What is a Home Warranty and how does it work?

KAREN: Hi, this is Karen. Welcome to House Talk.

I’m so excited today to have Shawna Bell with me. Shawna is actually – this is pretty impressive – the Account Executive for Landmark Home Warranty for the whole state of Oregon. Shawna, thank you so much for taking time – first of all, being in Bend. I’m sure it’s part of your busy schedule, but it’s a really neat thing to have you here on House Talk.

A lot of people, when I’m either selling a home or purchasing a home, say, “What is a home warranty? Is that home insurance? Why is this important to me?” I was hoping maybe you could speak to that in the beginning of our show.

SHAWNA: It is, Karen. Thanks for having me here today.

KAREN: You’re welcome.

SHAWNA: Insurance and warranty coverage are similar in that you’re covering the big fat costs that can sometimes come with home repairs and replacements. That’s the way that they’re similar.

They are different in what they’re covering. Homeowner’s insurance is covering the structure and contents, generally speaking, of the home. Home warranty coverage is for the systems, basically, of the home.

KAREN: You mean like plumbing, appliances, HVAC, heating, air conditioning?

SHAWNA: Yes, you got it. Water heaters. Anything that is the workings of the home are things you can cover with a warranty.

KAREN: All the stuff that usually breaks 30 days after close. [laughs]

SHAWNA: High usage things, yes.

KAREN: When we close on a property and we’ve attached a home warranty, how does one go about using a home warranty? What do they have to do to contact Landmark and you?

SHAWNA: Generally speaking, you’re going to call right in when you’ve got that dishwasher that breaks down and won’t run a cycle. You just call in to your home warranty company and let them know the issue. They’ll look up your local contractor out of their network and assign them right away and see how quickly they can get out to diagnose the problem.

KAREN: Is there a service call? Should you wait for more than one thing to break? [laughs] What if you think two things are on the blitz, what should you do?

SHAWNA: You just call and let them know all the issues that are going on, and then the warranty company will let you know if they have to assign different people and what’s going to be heading your way. You’ll pay the service call fee, and those can range. With Landmark, it’s $60. Pretty affordable.

KAREN: So it’s always a flat fee.

SHAWNA: Yes.

KAREN: That’s great.

SHAWNA: Super simple, just to get the guy out and say “Hmm, what’s going on?”

KAREN: Then as far as the replacement of the appliance – I know that I’ve placed a lot of home warranties over the years, and sometimes it’s just something that no one has needed, which is great.

But one time I sold a home, and they moved in and they had a really lovely high-end Dacor cooktop. Two months into the home ownership, that cooktop failed. Sure enough, they called you guys, and I think it was the $60 service call. They ended up getting a replacement, and it was a Dacor. It was like the same product. That’s how it works? I mean, that was amazing.

SHAWNA: It is. And sometimes you can have multiple things that happen all in one year, and you can either never chat with your home warranty company, or you know them real well. That’s the year you’re glad you have them.

KAREN: Yeah, and for the initial cost, it’s not much.

SHAWNA: No. They can range in pricing. For that first year, it’s always your best pricing with the real estate transaction pricing. It can range from $300 for basic plans to a much larger depth of coverage up to maybe $500 or $600.

KAREN: That’s definitely a worthwhile investment in a real estate transaction, whether the seller is providing that for the buyer, or whether the real estate agents decide to purchase it for the buyer, or the buyer buys it themselves.

SHAWNA: Exactly.

KAREN: There’s so many different ways to go about purchasing a home warranty.

SHAWNA: I just sold my home and offered it. It really makes your sale attractive to buyers when they know warranty is going to come with it right up front.

KAREN: Oh yeah. It gives the buyer a nice sense of relief, too, like “if something does break, I’m going to have this.”

SHAWNA: Absolutely.

KAREN: Let’s touch back on the differences again so everyone’s clear that’s listening. A home warranty is not home insurance; it’s additional coverage for the systems in the home.

SHAWNA: Yes. It’s actually not even a warranty per se. It’s a service contract. Basically you’re providing a service so that the second one of the items covered breaks down, they can just call in and you help them get a licensed and bonded contractor right out to their house. Then you take it from there. Whatever they have to offer as far as diagnosis, you just go from there and work with the contractor on hand.

KAREN: I think also, in a town like Bend where we have a lot of homes that were built in – well, mine was built in 1929, so let’s take that one out of the picture. [laughs] But if you have a home that was built in the 1970s or ’80s, it still may have what I call those “time capsule” appliances in the home.

SHAWNA: That’s when you really want a warranty.

KAREN: Yeah, because they’re all going to break at some point. You would think. I don’t want to generalize. Anyway, let’s take a short break and we’ll be right back with Shawna Bell with Landmark Home Warranty.

Welcome back to House Talk. This is Karen Malanga, Principal Broker at RE/MAX Key Properties. I’m visiting with Shawna Bell, the Oregon Account Executive for Landmark Home Warranty, which is my go-to home warranty company for many reasons. I’m sure by the time this show is over, you’ll understand why.

