Today the team digs in on some highlights about home warranties. They break down some topics from a discussion with Shelley Johnson with Home Warranty of America.
Reuben discusses the basic and specific coverage for a home warranty. They talk about coverable cases for PEACH: plumbing, electrical, appliances, cooling, and heating. Bill highlights that home inspections help the warranty situation; warranty companies need to know that these units and equipment work before they provide warranty coverage.
They talk about testing and documentation for furnaces, water heaters, air conditioners, and air exchangers. . They also talk about ice makers, dishwashers, microwaves, washing machines, and clothes dryers. They also discussed the recommendations for these units. Reuben mentions that some of these are excluded from home inspection standards of practice.
They revisited other surprising topics and home warranty options discussed by Shelley Johnson. She can be reached at 763-221-1098.
TRANSCRIPTION
The following is a transcription from an audio recording. Although the transcription is largely accurate, in some cases it may be slightly incomplete or contain minor inaccuracies due to inaudible passages or transcription errors.
Bill Oelrich: And you’re listening to Structure Talk, a Structure Tech presentation. My name is Bill Oelrich alongside Tessa Murry and Reuben Saltzman, as always, your three-legged stool, coming to you from the Northland, talking all things houses, home inspections, and anything else that’s rattling around in our brain. Well, welcome. Today’s episode, we are going to dig into home warranties, and Reuben, Tessa, I hope you’re doing well. We tried to do a podcast on home warranties, and it was an epic fail, based solely on technology. We had some really, really, really bad quality audio coming through, and we had to scrap it, but we wanna have this conversation and discuss some of the highlights of home warranties. I know, Reuben, you dug around home warranties to see if this was something that we could maybe partner up with inside of Structure Tech to add another layer of, I guess, options for people.
Reuben Saltzman: Another offering, yeah. Yeah, and it really was born, and I think our listeners heard the interest happen live on one of our podcasts where we had an agent on, Joe Schwartzbauer, and he was talking about how awesome it would be if we could actually offer warranties. And so we did a lot of digging into it. I ended up reaching out to a bunch of larger warranty companies asking ’em, what would it look like if we partnered up with them? And basically the answer was either, “No, we don’t do any type of partnerships,” or, “Yes, absolutely, we would love to partner with you.” And then I say, “Alright, what does a partnership look like,” and they’re like, “Well, you give our name out, and we’ll do the warranty.” [laughter] And it’s like, “That’s not a partnership. You will allow me to refer to your business. That’s it.”
[laughter]
RS: So I will admit, those companies are definitely better sales people than some of the other companies who just flat out said no, but I really couldn’t figure out any way for us to have any type of collaboration, where we each gain something from this relationship. And for us, gaining something, would be to give our clients a better deal on a warranty like, “Hey, normally this warranty is $1000, but get it from us, and you can get it for 800,” something like that, that’d be a good deal.
BO: And the basis of that discount would be, “We put eyes on this house already, we have a good understanding of the likely failure points, or not, and based on what we’ve seen, this would be a good risk for a warranty company to come in,” and, was that where your head was at?
RS: Well, I was thinking that, if it’s something that people are already interested in, we’ve already collected a ton of data about the house, and we could just send over like a package. It could be automated. I’m sure a warranty company’s gonna wanna know the address, and the buyer’s info, and how old the house is, age of… Well, they don’t even care about age of mechanicals.
BO: They would. [chuckle]
RS: Age of mechanicals. You’d think they would. And I’m stepping all over our podcast, ’cause that’s what we’re gonna talk about today, is some of those requirements that warranty companies have. But my thought was that, we’ve got a lot of data about the house. It seems like we could just click a few buttons, send it over to a warranty company, and then home owners could purchase it. It could be kind of a seamless transaction. Because as we know, setting up these home warranties and doing all the paperwork and registering all of it, it’s kind of a pain in the butt, and it falls on real estate agents to get all this stuff done, and to educate clients about all of this, and I thought, “Maybe it’s something we could do.”
BO: You are in the education business to a degree, so…
RS: Yeah.
BO: Okay, so we had Shelley Johnson from Home Warranty of America, join us for a podcast recording, and we just… Technology failure. So we wanted to discuss all that we discussed with Shelley on another podcast, right? Like just the three of us digging into what we learned through that conversation. And so let’s kind of start at the top. What does a home warranty cover?
