Real Estate Explained

Home Warranties 101: Protecting Your Home and Budget with Vicky Hamp

• Nick Bush • Season 3 • Episode 69

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In this episode of Real Estate Explained, host Nick Bush sits down with Vicky Hamp from Choice Home Warranty to break down the value of home warranties for homeowners and buyers alike. With decades of experience in the real estate industry, Vicky shares how home warranties provide financial protection, minimize unexpected repair costs, and offer peace of mind for both new and existing homeowners. She clarifies the key differences between home warranties and home insurance, using her PEACH acronym—Plumbing, Electric, Appliances, Cooling, and Heat—to highlight the essential systems covered.

Vicky also dives into the details of coverage limits, service fees, and how home warranties function similarly to car insurance deductibles. She shares real-life examples, including a personal experience with a high-end appliance, to illustrate the importance of understanding warranty policies before an issue arises.

Whether you're a first-time homebuyer, a current homeowner looking for added protection, or a real estate professional advising clients, this episode provides practical insights into leveraging home warranties to safeguard your most significant investment.

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Speaker 1:

We're in. We're in the podcast. Vicky's in here. How are you feeling?

Speaker 2:

I'm feeling great, nick, how are you?

Speaker 1:

I'm good. Are you a little like what's happening here?

Speaker 2:

You know what. I am ready.

Speaker 1:

Okay, cool, cool, cool. Well, welcome. Thanks for coming down from Manassas. Let's start by introducing yourself to people. So I met Vicky only a few months ago and I was like I need a home warranty. And you gave me all this information. I think Pedro actually was the one who gave me your number, I believe, and then I did need the home warranty. Actually, the furnace went in today this morning, so that's in there. But you were great and you gave me so much information on the phone and I was like, oh, I got to bring her on the podcast to explain these things. So, introduce yourself to everyone so they can get to know who you are so they can get to know who you are, Thank you.

Speaker 2:

So, Nick, I am with Choice Home Warranty and I am the local sales representative for Choice. I have come to the industry with about 30 years of real estate experience, so I have joined Choice within this past year and have become a student of warranties, and so I'm just really happy to share with my friends and people that I have come to know. You know in my 30 years in this business why they should be using home warranties and how they can use it to enhance their real estate business and help their clients with just one more thing than what they've you know, than what they're already helping their clients with.

Speaker 1:

So you've been in this for 30 years. What did you do for, like what have you been doing over the 30 years? It hasn't been all home warranty, or were you a real estate agent at some point?

Speaker 2:

So I am licensed. I am a Virginia licensed real estate agent. I have held leadership positions with a couple of the iconic real estate companies here in the DMV, primarily from a corporate role doing B2B business, really focusing on relocation, helping employees that are moving to our Washington DC metro area relocate from other areas.

Speaker 1:

The reload business yeah, that's really cool.

Speaker 2:

Yeah, and helping, and again, just anything. My passion really is helping real estate agents grow their business and enhance their services, so my role has always been in that kind of arena. So choice was just a natural progression to that.

Speaker 1:

So what made you say, like you know what I'm going to sell? I mean, obviously you gave us kind of like your, your mission and your passion, like how did the home warranty space become attractive to you?

Speaker 2:

You know, I realized that a lot of us are not aware of the benefits of warranties and home ownership can be. It's exciting, it's wonderful, it's, you know, it's. It's more than owning a home. It's where we live our best lives. And so I came to realize, after being a homeowner for a really long time and for, you know, being in this industry for a long time, the impact that a sudden repair can have on our lives, because it may impact that family vacation that we were planning to take, and suddenly, because of this large burden for home maintenance, you know I can't do it. And so, as simple as a home warranty seems, it really can impact the quality of people's lives and their family lives.

Speaker 1:

Okay. So when someone's buying a home, they, you know, they know they have to get home insurance is like required by the lender, right. But everyone doesn't understand. You know, like, what a home warranty is or why they should get a home warranty. So can you explain, like the benefits of a home warranty? And then is there, is it home insurance for the audience? Or like, what's the? What's the difference between the two?

Speaker 2:

So a home warranty is financial protection to homeowners for unexpected repairs for systems or appliances, whereas home insurance typically is coverage for property damage as a result of an event a hailstorm, fire, water damage somebody has fallen on the property, so it's usually is property damage or accidental. You know coverage for an event that has happened which is very different from you know a home. A home warranty is really going to cover the things that a home owner's insurance policy does not.

Speaker 1:

So a home warranty is for like HVAC, water heater appliances, like washer dryer, things like that.

