Articles

Inspections vs Warranty Policies

Your HOME INSPECTION REPORT should be best viewed like a Doctor’s Physical Examination: a general but pretty detailed evaluation of important components at a given point in time.

Your HOME INSPECTION REPORT should be best viewed like a Doctor’s Physical Examination:  a general but pretty detailed evaluation of important components at a given point in time.  The Texas Real Estate Commission details a MINIMUM set of Standards that your Inspector is required to follow and report upon.  An experience/seasoned Inspector will usually go well beyond those minimum Standards, based on his prior experience and knowledge in order to improve your understanding of your new home and what might be reasonably expected from it.  So-Called “Guaranteed Inspections normally rely upon their E&O Insurance Policies (which ANY reputable Inspector will carry, for both YOUR protection as well as his own).

Home Warranty Policies, on the other hand, are a form of continuing protection.  They basically cover the MECHANICAL features of your home, which include built-in appliances such as Dishwashers, Ovens, Food Disposal units,  Water Heaters, Automatic Garage Door Openers, and Air Conditioning (HVAC) systems.  Items such as Foundations and Roofing are normally excluded.  These policies are usually written for a period of (1) year, and prices usually range from around $325.00 to $400.00 per year.  They are usually subject to a small deductible, and multiple years may NOT normally be purchased in advance.

In the Austin area, normally the Seller will provide the first years’ policy for the Buyer as an incentive.

As a rule, the cost for continuing  this protection PAST the first year is prohibitive to cover smaller items, such as Dishwashers and Water Heaters-i.e..- the individual cost of replacement (including the deductible), is close to/lower than the price of the policy.  That rationale tends to CHANGE when the home you’re buying has (1) or more older (9 years or older) HVAC systems in place:  replacement of THESE systems, particularly if new DUCTWORK is included,  can approximate $3,500 to $5,000 or more PER SYSTEM.  When our Inspection indicates that the HVAC system(s) in place are currently PERFORMING WELL, but due to their age may be subject to REPLACEMENT soon, we strongly encourage our clients to renew their Home Warranty Policy annually. Most Home Warranty Policies promise to REPAIR OR REPLACE the system  In PRACTICE, when systems reach certain ages, most HVAC Contractors refuse to attempt repair in favor of REPLACEMENT.

 HAVING such protection relieves a Buyer from worrying about  being blindsided by a surprise outlay of a few to several THOUSAND dollars for new system(s) and/or trying to “baby” the system along to maximize its life requiring the sacrifice of personal daily COMFORT.

The information in this article is anecdotal and is based on shared past experiences with clients and professional Realtors.
Many companies offer these policies, and you are advised to research them well before buying.  Experiences with ANY given provider will change over time, and there are several reputable providers available.  Currently, we’ve heard many good experiences with a company called Old Republic, but we still encourage thorough personal research before deciding on a company.

---

Resource Links