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Home Warranties - YouTube
Channel: The Real Estate Classroom
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hey everyone if we're meeting for the
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first time my name is paul vachesky and
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welcome to the real estate classroom
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youtube channel where our mission is
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simple
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and that is to help you pass your real
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estate exam the first
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time hey real quick do me a favor give
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this video a thumbs up hit that red
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subscribe button click on the
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notification bell
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in today's real estate exam prep video
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we're going to discuss
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warranties and what you need to know for
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your real estate exam so
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let's get to today's video
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so in today's real estate exam prep
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video i want to discuss
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three specific types of home warranties
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that you have to know for your real
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estate licensing exam
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and this is important because typically
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as we dive into each one of these three
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the licensing exam likes to ask
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questions about the different types of
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this home warranty is for this and this
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warranty is for that
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or they'll ask a question that says that
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you know it's a brand new home
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and there's a structural issue this
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would fall under
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what type of warranty so you have to
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know the differences
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in the warranty now
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now the first one i want to talk about
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is called the home warranty or we call
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the existing home warranties this is for
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existing homes
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and they can be purchased really by
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anyone it can be the buyer seller and
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many times even the agent will
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as part of their marketing program they
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will purchase the home warranty on
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behalf of their client now
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coverages do differ based on the
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different
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home warranty companies that are out
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there so when you become a practitioner
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it's
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you're going to know all the different
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companies that operate in your area and
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what the coverages are
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but for the purposes of the exam here
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are the typical types of items
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that a home warranty would cover heating
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and air conditioning systems the
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electrical systems the plumbing systems
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appliances is a big one hot water
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heaters those
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type of things they typically don't
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cover like structural items
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uh or faulty product so bad
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shingles on the roof or poor workmanship
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they typically don't cover those type of
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items
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and you can also purchase on in addition
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to these warranties
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what we call coverage riders to cover
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things like
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pools and hot water i'm sorry uh hot
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tubs
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and saunas and those type of things and
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a lot of that too is based on
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the different areas of the country
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you're operating in
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now typically what happens is no matter
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who's paying for it there are two
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options for coverage you can have an
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evaluated policy or a non-evaluated
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policy and not every company offers both
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but now what's the difference between
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the two well typically
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on the non-evaluated home warranty
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policy
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for a certain period of time which is
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typically 30 to 60 days
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nothing is covered under the warranty
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nothing at all and then after that
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then the coverage kicks in and then most
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of the
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different components are covered such as
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heating and air and electrical
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now typically with the non-evaluated you
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might see higher deductibles
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and higher shared cost where you're
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going to have to share some of the cost
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with
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the home warranty company the other one
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is the evaluated this is where an
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inspector from the
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warranty company is going to actually go
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through not unlike a home inspector
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and they're going to go through and
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check all the different
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systems that is covered under the
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warranty so the heating and
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air and the plumbing systems and the
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electrical systems and
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they're going to check all the
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appliances and if there is a defect
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that item is not covered so here's what
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happens let's say the inspector finds
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that the stove is not operating
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correctly
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so what they're going to do is issue the
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warranty over all the other components
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and there's going to be an exception for
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the stove
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up until the point that the stove is
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repaired and once the stove is repaired
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then the stove then is covered by the
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home warranty
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and the home warranty company may or may
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not want to do a re-inspection of the
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stove that depends on the company
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point is is there's two types there's an
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evaluation that's done on one type of
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warranty
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and then there is some companies do
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offer that non-evaluated
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coverage annual premiums apply so every
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year
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the homeowner is going to receive a bill
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and pay the premiums if they want to
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continue
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that coverage and then deductibles also
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apply now
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remember deductibles may be different
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between the evaluated policy and the
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non-evaluated policy and the the amount
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of deductibles do
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do differ depending on the company that
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you use for the home warranty
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now i know i'm going to get comments on
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this from those that are in the existing
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real estate profession
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whether or not or they're going to give
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your opin their opinion on whether or
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not home warranties
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are good or not and we're not going to
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go down that road because the purpose of
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this video
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is for you passing your real estate exam
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and which you need to know for that exam
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so we're going to leave it at that
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let's go on to the next type of warranty
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now the next type of warranty i want to
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talk about is new construction warranty
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and a new construction warranty
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again is a lot like like the existing
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home warranty where
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the buyer or the builder purchases the
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warranty from a warranty company
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and it does cover many of the same
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things
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that the uh home warranty the existing
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home warranty covers
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but there are some exceptions the first
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one is
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it typically covers the
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items that the builder warranty does not
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cover and i'm going to talk about the
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builder warranty
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in the next slide here so it insures
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those items like the home warranty does
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if the builder does not cover it in
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their warranties it also
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applies in case the builder goes out of
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business or goes bankrupt
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uh it will then take over the items
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that the builder warranty you know is
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not going to cover because the builder
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is out of
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um out of business now in reality in the
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practitioner world
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there are several different levels to
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this and each level
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is is more expensive because each level
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it covers more items
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and every warranty company has different
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levels and what they cover so when you
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get into the real estate business or if
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you're doing new construction or you're
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representing buyers a new construction
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you're going to want to find out if
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there's any
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new construction warranties in your area
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and what it covers the basics that i
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want you to know for the real estate
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exam is
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it mirrors the existing home warranty
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and the biggest difference is
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the deductibles are typically higher and
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the coverages are different
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and the big thing is it ensures if the
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builder warranty doesn't cover anything
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and or the builder goes out of business
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that's the biggest things you have to
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know
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all right so the third and final type of
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warranty i want to discuss is a builder
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warranty and the builder warranty is not
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unlike your dealership warranty your
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bumper-to-bumper warranty that you get
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when you buy a new vehicle
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it is a warranty that comes directly
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from the builder
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and more items are covered or larger
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items are covered by the builder than
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what's in the home warranty
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and that is the builder's gonna cover
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those things that like defects and
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materials
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like bad shingles on the roof or they're
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gonna
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they're gonna warranty faulty
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workmanship or structural
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problems now in a builder warranty they
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may or may not cover
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items like appliances so you may need to
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get a
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home a home warranty or an existing home
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warranty for
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the appliances and typically builder
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warranties have multiple
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levels of coverage so for example the
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first year after the occupancy
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certificate
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is issued by the local government for
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that first year the builder is going to
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pretty much
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warranty everything maybe from one year
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to five years they're going to cover
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uh a few things but not as many as in
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the first year and
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and i've actually seen some builder
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warranties on some items go all the way
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out to 10 years but that
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is rare so so it really is something
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that if you're representing new
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construction clients
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when you're advising them it is it's a
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big deal
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and you need to know what each builder
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in your community
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has to offer in their builder warranties
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and as always you want to make sure
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these warranties are put in writing
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and then there's typically so if you're
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going to continue studying for the real
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estate exam i highly encourage you to
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check out this video right here
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and if you have not subscribed to the
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channel please do so click the little
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circle to my left
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comments and questions down below love
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comments and questions
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it's all i got folks i'll see you in the
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next video
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