Speaker 2:

Yeah, A really easy way to remember. It is an acronym PEACH. Do you like peaches? I do like peaches, so PEACH Plumbing electric appliances, cooling and heat.

Speaker 1:

Plumbing also. Does plumbing fall into the water heater category or plumbing like pipes? That's interesting. I've never heard that one before.

Speaker 2:

Yeah, and so that is one of the most, I think, complex type of repairs, because and this is a really good way to understand the difference between your insurance and your warranty A warranty, if a pipe breaks in the middle of your wall, the warranty is going to cover the repair of that pipe. It's not going to cover cosmetic damage. So if your floors have been damaged, if your walls have been damaged due to that break, that's what your homeowner's insurance is going to cover.

Speaker 1:

So it really can act as almost like a combo or an addition to the home insurance. When I first got into the business, I was working with a lot of first-time homebuyers. I've been in for nine years now, but when I first started selling real estate I was 25. And so a bunch of my sphere they were thinking about selling real estate or they were telling me, like, what are you talking about? Like, buy a house, like we have student loan day and I don't have 20% down, right, so it was like debunking some of those things.

Speaker 1:

But also, when you're buying I think that the biggest difference between renting and owning and if you're not buying new construction is when you purchase there are some things that are left over for you to do in the house, and so, um, you know things like a 20 year old hvac, right, and understanding the cost of that, things like you know, uh, an appliance that's really old, like the old white refrigerators and white and black appliances, um, and so I was giving out home warranties all the time. But can, can you go over, kind of at Choice, what items you cover and what the cost of those items would be without a home warranty and how you guys save home buyers and homeowners from having to spend big money out of pocket so they can go on vacation.

Speaker 2:

Sure, yeah. So I tell you, nick, last year Choice Home Warranty paid over a million dollars in claims. Now the claim that you see the most, and certainly the headliner, are appliances, but certainly the repair or the replacement that can be the most taxing on homeowners is the HVAC system. An HVAC system can cost you on average anywhere between $5,000 and $10,000. And so you know, to have a sudden repair like that again can put a homeowner in a very awkward predicament. And so with Choice Home Warranty, your cost for those types of repairs are reduced substantially. And I think you know, I think it is important to understand, and maybe the confusion out there is that you know home warranties are not meant to be an emergency service, and they don't. They're not necessarily going to cover a hundred percent of everything.

Speaker 2:

So it's important to have the right expectations, but they are going to provide financial protection. They're going to help you and reduce the cost associated with that. Some of the things that you're going to want financial protection. They're going to help you and reduce the cost associated with that. Some of the things that you're going to want to look at when you choose a home warranty is the cap of the home warranty, and so all warranties are going to have a coverage cap choice. Our coverage cap goes all the way up to $5,000. So if you have an $8,000 HVAC repair or replacement instead of having an $8,000 burden on your you know your budget now. You know you potentially only have three.

Speaker 1:

Yeah, and so when someone has so let's just say, my HVAC goes out, what am I saying? I have a home warranty, am I like? Vicki, you sign me up? I'm calling you. That's what I would do, that's what I did, right, but what are the steps for for the homeowner, like, how do they, how do they, you know, get that replaced? What do they need to do to move forward with the repair?

Speaker 2:

Sure, at Choice, we have what we refer to as an Uber-like system, and so a homeowner who's purchased one of our warranties has an online portal and they simply go in and file their claim in the online portal and then that claim is going to go out to several contractors, several vendors, at one time, right? So you're not calling one contractor to see if they're available and then the next contractor and waiting for responses. It's going out to several and then the contractor who responds first with an available appointment essentially claims that, and then you're going to be notified through your portal of a time and date of your appointment. Now, with that, I always suggest to a homeowner call the contractor If that date and time doesn't work. We have a lot of flexibility. It just means that we know that contractor is available and we know that they're available at this time and date. But call them and you can rearrange that appointment to get one that fits for you.

Speaker 1:

But we also have a toll-free number that is available to reach out to and follow your claims home warranty like the greatest in the game or uh, or is you know, or there's some out-of-car services that other people do like, kind of compare. How does a, how does a home buyer, compare like a choice home warranty versus another home warranty company and how do they understand like the coverage they're getting?

Speaker 2:

sure? Well, there's a reason I chose choice and it's because I am very confident about the value that it, that it provides to my realtors and to my consumers. Yeah, um, some of the things that you know every program is different, right and not, you know, everything fits everybody. And so what I would suggest to a consumer who was looking at a warranty? There are a few things that you want to look at. You want to look at that cap that I just mentioned and part of that cap, and so essentially what that means is we're going to cover a repair or a replacement up to X amount of dollars. Again, with Choice we go up to $5,000. But with Choice it's $5,000 per repair, per system.