RS: Sure. Even higher at the top, would be who Shelley Johnson is? She’s a local rep With Home Warranty of America, like you said. She’s been at this for 17 years here in the Twin Cities. I’ve known her for probably about 13 years, was the first time that we met, and she’s been hard at it ever since, and I see her name pop up all over the place. So she was the first person I thought of when we’re talking about, let’s contact a warranty company, or get someone on the podcast to talk about this. Back to your point, Bill, she came up with a great acronym she gave us for what these home warranties cover. She said, “Remember the word peach? And it stands for plumbing, electrical, appliances, cooling and heating.” That was her acronym, and that’s the basic stuff that they cover for Home Warranty of America. She said, “Now, if you go to different companies, might not be exactly the same, but I think it’s pretty similar. It’s kind of like a home inspection company. From one company to the next, we’re not gonna cover exactly the same stuff, but we do have our standard of practice we follow, and the same basic stuff is gonna be covered.”
BO: Okay, so based on the peach acronym, we’re not getting coverage for a roof leak. We’re not getting coverage for a rotted window.
RS: That’s right. That’s right.
BO: If your sidewalk is sinking, and you have a trip hazard at your front step, a home warranty isn’t going to cover that type of condition.
RS: That’s right, you got it. They’ve got some specific stuff they cover, and outside of that, no.
BO: That’s why you get a home inspection.
RS: Yeah, exactly.
BO: Okay, so let’s talk about the peach, plumbing. That feels like there’s a long list on the plumbing angle. I don’t even know what they would typically cover, so we’re not gonna go down plumbing. I feel like that’s how something you would wanna talk to your rep about while you’re getting into it. And electrical’s probably very similar to that. And so let’s talk about the three parts of this that really, I think everybody cares about the most. That’s appliances, heating, cooling.
RS: I agree.
BO: And so I thought one of the interesting things that Shelley had to say was, “Home warranty companies wanna know the condition, they wanna know that these appliances work before they put the policy on.” And she talked very graciously about how home inspections can really help a warranty situation and a buyer when they need to cash in on something, because if there’s good documentation of what was happening with the appliance before they owned it, there’s a better chance they’re gonna get coverage after.
RS: Yeah, yeah. She said that something that can happen a lot of the time is if somebody doesn’t have a home inspection or a home inspector doesn’t do a good job of documenting the condition of that equipment at the time they’re doing the inspection, once somebody files a claim on their warranty to say, “Hey, my furnace quit working and I moved in two months ago, I need you guys to fix it.” If a heating contractor comes out and they think these conditions existed prior to them purchasing the home, and there’s no proof that the furnace was working properly when they bought the house, they might just deny the claim. There’s really nothing to be done about it at that point. They’re looking for some type of definitive report showing this was working at the time that we bought the house, and in our case, at Structure Tech we’ll test. What do we do to show the furnace is working?
BO: Yeah, tell us. What’s the laundry list of documented items?
Tessa Murry: Hey, everybody. [laughter] I just was listening to this good conversation between you and Bill, lots of good info that we gained from our failed podcast attempts of this, but talking about the testing of furnaces and stuff, in Structure Tech, we’re definitely… We’re turning it on, letting it run for at least probably 10 minutes till it hit steady state, and then we do a measurement of the combustion gases in the flue just to see what the carbon monoxide levels are mainly. We also do a temperature rise measurement as well to see how much that furnace is heating up the air, and then we’re doing visual checks of the blower, inside the blower cabinets, and the upper compartment usually too, and checking the filter and making sure that that’s the right size and what kind of condition it’s in, and that’s mainly what we’re doing for furnaces. There’s a few little things I’m leaving out, but that’s the gist of it, and if we’re documenting all that information and that’s going in the home inspection report, and Shelley was saying that’s exactly what they need in order for you to be able to file a claim and have it accepted.
BO: Yeah, there’s a lot more teeth behind your claim if there’s good information proving that this worked within like normal standards.
TM: Yeah, it was operational.
BO: Okay, so you say you document that all in the report. What does that look like? Is this just a paragraph that says, this was the carbon monoxide reading and this is the temperature rise, or is this just a matter of you or the inspector saying it worked the way it was supposed to when we tested it? Or do you install, in the report, all of these data points that can very easily be transferred over to a warranty company?
TM: Yeah, typically if the furnace is operating properly the way that it should, the temperature rise, the CO limits, usually we’ll put in one comment that says, we tested the furnace, we did these things and it’s working acceptably. And usually we’ll have some pictures in there too to document things like the temp rise and the filter, and so I don’t think the warranty companies would be able to dispute anything if you’ve got the… Literally the pictures to prove that it was operating properly.
BO: Okay. So the data is collected in the form of a picture, it’s installed in the report, and that’s what could be shared with the warranty company when it came time to prove.
