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Make Sure Your Home Warranty Is There When You Need It (Follow-up)

A few weeks back I wrote an article on Pensacola Real Estate News about how you should protect your investment in a home warranty by making sure that all warranted items were in working condition when you moved into your home. I noted that the home warranty company would try to find a way out of paying for repairs if at all possible. The article was written based on the experiences of one of my clients. You can read that article by clicking on this link: Pensacola Real Estate News – Home Warranty Article

The fact that I am writing a follow-up article tells you that I’ve learned something since that previous article was published. I also learned that I have readers out there who are sharing feedback with me, and I greatly appreciate that. Man_cookingJust the fact that I have readers really excites me.

The day after publishing that article, a manager from the local branch of Old Republic Home Warranty company called me. He thanked me for the great article and was very complimentary (Thank you Stewart). He also told me that my article was accurate up until mid-December 2007. He said that in December Old Republic modified their agreement to cover unknown pre-existing conditions. I took a look at the new home warranty agreement and found the following wording:

Coverage may apply to a malfunction which existed on the effective date of the Plan if, at that time, the malfunction was unknown, and would not have been detectable to seller, buyer or agent by visual inspection and simple mechanical test. This Plan does not cover known defects.

I will let my readers decide how they feel about this wording. I believe it does indicate that they would cover an unknown pre-existing condition, but I do not like the word “may”. I prefer the word “will”, as in “coverage WILL apply”.

I do appreciate the call from the home warranty manager, and I fully believe he is sincere in his promise that they will cover pre-existing unknown problems. I do, however, still suggest that home buyers follow my advice given in the previous article. Check out all warranted equipment when you move in to your new home.

As for my client, well I’m afraid he was a male who doesn’t do much cooking and wasn’t clear on how to operate his warranted oven. After he was told by the sweet home warranty operator that his problem was not covered because he did not know if it worked when he moved in, he took another shot at it and found that the oven worked fine once he turned the correct knobs in the correct order. Now this guy in the picture is not my client, thank goodness. While he appears to know how to operate the stove, he kind of creeps me out with that sinister grin. I have to wonder what he is cooking.

Aside from the creepy dude,  all is well with my client, and his lack of oven experience happened to make for a great article. However, he purchased his home warranty in February of 2008, after the new policy was in place. Thus the new “unknown pre-existing” clause should have been in effect. Was the home warranty operator unaware of the change in the contract? Or was she aware of the change, and still trying to avoid paying a claim?  Good question.

I must end this article by saying that I have other clients who had warranties through Old Republic and were extremely satisfied with the service they received on warranted equipment. I am not trying to criticize any warranty company’s service, only trying to show home buyers how to protect themselves against the unknown.

Click on Pensacola Real Estate News for a list of articles indexed by category.

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Make Sure Your Home Warranty Is There When You Need It, Money Saving Advice From Pensacola Real Estate News

When buying or selling real estate, home warranty plans are often included as an incentive from the seller to the buyer,  or sometimes as a negotiation tool. I recommend all of my home buyers get a home warranty, even if the seller is not offering a home warranty and the buyer has to pay for it. In this buyer’s real estate market, motivated sellers should offer a home warranty. Customer_Service_Rep_RS380

However, this article is not about getting a home warranty. This article is about how to protect your investment in a home warranty once you have it. Remember, the home warranty provider does not make money by fixing your problems. The home warranty provider wants to find a way to get out of fixing your problems, and thus keeping their money.  Please take this advice to heart. It could save you a lot of frustration and money.

This article is based on an experience of a buyer who was my client. The behaviors described in this article may not be true for all home warranty companies. But the advice given is important, no matter who issues your home warranty.

TYPICAL SCENARIO

Let’s say that you purchased a home, along with a home warranty plan. You are feeling good knowing that if you have problems with warranted items, you pay a small service fee and the home warranty company will cover the rest. You had your home inspected prior to closing and the inspector told you that everything was in working condition.

