Home Warranties & Houston Real Estate

Consider the benefits!

A home warranty contract (sometimes referred to as a residential service contract) is an agreement from a third-party company that says it will repair specified items in a home usually for a term of one year. Studies show that homes with a home warranty contract sell faster and at a higher price.

A seller can use a home warranty contract as a marketing tool to attract buyers, or buyers can request a home warranty contract as part of their offer on a home. These contracts are not generally available to the For Sale By Owner (FSBO) market, but we can arrange to provide this service through several major companies, often at a reduced rate.

The following statistics from the National Home Warranty Association & Texas Real Estate Commission are from an article in the December 1996 Texas Realtor Magazine.

For more information about residential service contracts, contact the national Home Warranty Association at 800/325-8144.

Contact us @ 1-800-713-4521...or

Please include your phone & fax #s and e-mail address.

Clopton Realty ™ - Bill Clopton Broker/Owner

Landmark Properties ™ - Glen Gill Broker/Owner

This page was last updated on 06/26/00.

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Home Warranty Can Ease Worries When Purchasing an Older Dwelling
Detroit News (02/21/00) P. B1 (Preddy, Melissa)

Home warranties are becoming an increasingly common ingredient in the sale of existing homes. While such contracts only cost between $300 and $500, they can substantially bolster sellers' credibility and give some peace of mind to buyers who fear a costly home-repair emergency happening within weeks of move-in. These 12-month warranties generally pay for repair or replacement of major heating, cooling, plumbing, and electrical systems, in addition to built-in appliances. Structural damage is excluded. Realtors in the Detroit metropolitan area estimated that as much as 70 percent of prospective homeowners are now requesting such warranties. In most cases, the home seller pays for the contract. Buyers, however, may purchase one on their own behalf. There are even rare instances when real estate agents will cover the cost, depending on how much they want to sell a particular residence or as a closing gift. Actually, home warranties are mainly marketed through realty firms, which often get a commission on all contracts sold. It is recommended that homebuyers have as much say as possible in the purchase of a warranty. To this end, buyers should know that in most cases, the warranty vendor has the authority to choose which firm does the repair work, cheaper policies cover fewer systems, and a pre-set service call fee will be charged even if repairs are covered.

For Home Owners, a Lesson in Liability
Washington Post (02/22/00) P. E1 (Fleishman, Sandra)

A group of Fairfax, Va., condominium owners has filed suit against Carrdinal Place LLC, alleging that they were the victims of a bait-and-switch scam. The suit challenges the practice of brand-name builders advertising properties that are sold by limited liability companies (LLCs), which are essentially shields that protect owners from lawsuits. The plaintiffs argue that their attempts to have problems with their complex fixed under warranty were unsuccessful because the LLC designation provides protection for veteran builder Edward R. Carr against legal action. Plaintiff's lawyer Beau Brincefield Jr. said, "What most home buyers don't realize until too late is that...they usually sign a sales contract with a limited liability entity that is owned by, or affiliated with, the brand name but is a separate legal entity." Attorney Roger D. Winston, on the other hand, says that this is not an issue about the legitimacy of LLCs but rather a question of how Carrdinal Place LLC conducts business. LLCs, Winston contends, are necessary protections employed by builders to fend off frivolous lawsuits. Carr denies the allegations of fraud and misrepresentation and is seeking to have the charges dismissed.

Fleetwood Homes Announces Industry First Two-Year Limited Warranty Program
PRNewswire (01/31/00)

Manufactured housing producer Fleetwood Enterprises Inc. on Feb. 1 begins offering a two-year warranty on its entire stock of factory-built homes. The warranty--which covers appliances, plumbing, heating, electrical systems, and all structural components--is much more comprehensive than the industry's average warranty product. In addition, Fleetwood does not charge deductibles or service fees for covered repairs and replacements. "We are pleased to offer the best warranty in the industry," said Nelson W. Potter, president and CEO of Fleetwood. "This initiative is the latest example of our commitment to providing our customers with confidence and peace of mind when purchasing a Fleetwood home." Fleetwood also offers its customers a one-stop call center for all equipment repairs. 

Firm Leaves Homeowners in Lurch
Denver Business Journal Online (01/10/00) (Svaldi, Aldo)

Denver-based Rocky Mountain Home Warranty Inc., which began operating in 1994, has received several complaints from homeowners over the last few years. The company now appears to have gone out of business, leaving customers nationwide with home warranty contracts that are essentially worthless. Most of the grievances filed against the firm involve unanswered requests for repair coverage. In some cases, Rocky Mountain did respond after a while but offered only limited coverage. The problem has been magnified by the growing importance of home warranties in today's housing market as a tool for homesellers and Realtors to market their properties. In the case of Rocky Mountain, the problem was so severe that the Better Business Bureau eventually revoked the company's membership. The Colorado Attorney General's Office will now review each case, but it may have difficulty determining fraud because the home warranty business is largely unregulated in the state. In the meantime, experts recommend that homebuyers looking for a warranty seek out an experienced company.