Shawna, I wanted to ask you one more question regarding pricing. We had touched on pricing in the beginning of the program, and you had mentioned to me while we were waiting to discuss this on the radio that it is an advantage – I had no idea you could purchase additional years of coverage during that real estate transaction period.

SHAWNA: Real estate pricing is going to be your best option. It’s discounted to purchase it upfront in the real estate transaction.

KAREN: How many years can you purchase?

SHAWNA: Usually a company will allow you up to about 3 years, which is a huge savings. After generally the first year of coverage, when the homeowner goes to renew their own policy, you’ll see that the price jumps up. Then after that, each year it’s about the same.

But if you can get a couple years upfront with the transaction pricing, you’re going to save yourself quite a bit of money for coverage over up to 3 years, usually.

KAREN: That’s terrific knowledge, especially for me and how I could maybe help my clients in a little bit better way by providing more coverage.

SHAWNA: Exactly.

KAREN: I also wanted to go into the differences that there are between the different home warranties that are out there.

SHAWNA: Sure. A lot of them are set up really similarly. Your coverage items are generally going to be the same things. You can look through different brochures of companies and match up plans and see what is covered in this plan compared to that plan.

KAREN: And by that, you mean the systems that we discussed earlier, like everything to do with your plumbing, toilets, things like that, dishwashers?

SHAWNA: Different plans can cover all the kitchen appliances. Sometimes you might have to add the refrigerator. Just look through and see which items are checked when you’re comparing. You’ll have a whole furnace package, maybe electrical, plumbing, it should include your water heater, things like that.

KAREN: So there are different levels of coverage too, within those plans. You just have to really compare. Compare and contrast.

SHAWNA: Yeah. The difference comes when you’re looking at pricing. Definitely depth of coverage with plans. You just want to look through, see what’s covered, what you can add for how much money. Then compare across the board with other companies.

KAREN: I know that we like working with your company because your response time is really quick, and my clients have always been extremely happy with the service.

SHAWNA: It’s good to hear that.

KAREN: There’s differences in how other warranty companies service as well, correct?

SHAWNA: Yes. You can ask around to real estate agents who have a lot of experience working with one or five different companies, and just find out who they love to work with, because there are differences in basic customer service or response time, things like that.

KAREN: Yeah.

SHAWNA: The other biggest difference, I would say, is how the company is set up. There are general companies that have the network of contractors. It’s great to have that because the warranty company is going to require that they’re licensed and bonded, and they’re going to have a contract with them that sets up negotiated pricing. That just works great all the way around for homeowners.

KAREN: And you’re recommending someone that you know, like, and trust, that’s done a good job for clients in the past.

SHAWNA: True. Then there’s other warranty companies that are set up to allow the homeowner freedom to choose their contractor, which is sometimes great for the homeowner if they really have their favorite guy and they want to give them a call all the time.

Those companies are set up different, though, because then you don’t have negotiated pricing and you don’t know if they’re licensed and bonded. The homeowner would want to check that out for themselves. There’s also different limits and exclusions within those plans. What I mean by that…

KAREN: Yeah, what do you mean by that? [laughs]

SHAWNA: [laughs] There can be max payout that the warranty company will offer.

KAREN: You’re saying, if we went back to that Dacor range example, maybe they wouldn’t have put in a new Dacor range like you guys did? There could’ve been a maximum amount?

SHAWNA: Exactly.

KAREN: That would’ve been a total bummer. [laughs]

SHAWNA: It can happen. You just want to know the differences from company to company.

KAREN: That’s important. I do think that there’s a nice feeling – when something does break in a home and you’ve just moved in, I do think there’s a sense of comfort in knowing that you only have to make that one phone call.

If they’re working with a company like yours, like Landmark, there’s that ease. Okay, I made the phone call. They already have a dishwasher repair guy or water heater person, and I don’t have to worry about making those phone calls and fielding through possible – it takes a long time sometimes for contractors to call you back, in my world.

SHAWNA: Sure.

KAREN: So working with someone that already has those contractors in place adds another layer of simplicity to the whole process.

SHAWNA: And you know it’ll just be $60 bucks with Landmark to have them come out and at least get it diagnosed and find out what’s going on.

KAREN: Yeah. What’s the general turnaround if you do have an appliance? Is it going to be based on appliance availability, if it needs replacing?

SHAWNA: It’s true. And of course, you’ve got different appliance companies. Some are super simple to get parts and repairs done, and then there are other companies that it just takes a really long time to get parts. You never know from company to company which ones can sometimes be really slow with regard to getting parts out.

KAREN: Exactly. I think the best thing for our listeners to think about is, the nice part is you know it will be covered. It just might take some time, like everything else in life.

SHAWNA: It might. [laughs]

KAREN: Shawna, quickly before we take our next break, can you purchase a home warranty at any time on your existing home?

SHAWNA: You can. There are companies out there where you can just go online and shop through warranty companies for your own existing home and shop through and decide what you want covered, “what systems do I have that I’m kind of concerned about getting really high usage these days with my kids or how we’re living in the home?”

Then go ahead and just click on “I’m a homeowner” and “here’s what I need,” and you can just purchase one outright.

