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Home warranties: Good or good-for-nothing?
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Resale home warranties
As with a new home warranty, you want to read the policy on a one-year warranty and understand what's covered and what may be excluded. Usually, one-year warranties cover the "moving parts" of a home, like appliances, heaters and air conditioners, and do not include conditions caused by poor construction or bad maintenance.

"It's really just a service contract," says Jim Hood, editor in chief of ConsumerAffairs.com, a news and advocacy site.

Hood says he sees a number of complaints on one-year warranties. Some of the most common: long response times and claims by repair people that the fixes aren't covered under the contract. As a result, he says, "The homeowner ends up spending a lot of time and trouble calling, trying to get someone to do something."

But others see value in the service, especially for buyers who've already sunk every spare dollar into the house.

"I think they are very important to have, as long as it's a reliable company," says Ahmad.

Phipps says he's noticed that his agency spends a lot less time following up with minor repairs than before they started recommending the warranties to sellers. "Now with the program, it's delightful," he says.

"And if the seller doesn't pay for it, I recommend the buyer get it," Phipps says.

If you're considering one, first research the warranty company. How will they select the people they send to your home? And what's their track record? Check out the company with other homeowners, the state and any local or national consumer groups.

Are there complaints or pending actions? What are current and past customers saying about the company? If you have doubts, consider taking out a service contract for your heating or air conditioning with a local company that will actually perform the service, says Hood. Another alternative: Put some cash aside specifically for home repairs.

A little self-reliance
If there's a home in your future, and it comes with a warranty, do your own research before you sign. What, if anything, can you find out about the warranty company or the builder when it comes to being responsive to repairs? A quick Internet search can let you know if the warranty company or builder is dogged by complaints or if customers are satisfied. If the company has other customers in your immediate neighborhood -- such as in a condo or town-house complex -- see if they would buy or renew a contract with that firm.

With a new home, talk to other homeowners in the subdivision about the builder's warranty. If you're buying an existing home, get a few references from the warranty company or your real estate agent.

What you want to know: Are owners satisfied with the warranty or have they had problems with it? Is the home holding up well and does the builder, or the warranty company, stand behind the product? Is it fairly easy to get repairs completed? Are repairs done well, and is there a fairly quick response time? Are most things covered or are there a lot of out-of-pocket costs? Did the homeowner have to jump through any hoops to prove that the item was protected under the warranty?

In addition, "Many builders offer a warranty on their own, not as part of a commercial warranty process," says Crump. "The builder will replace or repair defective components in a stated period of time. There are lots of good reasons to do that, and buyers can also look for that."

Dana Dratch is a freelance writer based in Atlanta.

Bankrate.com's corrections policy -- Posted: Feb. 1, 2006
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