Benefits and Challenges of 90-Day Warranties

(Guest Blog by Andrea Worley of Complete Protection)

The Model

The 90-day warranty is designed for you, the home inspector, with two purposes in mind: 1) to provide a layer of protection from liability and 2) to allow you to stand out from your competitors.

Coverage in general will vary depending on the company administering the warranty. Warranties will typically become effective on the date of inspection, lasting 90 days, or may last up to 45 days beyond the date of closing. Some warranties will charge a per occurrence deductible, while another may not. Regardless of the warranty company, the basic approach is the same: the customer moves in and can make claims with the warranty company on covered items. The customer makes claims directly with the company and you don’t have to deal with any of it. Your customer is satisfied and their repair problems are solved, meanwhile you remain independent from the hassle of it. You are, instead, free to perform inspections and focus on growing your business.


Protection from Liability

If your client moves in and has issues with an item you’ve cleared in your inspection report he may feel you are to blame due to some kind of negligence or preventable oversight. This can result in negative reviews for your home inspection company, either online or by word of mouth. Now your reputation is on the line, and it may not stop there. If the new homeowner doesn’t receive the resolution or compensation they feel they are due, insurance claims and possible legal action may ensue. It will be expensive, time consuming, and likely an enormous emotional drain, not to mention it’ll keep you from being out in the field doing what you do best. No matter how you slice it, unhappy customers are bad for your business.

Marketing Tool

Most of us are savvy enough to have a home inspection completed when buying a new home. Oftentimes, the buyer’s realtor will provide a list of referrals, while others may search for an inspector online. But how exactly should the buyer choose which home inspector to use? Many offer similar services, at roughly similar price points. Plus, a lot of buyers are strapped for cash because they’ve put most of their liquidity into their new home purchase. With closing approaching, the home inspection is yet another few hundred bucks they have to cough up. So, what makes ABC Home Inspection better and different than XYZ Home Inspection? A quality warranty product is an easy and sensible way for the home inspector to set himself apart from his competitors. It provides peace of mind to the client and at the same time serves as a practical outlet for possible problems they encounter upon moving in. Any value-driven customer will appreciate a warranty with their inspection and most warranty products can be inexpensively incorporated into your standard home inspection package. “It’s almost harmful to your business not to offer something as low-cost and high-value as a 90-day inspection warranty,” says Nick Gromicko, founder of the International Association of Certified Home Inspectors (InterNACHI).


Cost to Business

Because many homebuyers do look for value when selecting a home inspection company, price is clearly a big factor. This means overheads and costs of all kinds must be kept in check. Providing a warranty does affect your bottom line. That being said, you can easily compensate for a rise in overhead with an increase in overall number of inspections performed and the natural growth curve you’ll experience with a completely satisfied customer base.

What else is as valuable as your profit margin? Your time!

Selecting and Implementing a Warranty Provider

Offering a warranty product will take up some of your time. First, you must select the warranty plan that is right for you and your clients, which takes some research. Once you’ve selected a product, you have to implement your new marketing strategy. This means changes to your website, printed materials, and ongoing customer education. Once implemented, you’ll have the continued commitment to report your client’s information to the warranty company so they may properly administer service to your customer. Look for efficient ways to create a process that can send data the warranty provider needs directly to them without the need for retyping as several options exist.

Pricing to the Customer

Be wary of a mark up. Warranty products work the best when they are included as a part of one of your standard packages. If you try to mark up and sell the warranty as a separate item on top of the inspection package, you may have a difficult time winning clients over. While it is a great addition to your home inspection service, many clients won’t be enticed by it as a stand-alone offer.  Some inspection firms bundle warranties as part of a “Silver, Gold, Platinum” package system which can work but most inspectors we’ve spoken to choose to do it on effectively all their inspections as it is a risk mitigation tool and increase the cost of their inspections from $10 to $20 to help offset or fully cover the cost.

Key Warranty Issues

There are three primary flaws that occur with sub-standard providers in the warranty space.

  1. Poor Claims Process – The claims process is difficult if not impossible for the homeowner.  Whether it is a denied claim, or a burdensome process of claim submission make sure your provider really is providing.
  2. Free Warranties – There has to be a business model behind the warranties to pay for the covered claims.  If the inspector is not paying the provider company must try and sell the customers on other products either directly or through a 3rd party to have revenue to cover claims.
  3. Customer Harassment – In line with the above, or independently of above, the customer may be pressured or harassed to buy an annual warranty plan that might range from $30 – $60 a month when the 90 day expires.

The short of it is, nothing is free and you get what you pay for so choose your provider carefully. InterNACHI’s Nick Gromicko says, “The inspector must stand behind any product or service he or she offers from a vendor or other third party, so performing due diligence is simply part of that responsibility.” He adds, “And it’s just good marketing sense.”

The Take Away

The benefits of providing a warranty product with your inspection are apparent. Like any service you offer, it will take time and dedication to implement and deliver successfully. The long-term payoff and potential rewards can only be quantified in relation to your own personal drive to be the best and most profitable home inspection company in your market.


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