. Each has an ala carte price.

I have not been an ardent fan of home warranties in the past, but this new set of products from American Home Shield has made a convert of me. The money to pay for the first year coverage of all of these items would easily be recovered if almost any of the covered items had to be repaired or replaced. The fact that AHS has taken a position that covers so many of the unknowns and common maintenance (or lack thereof) issues and handyman-homeowner-caused issues makes this the only home warranty product that I’ve seen that should be considered mandatory for all buyers.

Now there are two things that I will insist that my foreclosure home buyers do – get an “Eagle Brand” extended coverage title policy and get the AHS Home Warranty FlexPlan with at least the ServicePlus Package. Get both of those, plus have a good inspection done, and you’ll be about as well protected as you can get when buying a foreclosed home.

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