Forty Plus Year-Old Industry Originated on West Coast
(Lenexa, KS ) – The home service contract industry was established in California in 1971 in response to the risk management needs of homebuyers and sellers. The industry has grown and strengthened over the past 37 years.
Many home service contract providers also offer a menu of optional items such as swimming pool or spa equipment and other free standing appliances such as kitchen refrigerators and clothing washers and dryers for an additional fee. Contract terms are normally annual and renewable.
All parties to a real estate transaction benefit from a home warranty. The benefits of home service contracts to real estate agents include risk management after the close of the sale; the ability to focus on repeat and referral business, not home repairs for clients; and increased customer satisfaction as both buyers and sellers view home service contracts as a benefit and value the protection they offer. Although the term “home warranty” has been used historically throughout the industry, the correct term is “home service contract”. Home warranty is a descriptive term that was coined because the home service contract industry evolved by providing home service contracts purchased by home sellers for homebuyers as a form of “warranty” to protect the new buyer should a mechanical problem develop during the first year of ownership. Because many builders now offer “home warranties’’ on newly constructed homes, the two are often confused by consumers. Therefore, while home service contract companies still widely use the term “home warranty” the industry movement is to use “home service contract” to avoid confusion in the future.