TM: Yeah.
BO: Okay, so simple process.
TM: Yeah.
BO: Okay, other appliances, water heaters, when we’re testing water heaters, when you’re testing water heaters, there’s no carbon monoxide test or anything like that, so what are you doing there and what information could be passed along to a warranty company, that’d be useful.
TM: Well, there’s lots of different water heater types out there, but the most common that we run across is like a natural draft or atmospherically vented natural gas water heater here in the city. And like you said, for that we’re not doing typically a flue gas analysis, we are turning on the hot water at each fixture and making sure we’ve got hot water, and then typically what we do is we’ll take a picture too of the temperature of that hot water to document that it was working at the time of the inspection, and that goes in our report as well.
RS: And if it’s too hot, then we’re gonna make a recommendation to turn it down for safety, if it’s too cold, then we’re gonna make a recommendation to turn it up to help kill bacteria. We will comment on the temperature of the water if it’s not in a nice little range. Yeah, like Tessa said. A lot of it is just documenting that it was working at the time that we were there. And we’ve been glad to have those photos many times in the past where we’ve had clients who’d come back and say, “Hey, my water heater not working, you guys missed this.” And we’ll go back and say it was definitely working when we did the inspection, we have photos to prove it.
BO: Okay, before we leave the furnace or the mechanical room, is there any other appliances that you’re testing and collecting data points on, putting in the report that fall underneath the peach category?
TM: Yeah, Bill, we also check cooling, and obviously that depends on the weather, but if it’s warm enough, we will turn on the air conditioning, let that run, and we’ll also do a temperature differential measurement on that with pictures documented as well.
RS: Interesting point on the cooling is that you might think, Okay, well, we did an inspection in the dead of winter, we couldn’t test the cooling ’cause it’s not safe to operate it when it’s super cold outside. We put that in our report. We asked Shelley about that, we said, “What about in those cases?” She said they are not gonna exclude coverage from that equipment because it was too cold to test, they will still cover it, that is one of their exception. So it was really nice to hear that.
BO: Great.
TM: Oh, you know what? That’s interesting, I don’t remember hearing her say that, I guess I was thinking out loud that I thought that they needed some sort of documentation of proper operating for all these appliances and heating cooling, but apparently they don’t.
BO: Well, that was one of the good parts of a home warranty, it’s sort of, this is a little safety net below your cooling department and because for six months at least out of the year in Minnesota, you shouldn’t be running this equipment. And you see that all the time when you’re doing inspections in the winter Reuben or Tess, right? People ask you, can we test this? And your standard answer is…
RS: Not if it’s too cold. I’d love to, but if it’s below 60 degrees, we’re not gonna turn it on.
BO: Even if you turned it on in those times and you didn’t damage the unit, which is certainly a possibility, all that’s gonna do is tell you whether it turned on. The bottom line is you have a little bit of a safety net in the winter time with a home warranty on your cooling unit. Alright, moving on, we didn’t talk about air to air exchangers with Shelley, but I’m sure that type of equipment would also be categorized either under heating and or cooling. So if you have that type of equipment and you get a home warranty, I would just suggest that everybody make sure they ask the question, is that equipment covered?
RS: That was something that Shelley really stressed over and over again, is if you’re getting a home warranty, you need to read the policy. You need to know what’s covered, that’s the source of just about all the complaints or frustrations that people have is not having read their agreement, not knowing what was covered and just making assumptions about stuff. So if you get a home warranty, be sure you read what it’s about, and… She stressed this point a lot, too, is make sure you get a home inspection. The two are like peanut butter and jelly. They go together.
BO: It’s interesting because you’ve seen enough inspections where the agent and the client and the home inspector are there. There’s some question about what’s covered under a home warranty and oftentimes, there’s just casual conversation, plans to speed that, “Oh, that’s gonna be covered. Don’t worry about it. I’m sure that’s covered.” They may be 100% correct 100% of the time, but just make sure. If you’re the client who’s buying the policy, make sure you understand what’s in it, right? Trust but verify. Let’s move on up into the kitchen because this seems like the one place where home inspections do not necessarily cover. You don’t have to cover or inspect dishwashers and refrigerators and ranges, right? Reuben, this is for you.
RS: Yeah, we do.
BO: Well, you do, but are you required to?
RS: Yes.
BO: Okay.
RS: We are required to.
BO: So split that hair for me. I thought you just… During the home inspection, you look in there and you’re checking on all sorts of things, but I thought appliances were somewhat out of the realm of a home inspection.