KAREN: I had no idea that you could do that.

SHAWNA: You can. There’s no inspection happening. With the warranty company, since there’s no inspection happening, they’re not going to know the status of the house. So there might be some different things put in place, like a higher service call fee.

KAREN: Let’s touch on this right after the break, because this is pretty interesting. Let’s take a quick break, and we’ll be right back with House Talk.

SHAWNA: Sounds good.

KAREN: Welcome back to House Talk. It’s Karen Malanga again, Principal Broker with RE/MAX Key Properties, and Shawna Bell, our Oregon state Account Executive for Landmark Home Warranty.

Before we took the break, I was learning that as an existing homeowner, I could actually purchase a home warranty for my home, and that there’s no inspection.

SHAWNA: Correct. There’s not an inspection, and also – well, just with setting up a warranty coverage on an existing home, you might pay a little higher deductible, or that service call fee. The plans might be set up a little bit different, but you’re still going to be covering all the systems of the home.

The only other difference is you might have a waiting period to open a claim. Probably something like 60 days or something like that.

KAREN: That’s to protect the company to make sure like “Oh gee, my subzero refrigerator just broke. I’m going to add a home warranty now.” [laughs]

SHAWNA: Right, “Let’s just throw that on there.”

KAREN: Yeah. I totally get the waiting period on that. That’s very cool.

SHAWNA: You can go on and set up coverage, and you can pay for it upfront for the whole year, but a lot of companies also have the option to set up a monthly payment.

KAREN: I didn’t know that.

SHAWNA: Just to keep it a little more cost-effective, you can just pay the basic monthly fee and have that coverage.

KAREN: Oh, that’s perfect. What else would you like to tell us about Landmark Home Warranty today, or home warranties in general?

SHAWNA: Some home warranty companies also offer a lot of maintenance tips, like keeping systems running great so you can guard against breakdown. With Landmark, we offer pre-season tune-ups. In the fall you can call in and get your HVAC system all tuned up and serviced, and it’s just the $60 service call fee.

KAREN: I didn’t know this either. This is very cool.

SHAWNA: It adds a good value from your home warranty company. They’re just going to help you out with keeping all those systems maintained.

KAREN: It also would make sense to place a home warranty maybe in the year prior to planning to sell your home, because you could get everything maintained and tuned up properly.

SHAWNA: It’s true, yes. You can do those tune-ups in the fall for the furnace, and in the spring for the air conditioning.

KAREN: What other tidbits do you have for us today? I’m learning all kinds of things about home warranties.

SHAWNA: With Landmark, we also offer another service, which is the rekey. If you’re a seller and you’re offering a warranty with your home, you can know that your buyer would have that service sitting there for them when they move in. They just pay the $60 service call and they can get their home rekeyed and have all the locks set up.

KAREN: I think that rekeying is really a cool item. That’s something I need to remind my buyers about, that when they have your warranty, they can get that home rekeyed.

I know earlier in the program you mentioned that having a home warranty is one of those things where you may never make the call to the company, but then on the other hand, it may be the best gift you’ve ever had. Do you have any hero stories? Like when the home warranty came in to be the ultimate best thing someone ever had?

SHAWNA: I do know they’re not offered much, or often, for brand new homes. But when my husband and I moved into our first home, I’m telling you, in Year 3 if we would’ve had coverage – there’s a new home warranty coverage that, after the builders’ warranty is done after Year 1, the home warranty companies offer Years 2 through 4.

KAREN: Oh, that’s terrific.

SHAWNA: And it’s usually a discounted price, which is great. That’s when people think they’re never going to need it because the home is newer. But we had an icemaker go out in Year 2, and in Year 3 our dishwasher and the water heater started leaking.

KAREN: When the icemaker went out, that’s a real common horror story with people. Did it damage the flooring?

SHAWNA: That one didn’t, but that dishwasher was a problem.

KAREN: Oh no. The kitchen floor?

SHAWNA: Yes, that was a nightmare. In that case we ended up taking out two claims, one with the home warranty company to cover the issues, and then the homeowner’s insurance for damages. So sometimes you can have twofold, and you’re always glad you have both coverages.

KAREN: Oh, yeah. Any other hero stories?

SHAWNA: You always want to throw the free listing coverage on your listings because then it’s just sitting there in case you need it.

This summer we had a few air conditioners go out. After the inspection’s done, everything’s fine, and then the hot weather hits, and then those things that have been working extra hard just crash. That’s when we were glad we had even just the free coverage sitting there for the listings. The homeowner was able to take advantage of that coverage, and they hadn’t even purchased an actual warranty yet.

KAREN: Oh, that’s amazing, Shawna. How can any of our listeners find you, or how do they reach Landmark Home Warranty? What’s the best way? Can you give us your contact info?

SHAWNA: Probably the fastest way would just be to go online. Our website is www.landmarkhw.com. You can contact a claim manager or an orders agent that way, and you can set up an order or just ask questions, even, about how warranties work and what the coverage looks like.

KAREN: Thank you so much for being on House Talk. Really appreciate it.

SHAWNA: Sure thing.

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