Speaker 1:

So it's not $5,000 for the year you're capped out. It's like any time something breaks down that $5,000 cap Right right.

Speaker 2:

So our coverage on heating and cooling, for example, is $5,000. Cap, Right, right. So our coverage on heating and cooling, for example, is $5,000 each. So you have $5,000 on your heating system, $5,000 on your cooling system and $5,000 on your ductwork. Some warranty plans may have an aggregate coverage. So that's one thing that you want to ask about. What is the cap? And is that cap an aggregate for the term of the you know the term of the plan or is it her system or our appliance?

Speaker 1:

okay, that makes a lot of sense.

Speaker 2:

Yeah, and the other thing you don't look at our service fees, and so when you file a claim, most warranties are going to have a service fee for the contractor to come out at choice. Our service fee is $75, but I've seen them as high as $150. So something else to look at.

Speaker 1:

So can you almost look at. I've always compared home warranties to home insurance. I mean not to home insurance, sorry To like car insurance. Right, like something breaks, I call there's a deductible, there's like a fee for me just to go and then, whether it's a repair or replacement, I'm paying like some deductible to kind of get that taken care of. Is that like a fair comparison?

Speaker 2:

That is a fair comparison. Some companies will refer to it as a deductible.

Speaker 1:

We tend to refer to it as a service fee, but it's the same thing Do you feel like home warranties is something that, like, every buyer should have, Like every home I keep saying buyer right Like every buyer should have. Or do you feel like every homeowner should have like a home warranty, Like it's like necessary for every house, no matter how old it is or young the house is um, or the ages of the appliances?

Speaker 2:

So you know, certainly the home that is aging is is a is a perfect um scenario to have a home warranty, a new construction. You know, typically you've got a one-year warranty on your construction.

Speaker 1:

Yeah, when you buy.

Speaker 2:

But we do have programs that take effect in that second year. Okay, and you know, here's the thing New things break down too. You know, as we get more advanced, our appliances, our systems have a lot more features and gadgets, and, Nick, you know what that means there's more opportunity for things to break. So I don't think you know any home is really too young for a warranty, and certainly no home is too old for a warranty.

Speaker 1:

Yeah, it makes a lot of sense. I mean, I feel like, you know also, I feel like the home warranty just gives people peace of mind. When I was, you know, selling houses to some of those first-time homebuyers, you'd have like a five. Because this is what I realized, right, and this is even in my family. I come from a generational renter family, right, like everyone rents, like I think I'm one of three homeowners in my family.

Speaker 1:

But so, even if I'm having a conversation with my mom about, you know, buying a house, the first thing that she would say is well, what if the refrigerator breaks down, what if the stove breaks down, like these things, that I think renters are afraid that if these things break down, they have to handle them instead of calling a landlord or calling the apartment community. And my rebuttal to that has always been well, when's the last time your stove didn't work, right, like when's the last time your fridge just wasn't cold, like these things don't happen often, right, but when they do happen, um, you know, it could be a big deal. And so, even when I was selling houses, like to first-time homebuyers, if there was a five-year-old appliance, they were like, uh, you know, they're like doing the math like, well, this could be two thousand dollars, and I used to just be like here, here's a home warranty Like you can use that. And people have been successful. I mean, when we first bought our house in DC, this house has been like very interesting for us financially.

Speaker 1:

Our fridge broke like a month in you know, and then we had a home warranty another home warranty company at that time and we got a replacement fridge. But it saved us a lot of money and like time and hassle. So sure?

Speaker 2:

well, you're going to find the statistic very interesting. Um, appliances, on average, are going to need a repair or replacement about 68 percent of the time in a given year. Uh is the average that we found.

Speaker 1:

Oh, wow you know what makes me really afraid? I have a bird, so I have Bert is only appliances in my house. I walked into a house in like Capitol Hill five years ago and it was like getting into the house is getting flipped, and this guy had Bert is only appliances in there. And there's they're like these nice Italian appliances, and I was like this logo is the best, like I need this Bert is only range, and so I have these. Like this logo is the best, like I need this bertazzoni range, and so I have these I bought when we renovated our kitchen. I have a bertazzoni dishwasher, um fridge and like cooktop oven situation and um what I'm. What I'm realizing, though, is for repairs it's tough because it's not an american-made product. So how do you think you guys would handle something like that? Um, as far as the home warranty, are you able to help people with like those italian or upscale appliances um source kind of the parts and things like that, or is it mostly like american-made, um kind of like products that you guys service?