RS: Well, it used to be that the ASHI standard of practice would exclude appliances, but then there was a big survey that was done by the EBPHI, the Examination Board of Professional Home Inspectors, to figure out exactly what home inspectors were doing day-to-day. They call it this, role delineation study and they realized that home inspectors are inspecting appliances even though it’s not required by standard practice. This is just what everybody does. And ASHI realized, “Alright, if everybody is already doing this, then we really ought to update our standard of practice and just incorporate this and make it a requirement.” So it was a change in the standard. The change happened just a few years ago. It was 2014.
BO: Okay.
RS: Well, I guess time flies. It was eight years ago.
[laughter]
TM: Wow.
BO: I’m a dinosaur.
RS: [laughter] But, yeah.
BO: Okay.
RS: That’s when the changed happened.
BO: Alright. So you’re in the kitchen, we’ve seen this from a company perspective, you get more complaints about appliances not working than anything and we do our best to test it.
RS: Yeah.
BO: All the appliances, to make sure they turn and burn and drain the way they’re supposed to, but there’s one appliance that has one thing in it that always seems to be somewhat of a problem and that is… Reuben, Tess, come on. Let’s see who was paying attention.
RS: Tess, on three. One, two, three. The ice maker.
TM: Dishwashers?
[laughter]
RS: Oh, darn it.
[laughter]
RS: Alright, which one was it, Bill? Ice makers or dishwashers?
BO: Well, it’s the ice maker, of course.
RS: Okay.
BO: I mean, the thing that’s… Half the time, the thing is turned off. The other half of the time, you don’t know if there’s water to it. And then if it’s turned off, you’re wondering why. Why wouldn’t you want that conveniently working?
RS: Yeah.
BO: Okay. Talk to us about testing ice makers because if this is a point in contention, what do we do to help understand whether or not it’s working?
RS: I’d say the biggest thing is look in the freezer and make sure that you’ve got ice cubes that are the right shape. And I’ve seen many an ice maker where they’ve got the store bought ice cubes or they’ve got ice cubes sitting in the tray that clearly came from the DIY stick trays in your freezer type.
TM: Like a tray.
RS: Yeah, and they’re not at all the same shape as the ice cubes that would have come out of an automatic ice maker. So just be aware of this. Pay attention to that. Make sure that your ice cubes are the right shape and if there aren’t no ice cubes, you’re gonna put in a report that the ice maker was off and you couldn’t verify that it was functional. That’s about it. If you wanted to go all out, if someone was like, “This is a really big deal to me, I don’t wanna put ice cube trays in,” one could check the ice maker at the very beginning of the inspection. You gotta be diligent about that. And then if it’s turned off, you could flip the switch on. And then you gotta remember to come back at the end of the inspection and maybe if you’re really lucky, you’ll see that it made some ice for you and then shut it back off. But that’s a lot of remembering-to-do stuff, a lot of changing up the order of your inspection. I don’t think most home inspectors are gonna go to that length.
RS: I wouldn’t expect most home inspectors to go to that length, but it could be done if this is a really important thing to somebody. We’ll start off with a pre-inspection phone call, calling our clients a day before, the morning of, “Hey, what’s really important to you?” And if they’re like, “Above all else, I want that ice maker working.” And it’s like, “Alright. Well, we’ll go out of our way and we’ll do what we can for you.” So there’s things that could be done, but it’s a lot of actual work.
BO: Well, what I’ve noticed from people is they expect certain things to work and when they don’t work, they get extra frustrated about it. It’s like, “Why doesn’t this work? This should be so simple. It should be so obvious,” but it’s not always obvious. There’s not always time to get into those sorts of details, right? Like, if you want me to focus my attention there, I might miss the big problem over there that I walked past four times. Okay, have you routinely seen dishwasher spill during home inspections? And not fail, just like not drain or do something really strange like that? Or what’s the next level in the kitchen that seems to always rear its head?
RS: For me, frozen garbage disposers. That’s a really common one, where you flip the switch on the disposer and it just makes a buzzing noise or it starts smoking or it doesn’t do anything or it leaks. I had a lot of issues with disposers. That’s mine. What about you, Tess?
TM: Well, I just wanna go back to… You said smoking?
RS: Oh, sure.
TM: Like, you’ve had a lot of garbage disposers smoke on you? Wow.
RS: I wouldn’t say a lot, but more than six, less than eight. No, just kidding. I don’t know.
[laughter]
TM: Well, I’d say probably burners that don’t work on stove tops or dishwashers where the soap door doesn’t open when you run it through a full cycle. I run into that a lot too.