Let’s say that you close on your home in July, a very hot time of year in Pensacola.  Why would you think of running your heater in July?

Now November comes, and a blast of cold air comes down from the north. It is time to get some heat on. But to your dismay, the heater does not seem to be blowing any hot air. After checking what little you actually know how to check, and getting advice from your friends who don’t know any more about heating and A/C units than you do, you decide it is time to call the warranty company.

Important: Don’t bother calling your real estate agent. He or she likely knows very little about heating systems, and that is why he or she recommended you get a home warranty.

MAKING THE CALL – BE ON YOUR GUARD

You dig up your paperwork from the real estate closing, and give the warranty company a call. A very sweet customer service representative from the warranty company answers. She talks to you like a friend, sharing how terrible she feels that you may have to endure a few cold nights in your home while you wait for service. After several minutes of basic question and answer conversation, you are feeling very good about the whole situation. This warranty company really cares about you. You can just hear it in her voice. She is like a genuine friend.

And then the warranty company representative asks if you have tried the heater since you moved in to your new home. Your guard is down, you are at ease with your friend on the other end of the phone, and you answer “Well, no. We bought the home in July and it was very hot. But we had a home inspection and the inspector ensured us that the heater worked when the home was inspected”.

Then the warm and friendly answer on the other end comes. “We’re sorry, but since you have told us that you did not know if your heater worked when you purchased the home, we are not obligated to cover it under your warranty plan. You did not actually own the home when the inspector tested the heating system”.

OUCH!!! Even though the weather has gotten cold, you are now feeling pretty hot. But don’t lose your cool, as you can be sure the call is being recorded “to ensure quality service”.

Home_warranty_ProviderDon’t let this happen to you. When you move into your new home, test every item that is covered under the home warranty. If it is the middle of winter, test your air conditioning. If it is the middle of summer, test your heater. Test all of the burners on your stove, even if you never cook. Test all the features of your oven and your dishwasher. If the seller left you a freezer in the garage that you really don’t need right now, test it anyway.

Now if you have a problem in the future, you can call your home warranty company and say “YES, I know it worked when I moved in because I used it”. It is as simple as that. You keep your warranty in force.

BUT what if you move in and test your heater, or your stove, or your A/C, and find that it doesn’t work? You have no way of proving that it worked at the time you purchased your home warranty, which was at the closing table. What are you going to tell the warranty company when they ask you if you have tried it since you moved in and verified that it worked? I just wrote this article to explain how to protect your home warranty, not to answer moral dilemmas. Hopefully you will never have to decide how you would answer your friendly home warranty operator in this situation.

After publishing this article, a local home warranty company contacted me with updated information. You can read about it in my follow-up article on home warranties.

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Pensacola Real Estate News: Your Credit Score – The Key to Building Your Future Wealth

It seems today as if everyone wants to know your credit score. Lower credit scores cost you in more ways than you may be aware, not just failure to be approved for a real estate home loan. It can all add up to big savings or losses for you, depending on how responsible you are with your credit.

I will show you how low credit scores hurt your chances of building long term wealth. And everyone knows real estate is a key factor in building long term wealth.

As a real estate agent in Pensacola Florida, credit scores are extremely important to me. Helping my Pensacola home buyers get the highest possible credit score makes the home buying process much easier for my clients. If your credit score is not where it needs to be, the time to start building your credit score up is NOW!

Having a higher credit score is critical to building your wealth. To build wealth, you need to keep your money instead of paying it out and receiving no real value in return. Read on to find out how your future wealth is directly related to your credit score. (It is also directly related to your outlook on life, but that is a whole different series of articles yet to be published).

Who cares about your credit scores? Just about any entity that wants your money.

1. Lenders – If you want to borrow money for any reason, lower credit scores will mean higher interest rates. It also makes for a more complicated loan approval process. The lender will ask you to dig up much more documentation than a person with a better credit score will require. Let’s look at how much low scores can actually cost you. In this example, we are looking at a 30 year fixed rate loan of $100,000 at varying interest rates. (The monthly payments shown are principal and interest only. They do not include taxes and insurance).