Speaker 2:

well, you know our we try to replace like with like. Now again, we do have a five thousand dollar cap and I know you know, some of these luxury appliances are $10,000, $15,000.

Speaker 1:

Way too expensive. I wouldn't do it twice Plus right.

Speaker 2:

So again, that's where we're not necessarily going to cover the entire cost of a luxury appliance like that, but certainly the coverage that we do provide is going to help you with that unexpected burden. The coverage that we do provide is going to help you with that unexpected burden. But I would say, if there were anything that I could say right now, is that now is the perfect time to purchase a home warranty because, you know, our homes are aging, just like our demographics are aging, our homes are aging.

Speaker 1:

Yeah.

Speaker 2:

And statistics show that we're also staying in our homes longer. You know, national Association of Realtors used to say that people move about once every seven years and that number in their most recent report is at 10 years. And so we're staying in our homes longer and our homes are aging, just like our population. So warranties are important for that reason, but even more so, you know, there are a lot of changes are coming out in mandates. Epa mandates are coming out.

Speaker 2:

And so one thing to be kind of on the alert is your HVAC systems and refrigerant and so that's something else.

Speaker 2:

When you're purchasing a warranty or looking at different warranty programs, it's important to ask about their coverage for refrigerant for your AC units, and so most of us either have an air conditioning, a cooling system that has the R22 or the 410A, and so the R22 was actually banned in 2020.

Speaker 2:

And so you can still get the R22 refrigerant, but guess what? It's a lot more expensive, right as supply and demand as the refrigerant becomes less and less and less available, the cost of that is going higher and higher, and so if you have a system in your home that has that needs that refrigerant, then you may be looking at a full replacement just because you can't get the refrigerant, or hundreds or thousands of dollars to refill the refrigerant. The newer version is the 410A as of January 2025, epa has come out and said has mandated against that, and it's all you know the effects on ozone and global warming, and so it's anticipated that an air conditioning system, the cost for repairs and replacements are going to go up anywhere between 15 and 30 percent, so it's about to become more expensive, but our warranties are still, you know, we're still at the same price that we were in 2024. So it makes it a perfect time to get something now.

Speaker 1:

So how do you guys handle you know. So we'll go with my situation a little bit. Area it was. It came in handy. You know any money is good money, but how do you guys like handle pre existing community, pre existing conditions when it comes to like an appliance, Like how do you guys assess that and then like handle that? And then the other question I have also is if I, if I close in the house and I get a home warranty, does my home warranty coverage start that day, or is there a time where it doesn't? It doesn't apply it?

Speaker 2:

That's a very insightful question and another reason as realtors, I think we really have an obligation to our clients to talk about warranties.

Speaker 2:

And advising a client that a warranty is available is very different from recommending a home warranty to them. And you know, the advantage of getting a warranty when you have recently closed on your home is that warranty will take effect immediately. If you purchase a warranty, you know months later or years later there will be a 30-day, typically unless you've had another warranty on it and you can show proof of that. But if you've had no warranty on it, you've owned the home for a while there will be a 30-day hold Lease with choice. Most warranty companies are going to put you on a 30-day hold for claims because what we have to be careful of is a homeowner's refrigerator goes out and they realize it's going to be a few thousand dollars. So instead of going out and buying a new refrigerator, they say, oh, I'm going to go buy a home warranty. Right, we have to avoid those situations. It just is a have to. So we always have a 30-day hold.

Speaker 1:

But when you have settled, on your home and it's a real estate transaction, that warranty will go into effect. So basically, if I'm buying a home in the process, I can get a home warranty before closing right, like as I'm closing it goes into effect that day. And obviously a home warranty before closing right, like as I'm closing and it goes into effect that day. And obviously the home warranty company knows, like, I haven't lived in my house so I don't know that there is any issues. If there are any issues, yeah, yeah, okay.

Speaker 2:

It does have to now. We only cover items that were in working order when you took the warranty out.

Speaker 1:

So if an HVAC was deemed, like you know, non-functioning by the home inspector, you guys are like sure we'll replace it then.

Speaker 2:

Right, exactly. So it really comes down to the diagnosis. And if the contractor that goes out says, oh, this has been an ongoing problem and it's you know, because of this or that or this, you know there is risk that it might not be covered. So, it's always a good idea, if you can, to have a home inspection or something that shows, when you purchase, the warranty that the systems and appliances in the home are in good working order. But, unless something comes up that specifically suggests that it was not, it's usually not an issue.