BO: The soap door doesn’t open. And you catch that in a home inspection?
TM: Well, kinda like Reuben was saying with the ice maker situation, if you got a client who’s really concerned about that and you’ve got enough time, you could try and turn it on and test it and see if it makes ice while you’re there. Same thing goes with the dishwasher, if you’re gonna be there long enough, you can test this. We’ll close the soap door and run it through a full cycle and then check it at the end to see if the soap door has popped open.
RS: Yeah, and I think that is an important part of testing a dishwasher is, you do need to turn it on early on in the inspection and you need to come back later on and make sure that it’s emptied all the water out. I mean, that’s about all we can do, short of hopping inside while it’s running and observing it. Yeah, that’s all we can really do.
BO: Okay. Alright.
TM: And we take pictures before and after too, just to document that we did run it. ‘Cause we… Again, a lot of our complaints that come in have to do with appliances, so we’ve gotten really good about documenting everything we’re doing when we test.
BO: Do you ever document anything on the range? I imagine you…
TM: Yes, always. So we turn all the burners on and then we’ll take a picture, either with our regular camera or infrared camera, of the burners while they’re on.
RS: Yeah, and then we do some in the oven too, just checking to make sure that the oven gets hot. We don’t make sure that it’s calibrated. I know that we did get a complaint about that. Somebody said they had turned their oven up to 400 and it was really only getting at 350. We don’t check the calibration of the oven thermostat. I think that’s just going way above and beyond. We check to make sure it gets hot. And we’re not checking every feature on there, like we’re not testing the broil. We’re just checking to make sure that it gets hot. Basic functionality of appliances.
BO: Have you ever had any major fails when you’re testing an oven? Like a plastic bowl or something that was just being stored in there?
RS: Oh, I got stories.
TM: I was thinking of you, Reuben, with the dishwasher actually.
RS: Oh, that was one. Yeah, I’m sure I’ve shared it on the podcast, where I went to turn the dishwasher on, this is one where the listing agent was in the kitchen. Normally, you don’t have a listing agent at the home inspection at all, but he… The fellas asked him to be there the whole time, and I went to turn the dishwasher on… And this was right around the time we first started inspecting appliances, we didn’t really have our beats down yet. And I went to turn the dishwasher on, the guy is like, “Oh, wait, wait, wait.” He comes over, he goes, “Hold on, that’s where they keep their laptops for showing.” He pulls… He pulls the owners’ laptops out of the dishwasher. I was so glad I hadn’t run the dishwasher and from that day on, it’s like, “Alright, always open the dishwasher, look at what’s in there, dummy.” Like…
TM: Oh my gosh.
RS: “Don’t assume that people just store dishes and things that are safe for dishwashers inside a dishwasher.” Another one, I melted, I don’t remember what. Somebody was storing other stuff in their oven that didn’t belong in the oven, and…
TM: Tupperware?
RS: Something like that, and whatever it was, I melted it, it started smoking, and I think it was actually candles or something, but…
TM: Oh, what!
BO: Ooh.
TM: That’s terrible.
RS: Yeah, so that, that one…
BO: You store candles in your range.
RS: Or it was either that or maybe it was plastic and it looked like melted wax by the time I was done touching the oven.
TM: When you were done with it.
RS: Yeah, it could have been it. I don’t remember, it was a long time ago, I just remember the lesson learned was, “Always look inside the oven before you turn it on, dummy.”
TM: Oh man. I always look at drains of dishwashers to make sure that they’re connected before I turn the dishwasher on too.
RS: So smart, Tess. Here’s a scariest one for a stove, the biggest surprise I had was, this house was a flipped house and they were on propane, and propane has twice the energy of natural gas, twice the energy potential per cubic foot or whatever it is. So when you’re gonna have a propane source, you need to take the appliance and you need to put this restrictor on the gas line, so you have half as much gas coming in. Well, they didn’t do that with their oven. I didn’t really think through what was going on. I had turn the oven on to get it to work, and then I turn the burners on and the burners are super aggressive. It’s like these really tall flames shooting way up, I was like, “Oh, that’s picture worthy. Take a video, okay.” By this time, I’m like, “Alright, the oven should be warm enough by now.”
