We don’t plan to keep the home that long. Best guess is 2-5 years (and if it was my sole decision we would have bought a different place in December and I’d be picking out furniture right now).
I just need it to work until the next buyer’s inspector arrives.
There is no proration.
I just got the sample contract, so I haven’t yet consumed the whole thing.
I’m looking at the Essential Plan, which is $372 for the first year (with $200 promo code applied), and which will obviously be more in subsequent years. Service calls at that premium are $125 each (takes 3 service calls a year to come out ahead at the $100-per-call level based on the additional cost).
The reason for my initial rant on this btw was the conversations I had with Choice Home Warranty and Liberty Homeguard.
Both calls were hard sells (“Sir, if you’ll give me just one more minute to talk with my supervisor, I promise I’ll come back with a price that will blow your mind.”).
Plus one capped HVAC coverage at $3k and the other at $6k.
When I explained how this didn’t make sense mathematically based on the cost of coverage, I got: “Don’t think about it like that.”
“Nick” even told me that he’d be my personal contact in case I had any issues.
36 years old - take that. The piece of crap in my apartment is loud and would require a custom-built unit, so no one replaces them. They’re horribly inefficient, but we only have two air vents, which I’ve never understood anyway. Maybe people should buy more cars from me so that I can finally buy a place and move out of here. Hahaha.
When is the last time you have the HVAC system inspected and cleaned? If you’re just trying to mitigate that risk, local companies sometimes offer a maintenance/warranty. My recollection the last time I had an hvac service contract it included discounts on parts and labor if the system ever had to be repaired/replaced after first service.
By far the best coverage for my needs was from First American Home Warranty (no cap on HVAC coverage, while the other two were $3k and $6k).
They also had the best price.
The FAHW agent was also by far the most professional and consultative. She was more interested in aligning my coverage needs with the right plan than making sure she talked me into buying something before I hung up.
Choice Home Warranty was oily from the moment the guy answered the phone.
I didn’t spend a lot of time with Liberty because their coverage didn’t meet my needs, but they seemed a lot more professional than Choice but were more sales-y than FAHW.
How long are you willing to go without AC when it breaks? [Assume it will break on the hottest day of the year. ]
Are you willing to have them fix it, but take a week to do so?
Be prepared that if they fix it (or replace it) there will be additional costs outside the deductible/etc.
My experience: Purchased current home in 2012. Home was 10 years old with original Lennox HVAC equipment. Seller included 1 year home warranty with sale of house. Fast forward to early September and 2nd floor AC stops working - 95 degrees in humid NC for the next week. (It was a Wednesday). Warranty company sends out service person 24 hiurs later (as they do some sort of reverse auction lowest bid on the service call). Guy is from city 60 miles away. [There are plenty of qualified HVAC people in my area.]
He comes over says compressor is dead - no kidding, I already knew that. A normal HVAC person could run to the shop and have a compressor installed same or next day. He needs to reach out to the warranty company who then had 24 hours to start a reverse auction process on the replacement part. Their auction process to get the lowest price part had to run for 48-72 hours, after which they would order the lowest price item, wait up to 2 days for it to arrive, then schedule a technician to install it. This would put us at over a week without AC upstairs where all the bedrooms are. School is back in session - so relocating temporarily isnt feasible, temps are already 85 degrees inside the house. Its insanely humid, so opening windows only makes things worse.
In the end, I short circuit the process and ask for the buyout price (where they give you what the cost of the part would be), contact my HVAC guy who is able to install a new coil/compressor/condenser with the new refrigerant on a Saturday AM, at least 4-5 days ahead of what the warranty company could do.
After 13 years, that unit died this summer and we had the whole thing, including the furnace this time, replaced.
I’m not a fan of home warranties after that experience.
At first I straight up thought this was trolling as home “warranties” are one of the biggest scams out there. Anyone considering one of these should also think about purchasing “credit life insurance” and seeing a fortune teller for their next investment decisions.
Out of curiosity, what warranty company was this? Just from my limited phone sampling during the sales process I can tell that they aren’t all the same, which is true about almost every category of business.
I also have some mitigating factors:
San Diego climate
This isn’t our main home, and I don’t have to be here at all
My parents have a house 10 minutes away (and they’re only there full-time in the winter)
I have other family and friends in the area
Realistically, the other viable alternative is to continue self insuring for the entire amount of replacement for both the 21-year-old AC system and the equally-old furnace.
If we assume $600 a year for coverage after the first year ($400), and consider the scenario in terms of the HVAC system’s age, cumulative spending on coverage looks like this:
Also, I’m not looking at this primarily as insuring for routine repairs, I’m insuring against the need to replace the AC, the furnace, or both, before we sell in some indefinite amount of time.
If you’re selling then you DEFINITELY want to change out the AC. Average age of life on an AC unit is 10 years. Unless you plan on selling it as a dilapidated POS, then it’ll absolutely help you to maximize your selling price.
Agreed, and beyond the AC for sure. I have seen savvy buyers absolutely blow deals up prior to closing and after a real inspection on a million different maintenance/replacement items.
Problem: the comp roof is 20-25 years old, and it needs to be replaced with a full tear off. We want a $50k credit at closing.
Fix: Spend the $25k before it hits the market, raise the initial ask by $20k, plaster “new roof” all over the listing and recoup way more than being out $50k at closing.
This applies to many deferred maintenance items across the board. Other than a roof and painting/stucco, HVAC is right up there.
I can still proactively replace the HVAC system before listing the home, if it makes more sense at that time.
What I’m doing now is betting that the AC and/or the furnace is more likely than not going to require replacement before I list the home at some indefinite future point.
The coverage is worth something. How much? That’s always the question when insuring against a loss.
Insure against a loss? How about not taking a loss with a “better way” all around?
Get a zero cost @ closing (or close to zero) home equity loan from someone like SoFi that will cover all your items/needs, deduct the interest on your taxes (assuming you are in a position to be able to do so), fix and/or replace all of your deferred maintenance items/issues, update the home where needed and then have it sale-ready when you need to pull the trigger and now at an increased price as it will be turnkey. You also enjoy the benefit of having lived in the home while upgraded as well.
Pay the loan off in full when it makes sense tax-wise, or at closing if need be if you can’t pay in full prior to close if the tax standpoint does not work out, etc.
Just a suggestion, but the above is both a “peace of mind” and “actuarial decision” at the same time if done correctly and if it works from a tax standpoint - and assuming you have equity as well.
Edit: and the above is not tax advice as well of course.
I’ve been listening to nail guns all week as my roof is being replaced, in preparation for this exact same scenario. Sadly, it won’t move the need on the asking price, as I’m pretty hemmed in by the market and location comps, but I’m hoping that it’ll help the unit sell faster. The water heater is over 10 years old but I’m contemplating on whether to bother with that as its far less of a selling point.
You may want to check into seeing if there’s any electrical rebates for a heat pump water heater anyway.
We did that for a heat pump water heater and our utility basically paid for the entire unit on a rebate, and the labor for the haul away and install was fairly cheap.
Volunteer coordinator emailed a bunch of volunteers: Can anyone pick up a disabled donor and his electric wheelchair and drive him to our event this weekend?
Me: I can help if the wheelchair will fit in a mid-sized SUV and it can be lifted by just me.
Coordinator: You’ll need a truck or minivan. Mr. X has helped in previous years. I copied him here for specifics.
Mr. X: Thanked me for volunteering, referred to me by someone else’s name, and gave me the donor’s phone number.