Home Warranty Association Offers Streamlined Education Course for Real Estate Community
Business Wire (12/08/99)

To help real estate professionals understand the role of the increasingly common home warranty, The Home Warranty Association of California (HWAC) is offering a streamlined course on the topic. Agents can now attend the class, "Opportunities and Advantages of Home Warranty Disclosure", in three one-hour segments instead of devoting an entire three-hour block of their time at once. "Our new format provides the real estate community with greater flexibility to attend the course, and greater ease of scheduling by local real estate companies and realty boards," according to HWAC President Ray Adams. "The course will reach more professionals who are more likely to have one hour available than three." The instruction is open to California real estate licensees and can be applied to Department of Real Estate requirements for continuing education. HWAC instructors will elucidate the ins and outs of the home warranty product--including its role in today's real estate transactions, the parlance of home warranties, disclosure issues, and a warranty's relationship with the Department of Insurance and the Home Protection Company Act.

Farmers Insures Appliances, Plumbing, Electrical Systems
Best Review (P/C) (11/99) P. 114

A Homeowners Plus policy, offered by Farmers Insurance Group, is designed to limit the inconvenience and cost of home-appliance repairs. After calling a toll-free repair number, policyholders receive repairs from Sears National Network specialists. Policyholders no longer have to search for quality technicians or pay for extended warranties on plumbing systems, electrical systems, refrigerators, built-in dishwashers, washer/dryers, and ovens/ranges/cook-top stoves.

Texas Journal: Court Expands Protection for New-Home Buyers
Dow Jones News (11/24/99) (Flood, Mary)

The Fourth Court of Appeals in San Antonio has ruled that Centex Homes cannot enforce contract provisions that require new-home buyers to waive a guarantee that their houses are in good condition. The ruling against express, or limited, warranties means that homebuyers may be entitled to free repairs even if their contract waives this provision. While the court decision should benefit homebuyers, builders say that limited warranties are important to help spell out clearly what is covered under the repair provisions of the contract and to prevent frivolous lawsuits. Currently, according to Texas Association of Builders President Randall P. Birdwell, about half of the state's homebuilders ask buyers to sign a waiver that lists specific defects that can repaired under a certain time frame. Implied warranties place builders at a significant disadvantage, he says--especially when the company is held liable for damages that may have been incurred by previous occupants of the home. Four San Antonio homeowners challenged the builders' stance early last year, however, contending that Centex violated the state's deceptive trade practices law. Centex general counsel Brian Woram, arguing that warranty requirements will be even more confusing as a result of the ruling, says the firm plans to file an appeal. 

Warranty Might Help a Home Sell More Quickly
Washington Times (10/15/99) P. F3 (Sicks, Chris)

A home warranty can be powerful incentive when it comes to transforming a potential buyer to an purchasing buyer. Basically, this document provides a form of insurance on the major systems and appliances of a house. These policies--which generally cover heating and electric systems as well as washers, dryers, ovens, and dishwashers--are relatively inexpensive and can often times boost the overall sale price of a home. There are, of course, several considerations to keep in mind when dealing with warranties. For example, it is important to know that it will not take responsibility for problems that existed prior to the coverage. Also, because warranty companies often cover work done by a select group of servicers only, it is best to go through the company when there is a problems. Repairs generally will cost the homeowner between $50 and $100, which means that small, easy-to-fix jobs are better remedied without the assistance of the warranty company. Many times, warranty companies will use inferior products to fix a problem. Thus, it is the homeowner's best interest to make certain that comparable parts and brands are being used to replace faulty ones. Finally, a home warranty is not a signal to buyers that a home inspection is unnecessary. To the contrary, a home inspection can reveal problematic areas with a home that are not covered by the warranty, for example the roof, doors, walls, and swimming pool.

Home Sellers Make Many Warranties to Buyers
Naples Daily News Online (09/05/99) (Bowie, Raymond J.)

