5 home warranty tips

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If you’ve been trying — without success — to sell your house, it might be time to consider a little sweetener for the buyer. Offering a home warranty might amount to peace of mind for the home shopper who looks skeptically at your dishwasher, furnace or water heater and sees "old age" written all over it.

That’s the theory, anyway. Each year, literally hundreds of thousands of home sellers toss a home warranty into the sale to assuage those fears. But lately, it isn’t just home sellers buying them. With a market full of foreclosed homes that may have suffered from seller indifference or outright abuse, more homebuyers are purchasing warranties for themselves, according to some warranty companies.

But the warranties can vary widely in their worth and reliability. It can pay to shop around.

Five things to know about home warranties:

1. They’re a kind of insurance — but they’re not, exactly. They’re not like home-insurance policies, which cover loss and damage from accidents, fires, etc. Home warranties cover mechanical breakdowns for such things as appliances, furnaces, garbage disposals, etc.

"Every market is somewhat different," explained Mike Frosch, president of TWG Home Warranty Services in Chicago. "Some might or might not cover air conditioning or plumbing. But for the most part, you should be able to cover your major systems, and then there will be options available, programs for your pool or spa motors, or your septic tanks."

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2. Frosch estimated that the typical warranty costs $400-$450, though he said there could be regional price variations.

Art Ansoorian, a spokesman for the Home Warranty Association of California, a trade group, said warranties in his state — where nine in 10 home sales offer them — average closer to $300.

Most home warranties cover breakdowns of these mechanicals for one year, though the contracts can be renewed. When a covered item, such as a refrigerator, breaks down, warranty companies typically require the homeowner to use their affiliated contractors for repairs.

The homeowner pays a fee that covers the service visit, usually from $25 to $100 though this, too, can vary by region.

3. As popular as they are, home warranties have their detractors. For several consecutive years, Angie’s List, which compiles consumer-generated ratings of local companies, has put the industry at the top of its annual list of most-complained-about services. …CONTINUED