RS: Turn all the burners off, go down to the oven, open the door, now, here’s what was happening, when I first turn the oven on, the gas was coming out so aggressively or so fast or whatever, it could not or would not ignite. It wasn’t the right fuel-to-air mixture, and it wouldn’t burn. But then as soon as I open the door, the fuel-to-air mixture, just at some point, it got perfect and all of the gas that had been filling up inside the oven exploded. And so I had an explosion in the oven as soon as the door opened in my face, got my eyebrows. That was a boom and I yelled and the buyers came running into the kitchen ’cause it was an event, scared the heck out of me. Probably the scariest thing that’s ever happened to me during a home inspection. And now when I think back, it’s like, yeah, I could see myself doing that again if I didn’t know what was going on. It wasn’t a dumb mistake. I really had to think through later on, “What caused this?” But…
TM: Well, and how would you know though, how would you have prevented that?
RS: I mean, for any inspectors who come across an oven where you turn the burners on and you get this big, aggressive flame, you can go, “Oh, they didn’t put the right setting on.” Turn all the gas off, turn the gas off to the oven and walk away and don’t open the door for another hour or something.
TM: Wow.
BO: Wow.
RS: That’s what you’d do different.
TM: Just think if you woulda let that oven try and pre-heat without opening the door to check on it for like 10 minutes, what woulda happened?
RS: Nothing. You just would have smelled propane leaking out of the oven and it would have started filling up into the kitchen.
TM: Oh, that is so dangerous.
RS: So dangerous, yeah, yeah. It’s a big…
BO: You learn more by accident…
RS: Right?
BO: In this business, right? And then you piece it back together, so you’re like, “Okay, that makes sense. That makes sense. Okay, I got it now.” Right?
RS: Yeah.
BO: And then you look outside and you’re like, “The propane tank is sitting there, and I bet you they didn’t learn this in flipping school.”
RS: Yes, exactly.
BO: Alright, I have one other question. There’s always one appliance that… Well, I personally had several complaints about this one, single appliance, and I wanna know, Tessa, Reuben, what you guys typically do with a wine fridge. Oh my God, the wine fridge. They’re these expensive little things that sometimes are in the kitchen, sometimes they’re in the wet bar. Do you do anything with wine fridges?
RS: No.
TM: Typically, just treat it like a refrigerator where we open the door, we’ll take a picture with our infrared camera to document that it’s cooling and that’s it.
BO: Okay. The complaints I had were always, these people were very upset, these appliances are very expensive for whatever reason, and they did not work, and I don’t know what the standard of practice is around it, Reuben, so I would turn to you for that question. But feels to me like that’s sort of one of those extras that maybe you have to cover in your inspection, maybe not.
RS: Yeah, I never did anything special with a wine fridge. I can say I have a wine fridge in my house and I’ve never plugged it in.
BO: Got you.
RS: I don’t even know if it works if you came at the house.
BO: Well see to my point, there is sometimes… There are those appliances that are filling a gap in a wet bar. You don’t pull them out because then it would look ugly, but they don’t necessarily work and they might be unplugged. And all of a sudden you’re in that basement area that people don’t go to nearly as much as they think they would. But when they wanna put their beer in there, they want that thing to work, so. Okay, well, I’m glad we have clarity on wine fridges. Two other appliances that would certainly fall into the category covered by a home warranty, what are they? And we test them at Structure Tech, correct?
RS: What other appliances are they?
BO: Oh, you gotta go to the laundry room now.
RS: Washer and dryer?
BO: Yes.
RS: Okay. Alright. Sure.
BO: Let’s go make sure that you can get some clean clothes put together.
TM: We left out microwaves too. We test those if they’re permanently installed, but if they’re just sitting on the countertop, they’re typically not part of our inspection process, either. Just wanted touch on that.
BO: Well, time out. Permanently installed microwaves, you test them? What do you… What are you doing for a microwave test? You put some popcorn in there or what?
TM: Always. I always bring microwave popcorn to an inspection. No, I’m kidding. [chuckle] That’s a good idea, Bill. We usually try to heat up some water. We’ll bring a mug or something, fill it with water, put in the microwave, make sure that it’s actually functional. And then we will document that with an IR picture as well. I have found doing these tests with microwaves that it’s good to let it run for a little while. And then you wanna put something in there while it’s working. ‘Cause I’ve actually had microwaves that trip circuit breakers, and they run for more than 10 seconds, 30 seconds, a minute and then they’ll trip a breaker. Have you ever had that Ruben?
RS: No. No. I don’t think I’ve ever had that. Although I’ve always done a less aggressive test on microwaves. Like I’ve done a wet paper towel and I’ll put it in for five seconds and that’s about what it takes to get it piping hot and steaming. But I guess doing a cup of water, that’s probably a better test. I like yours.