During the process of selling a home, homeowners must often make promises to the buyer in the form of specific provisions in the sale contract. These provisions, also known as warranties, ensure that the seller makes certain commitments and is liable for the condition of the home. There are two generic types of seller warranties: the first concerns the physical condition of the property; the second concerns the legal title of the property. The specific provisions found in the contract will vary, but for the most part, the seller is only liable for the provisions outlined directly in the contract. Regarding the physical condition of the property, home sellers must make sure that the structural and mechanical systems of their home are simply in working condition. This only means the system must work according to the way they were designed, regardless of how old they are. In order to make sure the home's system's work properly, the sales contract will usually allow the buyer to make two inspections of the home, one after signing the contract, and another immediately before closing. Most of these warranties are determined by the buyer and seller, but there are some provisions, such as lead-based restrictions, that are mandatory in the contract. The legal title concerns the buyer's legal access to the home. In this case, the seller must make sure that all title and warranties for the home are correct, or else the contract will be voided. Most sales contracts follow comprehensive titles, which completely shift title of the home from the seller to the buyer. Buyers should also obtain title insurance to cover the warranty.

Wise Up to Home Warranties
California Real Estate (06/99) Vol. 79, No. 5; P. 22 (Kirk, Patricia)

Home warranties used to be considered an optional aspect of a home purchase that Realtors sometimes used as a marketing tool. Today, eight out of 10 homes sold in California include a home warranty, according to Ray Adams, president of the Home Warranty Association of California (HWAC). Most home buyers expect a warranty as a means of protecting the home and making sure it remains in good condition. Warranties also help Realtors by removing them from liability while allowing them to protect consumers. The average cost of a home warranty in California is about $300; but Realtors say its value extends beyond the price, offering "peace of mind" to agents as well as to home buyers and sellers. When suggesting home warranties to buyers, Adams says Realtors should review the warranty, explaining what the document does and does not cover--as not all home warranties are identical. In particular, Adams notes that most home warranties last about one year and cover "normal wear and tear"--but not property upgrades. Adams also says that claims on home warranties may be based on the lifestyle of the family.

Proposed Legislation Will Help Californians Buy New Homes
Realty Times Online (07/07/99) (Amoruso, Dena)

A University of Southern California Lusk Center Research Institute 1996 survey of local home builders uncovered concerns over the rising problem of construction defect litigation. The survey showed that 79 percent of local builders had faced some form of litigation. This trend reflected another more significant problem--a lack of affordable housing construction. As a result of their litigation fears, 68 percent of the survey's respondents say they no longer build townhouses, and 86 percent no longer build stacked housing. In addition, fewer insurers in California are covering developers of multi-family or stacked housing, and those that do offer coverage require high deductibles. In an attempt to curb the rise in litigation cases, the Coalition for Quality, Affordable Housing has joined with California Assembly member John Dutra to introduce the California Homebuyer Protection and Quality Construction Act of 1999. The legislation aims to promote quality affordable housing, while at the same time protecting home builders from litigation. According to the legislation, housing developers must offer home buyers a California Home Construction Warranty that would ensure timely repairs of defects for new homeowners, encourage quality affordable housing construction, limit frivolous litigation by providing consumers with an easy arbitration process, and guarantee that only financially sound companies will back the warranties.

Your Options When Problems Arise With Builder's Work
Cleveland Plain Dealer (04/03/99) P. 4-W (Budish, Armond D.; Karakul, Kurt)

The process of constructing a new home usually runs smoothly with minimal problems, but there are times when serious problems and misunderstandings can arise between home buyers and builders. While buyers should attempt to resolve the problem early, there are contractual and legal solutions if this is not possible. Most contracts between buyers and builders contain an arbitration clause that says serious problems will be resolved through arbitration, typically a shorter and less costly process than actually taking the builder to court. When examining the arbitration provision in the contract, home buyers should consider who the arbitrators will be, if the decision is binding, if the loser pays all fees and costs, and what the process is for filing for arbitration. Even though this step is less drastic than a court case, home buyers should still attempt to solve the problem informally before resorting to arbitration. The builder's contract should also include a warranty stating that within a certain period the builder will repair any problems that arise. Home buyers are often entitled to additional protection if they can prove the builder acted negligently.

CNA Unveils First Home Warranty Protection Available Through Independent Agents
Business Wire (03/31/99)

Insurance company CNA and Home Security of America have launched CNA Home Warranty, the first home warranty product offered by independent insurance agents. The CNA Home Warranty provides coverage for the breakdown or damage of a home's mechanical systems, appliances, and utility systems. There are no coverage limits based on the size of the home. According to Robert C. Ritchie, executive vice president of CNA Home Warranty, offering the service through independent agents gives it a wider distribution base, provides more flexibility to homeowners, and provides coverage for traditional wear and tear of a home's systems. Coverage is also available through a homeowner's personal line insurance agent, rather than simply through a real estate transaction, according to Robert J. Lehmann, president of Home Security of America. Buyers have a number of coverage and payment options.