Speaker 1:

Okay, so are you out just like slinging home warranties? Or do you do like, who do you partner with? Like how does it? Because, as a home buyer, you're not just like, hey, like I heard about this home warranty part, right, like I tell my lender partners when we do seminars, I'm like no one's here for me, by the way, they're like no one's here for me, by the way. They're like they're only here for you, right? Like everyone in this audience today is going to ask you about.

Speaker 1:

Like loans and down payment. Like no one cares about the home inspection contingency, or like the appraisal contingency. Like that's not why you come to a first time homeowner seminar, right? So the same like when you're buying a house. I don't think.

Speaker 2:

Back to your question originally. Not every warranty is the same, and so at Choice Home Warranty, we have a program that is exclusive to our realtor community, and it's a much better product because it has higher coverage limits. And so, again, just another reason that, as realtors, as real estate agents, we really need to be talking about warranties with our consumers, with our homeowners, because guess what? Statistics show that homeowners are still purchasing warranties, but they're going it alone. The purchase of home warranties is rising, but the purchase of home warranties referred by realtors has decreased since COVID. So for some reason, as a real estate community, we've stopped talking about them, and it's so important that we do, because homeowners still want them and if they work through you, they're eligible to receive our real estate product, which again, has much higher coverage.

Speaker 1:

I think during COVID we were all trying to figure out how to beat the 25 offers we were up against. All right, we got like we're one of 28 here, like how do we win this? Oh, by the way, you have to go $150,000 over During.

Speaker 2:

COVID, I lost a transaction.

Speaker 1:

We were at 180 over list price. The house was listed at 1 million. We went to 1180. My client was a doctor, so definitely like had the money to close and cover appraisal and all of those things and we lost to somebody that went one one, seven, five but they had like a million dollars in like their Wells Fargo private account and so the seller took that and like having to make a call like hey, we just lost and you like wrote 180,000 over, was tough. So I probably was distracted also because when you said that I thought thought to myself like yeah, I used to talk about home warranties way more, and then it's like COVID kind of like yeah, you know, we weren't even, you know, for a while there, we weren't even attending settlement with our clients, right.

Speaker 1:

And so, and then there were less home inspections and things like that. Yeah, that makes sense, have you? What kind of horror stories do you have Like that you could share? Like something went out. It was like horrible, like when you guys came in and saved the day. Like do you have any of those? Like what is the craziest thing that you heard?

Speaker 2:

well, you know. Again, I think the horror story is when you get that you know, unexpected repair and it's it's impacted your budget in a way that it impacts your family life and so.

Speaker 2:

so, yeah, next to the horror story, I think, is, you know, when you get that unexpected repair or replacement that impacts your family life and you know, impacts something, a goal, impacts a vacation, impacts something that you're planning to do or puts you in a position to have to go out and get financing With a warranty, it just gives you peace of mind that if you have that unexpected repair or burden, you're going to have some financial protection against it. And so I see it every day. You know, I'd love to tell you there is some life-saving type of event, but it's really about the impact that it has on people's lives on a daily basis.

Speaker 1:

Yeah, get a home warranty. It's going to be good for you. I think I read through all my questions. You crushed it. It's just like, basically, like yo get through your, get a home warranty. I have this one. I'm looking at my phone, right? What are some common exclusions? That's a good question. I guess what's an exclusion in a home warranty policy? But I feel like you covered that.

Speaker 2:

I feel like we talked about that. It's really the 30-day hold about is our rekey service. You know, one of the benefits in all of our home warranty plans at Choice is rekey. So when you have bought that new home and well, when you've bought a new home and you're at settlement, you can practically file a claim from the closing table to have a locksmith come out and change all of the locks so that you have peace of mind that you know.

Speaker 2:

You don't know what kinds of you know. You don't know from the previous owner, you know who might have keys to that home, and so it just gives added security to your family.

Speaker 1:

Oh, that's great. Well, Vicki, where can they find you? How do they find you if they want to get a home warranty?

Speaker 2:

Sure, you can reach out to me at 703-987-7021 or email me at thehamp at chwprocom.

Speaker 1:

Awesome, you're amazing. Thank you for joining me. I appreciate it, and we're going to give Vicki some social media, so you can shout that out next time too. Do you have an Instagram or anything?

Speaker 2:

I have Facebook and. I have LinkedIn, yeah, so you can find me there.

Speaker 1:

All right, find Vicki. On LinkedIn choice home warranty.

Speaker 2:

Thanks for joining me. Thank you, thanks for being here.

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Nick Bush

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