BO: Right. It’s the one appliance that when you don’t have it, boy, do you miss it. And the example I give is we’ve all gone to… We live in the north line, you go to a resort and there’s this very primitive kitchen and you’ve got a range, but you don’t have a microwave and you’re like, “Damn, I need a microwave.”
RS: You Know, Bill we’re we’re not gonna talk about it now, but we need to talk about toaster ovens. Once I got a toaster oven, I almost quit using my microwave.
BO: Interesting.
RS: Bill, just real quick, you keep talking about what’s required. We keep talking about this, so…
BO: Yeah, yeah.
RS: Let’s just read what the standard says. If a home inspector is…
BO: Okay.
RS: Following the ASHI standard of practice, it says that we are to inspect installed, they got the word in italics. Installed ovens, ranges, surface cooking appliances. So far we could all be talking about the same appliance. Microwave ovens, dish washing machines and food waste grinders by using normal operating controls to activate the primary function. So that’s what the standard of practice says. It doesn’t actually say anything about refrigerators, about ice makers, those really aren’t part of the standard of practice. Doesn’t say anything about washing machines, clothes washing machines or clothes dryers either. We still do them.
BO: Why do you think those are excluded?
RS: You know what? I have an idea. I’ve heard that in other parts of the country, it’s just standard for that stuff to not come with the house. That here in Minnesota, I’ve heard that maybe it’s a little unusual. Where for us, it always comes with the house or usually comes with the house. I shouldn’t say always, never say never, but it’s pretty standard to get the washer and dryer. In other parts of the country it’s not. So I think that’s why it’s excluded.
BO: Well, I also think some of these appliances are getting more technologically advanced. And so if you have a steam dryer or if you have a front loading washer that’s a load sensor, we can’t really in the short time that you have in a house test each and every one of these features for functionality. I mean, it’s sort of a…
RS: Not fully, no. I mean you’re testing basic function, just like the standard of practice says, “Using normal operating controls to activate the primary function.” That’s what we’re doing.
BO: Okay. And I know you you’ve gone above and beyond at least with the washer. So what’s the washer process here that hopefully is going to catch the majority of the functionality?
RS: We’re tossing a towel in there. We’re washing a towel. That’s about it.
BO: [chuckle] Just some added weight, right? I mean just the…
RS: Yeah. Exactly.
BO: Let’s make sure this thing goes, so.
RS: And then to makes sure that the spin cycle works. I mean, if it’s done with the cycle… You could have a washing machine where the spin cycle doesn’t work and it might drain all the water out, but it doesn’t spin anything. So if it’s all done and you take your towel out and the towel is just sopping, well then you know your spin cycle wasn’t okay. So we’re doing a little bit more, we’re testing it a little bit. I think it’s a good thing to do.
BO: When testing dryers go outside and put your hand where the exhaust is, to see if warm air is coming out. Warm moist air is coming out, or is there an element test to make sure that this thing is heating up?
RS: Yeah. We check the terminals for all the appliances, like the kitchen exhaust fan, bath fans, clothes dryer. We’d have all those on at the beginning of the inspection, we’d go around the outside and make sure there’s air coming out of all those terminals.
BO: Well, we document the heck out of all of this. So if you get a home warranty, chances are, if you got a report from Structure Tech, you have plenty of data to back up whether or not your appliance worked at the time of the inspection. Now let’s get back to just home warranties in general. Shelley mentioned, at least at her company and Home Warranty of America, they have three levels of coverage, kind of a basic, upgraded and then a premium. And she was very clear about the pricing on it. And the difference in pricing between the basic and the premium was only like $125 or $150. Which going from $450 for the basic to $625 for the Cadillac, you’d have to confirm these numbers with her, but it felt like a really, really good investment of an extra 125 bucks.
RS: Yeah, yeah. She said most of the people buy the most expensive warranty option available ’cause it’s just worth the extra money.
BO: Any other surprises in that conversation? I was really surprised to hear how often people buy home warranties. I would…
RS: Yeah.
BO: Thought it was standard procedure, but not. Tessa, what was… What number did she quote us? Is like the rough number of people buying home warranties.
TM: I think Shelley said, and we could be wrong about this, but around 10% of the real estate transactions that are happening include a home warranty purchase. And she did say that home warranties, it seems to like they… Overtime, the overarching trend is that they’ve been declining. But just in the last year or so with the crazy market being what it is, and a lot of people foregoing a home inspection, it seems like more people have been buying a home warranty to cover, I think these things that they’re worried about that obviously didn’t get an inspection for, so that was kind of interesting.