Over Eight of 10 Existing Home Sales in '98 Included a Home Warranty in California
Business Wire (03/23/99)

For the second time in five years, over 80 percent of buyers of existing homes in California last year also purchased home warranties, according to the Home Warranty Association of California. In addition, the HWAC reported that the total number of home warranties sold increased 11.5 percent in California last year to a new high of 355,364 contracts. Ray Adams, president of HWAC, attributed the trend to growing recognition of the monetary value and risk reduction that comes from purchasing a home warranty. Home warranties typically offer one-year coverage of a home's major operating systems, including plumbing, heating, and electrical. Recently, some companies have also offered coverage for items such as washers/dryers, refrigerators, and garage door openers.

Real Estate Brokers Agree Home Warranties Ensure 'Peace of Mind' in Resale Transactions
Business Wire (02/23/99)

Eight out of 10 sales of used homes in California include home warranties as part of the deal, reports the Home Warranty Association of California. Real estate brokers praise the warranties for making buyers, sellers, and agents feel more confident about the home resale market. Home warranties generally involve a one-year contract insuring a home's mechanical systems, such as plumbing, heating, and built-in appliances.

How Valuable Is a Warranty?
Money (10/98) Vol. 27, No. 10; P. 210 (Caplin, Joan)

The National Home Warranty Association (NHWA) says that these days a growing number of homes are sold with a warranty that offers to cover any built-in appliances or mechanical systems that fail. The number of such guarantees has almost doubled over the past five years, yet these offerings are not always as useful as they may seem. For the people selling the house, warranties are only a help in some markets--in Miami, for example, they add no value to the home, while in California eight of 10 listings include a warranty. Two years ago, the real estate firm ERA reported that homes with a warranty sold 27 days faster and for 2.7 percent more. Those interested in finding out more about the viability of warranties in their area should ask a local real estate agents. To obtain a warranty, which typically run between $350 and $450, NHWA (www.nhwa.com) can offer referrals to an agent or contractor. Bruce Hahn of the American Homeowners' Foundation warns that warranties do not cover everything; often roofs, foundations, and breakdowns known to be due to inadequate wiring or pre-existing conditions are not included. Furthermore, some warranties serve merely to cap fees, while others cover only repairs and not replacement. If you have already bought a home and are considering a warranty, it might be a good idea if the appliances are high-end, or more than 10 years old, and you have just drained your savings for the down payment.

Home: A Warranty for a Resale Home Is not of Much Value ...
Moneysworth (08/98) Vol. 4, No. 8; P. 1

Prospective homebuyers may not be able to rely as much on warranties as they would like to, according to Jordan Clark, president of Washington, D.C.-based consumer advocacy group United Homeowner's Association. For one thing, structural problems, preexisting conditions, and building code violations most likely are not covered--warranties tend to cover repair work or replacements involving plumbing and appliances. Second, there is a good possibility that the warranty company is not even in financial shape to cover costs, since the industry is unregulated in most states. "Get a thorough inspection before you buy to determine the home's condition," said Clark. "Negotiate with the seller to repair or replace defective items before you sign a contract."

Compassion ... but It Was too Late for Help
Chicago Tribune (06/07/98) P. 16-1 (Kerch, Steve)

Estate homes can prove to be particularly troubling for For-Sale-By-Owners if the sellers live out of town, and if the property has not been lived in some time. Chicago Tribune columnist Steve Kerch recalls the legal hassle a Chicago woman found herself in when the buyers of her estate home sued her for $80,000 worth of repairs. The home was sold to a nice couple down the block. But even with the assistance of a real estate attorney, the woman entered into a contract that had a "warranty" rider "that the major components of the house were warranted to be in operating condition at the time of closing," according to Kerch. And what made the sale even more of a problem was that the buyer of the home never had the home inspected. For those dealing with estate homes, Kerch's advice is to make sure you hire a professional Realtor. Also, it is essential that the home be inspected. And finally, simply sell the home "As Is" if you are not concerned about repairing the home.

Just What Does a Home Warranty Guarantee?
Chicago Tribune (12/13/97) P. 4-1 (Gilje, Shelby)

Contrary to popular belief, warranties on new homes do not guarantee structural perfection. Prospective homeowners may be surprised to find out that cracks, creaks, and squeaks may not be covered under their one-year warranties, particularly if the overall structure of the house is considered sound. According to Douglas Tingvall, general counsel for John L. Scott Real Estate of Seattle, builders are only required to fix such problems when the cracking or settling hinders the serviceability of the home or exceeds normal construction tolerances. Consumers also may be surprised to find out that builders are not required to repair cracking or settling that occurs. Gary Wright, president of the Washington Association of Realtors, notes that some problems are simply the result of normal "wear and tear" and that others are beyond the control of the builder. Prospective buyers should keep in mind that their home warranty is not an insurance policy. Moreover, homebuilders offer warrantees that vary significantly after the first year.