Interest_Rate_Montly_Payments

The numbers in the table show how higher credit scores can save you thousands in interest. Just a 2% difference in the interest rate can add up to almost $50,000 in savings over the life of a $100,000 loan.  For a $250,000 loan, the savings is over $120,000 for the life of the loan.

2. Insurance companies – Whether it is home or auto insurance, insurance companies are now factoring in your credit scores when determining your premiums. With home insurance premiums at ridiculously high levels in Pensacola and all along the Gulf Coast, you need every break you can get. The reasoning is that people with lower credit scores are less responsible with their home life and their driving. Did you know that just a couple of late payments could cause your premium to be doubled? Add that to the increased monthly payments in the table above.

3.  EmployersA low credit score can cost you a great job.

Employers equate low credit score to irresponsibility. They want dependable responsible employees, so they are apt to hire people with higher credit scores. They don’t take into account that many low credit scores are the result of a hardship that was out of the control of the individual.

4. Landlords – Any knowledgeable landlord checks the credit scores of all applicants for rental properties. Lower credit scores equal more application rejections, and higher deposits if you are accepted.

5. Credit card companies – Lower credit scores mean lower credit limits and higher interest rates.

6. Utility Companies – Lower credit scores mean higher deposits when you order utilities such as electric, water, gas, phone service or cable service.

As you can see, lower credit scores can cost you in many ways. Add all of these factors together and you could end up paying thousands of extra dollars a year and receiving absolutely no added benefit in return.

Money_into_Piggy_bankOne of the primary vehicles for long term wealth accumulation is home ownership. At the National Association of Realtors (NAR) Mid year meeting in 2007, Laurence Yung, the Chief Economist for the National Association of Realtors, shared the following data from the Federal Reserve: “The median wealth accumulation for renters from 1995 to 2004 was $4,000. The median wealth accumulation of a homeowner was $184,000.”

How do you want your financial picture to be 10 years from now?

Don’t wait. Start now to build your credit scores, buy a home, and invest in your future.

Related Articles on Pensacola Real Estate News:

What Is A FICO Score?

The New Credit Scoring System – How Will It Affect Your Credit Score?  

How Not To Lose Your Home Loan After You Are Already Approved

Click on Pensacola Real Estate News for a list of articles indexed by category.

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How To Search For Pensacola Real Estate The Right Way

If you are searching for Pensacola Homes for Sale, you will most likely begin your search on the Internet. While there are many sites available on which to search for Pensacola homes for sale, all are not created equal.

To get the most accurate and up-to-date search results, you need to be searching on the Pensacola MLS. Other home search sites will have information about homes available on the Pensacola real estate market, but these sites often don’t have a complete and current database of Pensacola homes for sale. You may find homes on these sites that show as active listings, but which actually are already under contract or even sold. This situation can happen because other sites do not have a direct Internet data feed from the Pensacola MLS. Thus delays in record updates are common.

A fellow real estate blogger in Alabama posted a great article about this recently. You can read it at his Dothan Home Search site.

Remember, when you are performing a search for a home to buy, you can search the Pensacola MLS by clicking the “Search For Homes” link in the menu bar at the top of this page. This will take you to the most accurate and up-to-date listing of homes for sale in Pensacola Florida. If you need more criteria defined in your home search than are available through the Pensacola public MLS, please feel free to Contact Me .

As a Pensacola Realtor, I have the ability to perform a search based on a wide range of criteria not available on the public MLS. In addition, I can provide a service for you whereby you can receive an email when any home that matches your criteria becomes available on the Pensacola real estate market.

If you would like to sign up for this free notification service, just call or email me and I will help you find exactly what you are looking for. You will never be spammed with unrelated emails. You will only get emails when a home comes on the market that meets your criteria.

Click on Pensacola Real Estate News for a list of articles the most popular articles on this site indexed by category.

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