BO: Yeah, but based on our conversation, it feels like there might be some gaps in expectation. If you get a home warranty and none of these appliances were tested, there’s no documentation of what worked and what not, I think there might be some false sense of security in that purchase.
TM: Yeah, I agree, and it’d be interesting to see what kind of… I guess what the documentation is required for, at least for her warranties, ’cause I’m sure if they’re not getting a home inspection, she’s probably got a lot of paperwork to fill out.
BO: Yeah, and the other thing that I thought was interesting is most often, I think real estate agents are sort of initiating the conversation about home warranties, but you don’t have to… You can go directly to them and get your home warranty, and she also talked about an extended plan that you can buy. So there was other coverage that was available through it. So here’s the one thing, Reuben, we absolutely need to… And will link Shelley’s contact information. She gave out her cellphone. She’s like, If you have any questions whatsoever, just feel free, give me a call on my cell, I’ll be happy to walk you through all of it, but Home Warranty of America, Shelley Johnson we will link her contact information up here.
RS: And just for fun, let’s just give out her mobile number too, ’cause she gave it out, she was happy to have people call her. It’s… Again, Shelley Johnson, Home Warranty of America. And her mobile number is 763-221-1098. Again, that’s 763-221-1098, Shelley Johnson with Home Warranty of America.
BO: Tessa, it looked like you were gonna say something.
TM: Yeah, it doesn’t fit in now because you’ve kind of wrapped it up. But I was gonna say there was one other thing that was interesting to me that we did not cover that she had mentioned, and that was the fact that if you’re filing a claim, typically there is a filing fee that you have to pay, and that ranges based on the company that you’re working with, but I think it was… She said usually anywhere from 60 to 100 bucks for each claim that you’re filing. And then that there’s usually a cap on the amount that’s paid out as well, so if you need a new furnace, there might be a cap that’s like $1500 and then you’re on the hook for the rest of it. So I think that’s important again, as Reuben mentioned before, to read the fine print and know what you’re getting when you get one of these home warranties.
BO: And we grilled her on age of appliance, we’re like, “This old one, it’s not covered. Right? It’s… ” And she said, “Nope, as long as it’s turned and burned the way it was supposed to at the time of the inspection and then you have documentation, it’s probably gonna get covered.” And there’s always that caveat, but yet she was like, “No, age of appliance doesn’t… It’s not a natural excluder for a coverage.” and I was just like, “I can’t believe that, but I believe you ’cause this is what you do.”
TM: I think it’s something that I personally would think about doing, getting a home warranty if I was buying a house that had a furnace that was beyond its expected serviceable life, or a water heater, or any appliance, that’s… A kitchen appliance that’s 10 years old or approaching the end of its life too, I would think about getting one of these home warranties, just as a supplemental coverage to your home insurance that you have as well, because these things are expensive and when they go out… I’ve also seen a lot of times too, it seems like where we’ll do an inspection and then the buyer moves in and within a few weeks or a few months, their AC goes out or their furnace goes out. And they’re always calling us and they’re like, “Why didn’t you catch this?” Well we have documented that, it’s 20 years old. It’s on, it’s last legs. But if you have got a home warranty, I think that would definitely help you through those tough situations.
BO: Reuben do we have a Minnesota-based service life for these various appliances… I mean, ACs in the South, they have a much different service life than ACs in the north line.
RS: It’s just anecdotal, we don’t have any hard evidence of empirical studies showing exactly what they last, generally speaking. We would like to say about 20 to 25 years for an air conditioner in Minnesota and for a furnace, more like somewhere around 15 years, maybe as much as 20.
BO: That’s still a pretty good run on an appliance that’s going on a lot, it’s doing a lot of work.
RS: It’s pretty good. I think the newer generation of furnaces is gonna be 15 years or less. A lot of the older ones, the more basic ones that didn’t have nearly as much technology, it was just either on or off, I think those are the ones that tend to last a lot longer maybe closer to 20 years.
BO: So we will link up Shelley’s contact information, we’re fans of home warranties. And by the time you get a solid inspection and you put together a warranty that could extend into the future if you wanted to, I mean, you have several potentially years of coverage on the equipment in your house and not a bad idea. Things are expensive, and especially in the current market where you’re paying top dollar for real estate. Get your questions answered upfront, don’t wait to have a claim to learn about your home warranty policy. That’s my only recommendation. Alright, that’s a wrap for this week’s episode. You’ve been listening to Structure Talk, a Structure Tech presentation. My name is Bill Oelrich alongside Tessa Murry and Reuben Saltzman. Thanks for listening. Catch you next time.
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