As much as saying ‘yes’ to this question should go against every fiber of your being, sky rockets should flare, alarms should sound, and red flags should shoot up, many good agents like you find themselves saying ‘yes’ in error to their clients when they are asked this question; it is misrepresentation and you are breaking the law.

Nevada revised statute 645.645 is clear when it addresses the importance of representing the home warranty properly. An agent must represent the sale and the provisions of the home warranty contract accurately as well as appropriate the funds properly or they may be found in violation and subject to twenty years in the state penitentiary. Okay, so it may not be twenty years in the big house but the very reason that this statute made it into real estate sales law is because it is important.

Have you ever heard this one? “Don’t worry if it isn’t working now during our walk through, I’ll slap a warranty on it at closing and you can just call in a claim a few days later and they will come out and fix it.” As God is my witness I cannot tell you how many times I have heard this one! This is flat out insurance fraud. Every warranty company in the business does not provide coverage for a home’s systems and appliances that are already known to be broken. If an agent tells their client there is coverage when they know something is already broken and conceals this information from the home warranty company, they likely will be found to be guilty of fraud. Subsequently, fraud is never covered under a professional liability insurance policy. This creates bad juju.

Juju is the magical power attributed to the prospect that bad things happen to people that do wrong. Fraud is bad so don’t do it. On a lighter note and the converse to bad juju is good juju. Good things happen as a result of people doing good deeds. The best deed or service an agent can provide to their client is the gift of having realistic expectations. Home owners that have to shell out $6,500.00 for a new five ton air conditioning unit less than a month after closing typically do not fit the mold for repeat customers nor do they usually turn out to be strong advocates for helping to build your referral base. There is an easy answer to this problem, however; honesty.

Saying, “I don’t know,” followed by, “let’s find out together.” Is priceless! At this point you would call your home warranty representative or the 800 number and allow the warranty employee to present the home warranty, its options, upgrades, benefits, limitations, and exclusions to your prospective buyers and sellers. You are left with simply taking notes and then putting those notes into your working file.

Home warranties were designed to help, aid, and minimize high unexpected out of pocked repair and replacement costs to a home’s systems and appliances; they do not cover everything. A really good representation that will earn you a place in the heavenly realm is to tell your happy homeowners-to-be that there may be and likely will be ‘non-covered’ costs associated with a ‘covered repair.’ “What? You mean to say there may be additional costs to a home owner more than the premium and deductable?” “Yes. I did mean to say that.” Shocking as it may be, home warranties much like car insurance, home owners insurance, and car warranties are subject to rules, boundaries, and limitations. Home warranties are not a ‘catch all.’

A retail cost for a hot water heater replacement from a licensed plumbing company for your typical thirty or forty gallon water tank will run a home owner in the range of approximately $800.00 to over $1,100.00. Basic home warranties usually cover for the new water tank and the labor to put it in but that leaves charges for earthquake strap supply and installation, flex lines, ball valve, sediment traps, permitting fees, etc. These charges are expected to be paid to the plumber by the home owner at the time of service. Make sure your clients read through the home warranty contract and look to see if there are any upgrades available to purchase in addition to the basic premium. Even when an upgrade is purchased, the policy limits may be exhausted and ultimately result in additional monies being owed to the plumber. This is why it is important to read the contract verbiage.

Home warranties are used on average more times per policy year than either homeowners insurance or title insurance policies by the tune of an approximate average of two times per year. Owning a home without transferring some of the mechanical repair and replacement cost onto a warranty company is a gamble. Protect yourself and your clients from the high cost of home repair, include a home warranty plan at closing and remember: When properly presented, the home warranty is invaluable in terms of reduced liability to you and peace of mind to your clients. Next time your client asks you if the warranty covers everything what will you say?