It sounds shitty/shady to you (or at least that's how you're framing it here - apologies if I misunderstood) but if people are still buying those homes, then they must think it's an acceptable contract to enter into.
It's ridiculous to even try to say that a home owner will not weigh 50 different factors, and have to tolerate 10 things they do NOT want because they come packaged with 40 other things they either want or absolutely need.
Why does anyone even try to pretend like they don't recognize this unless they are themselves one of the few people actually benefitting from one of these consumer-hostile deals?
You make it sound like there's a lack of options for homeowners when you say this. Where I live (Toronto) that is not the case.
Of course there is no perfect deal, there will always be things that aren't ideal but I don't know anyone (and I'm old enough to know lots of home owners) who has ever bought a house that had some kind of feature or clause they absolutely hated or didn't want.
If it's that bad, you don't buy that house, and you find one that better suits your needs.
Otherwise, you're understanding and accepting the terms, and you're willing to live with them.
I hate the argument that "people" are too stupid/naive/stuck to understand or avoid the terms of an agreement they're entering into.. except for the narrator who sees themselves as the smart person who is yelling about it from the mountaintop.
If so, I could see people liking it as it serves the same function as an HOA: a hedge against bad things happening.
Water heater died? Plumber comes out, no charge. Neighbor starting a junkyard on his front lawn? HOA sends a letter, no confrontation.
Some people will decline an HOA for the same reasons they decline extended warranties: they’d rather deal with situations themselves, as they arise. Others don’t want to be bothered and let someone else handle it. I think there is space for both.
I believe so. But the price is so unreasonably high that you could replace the furnace literally 3 to 5 times and you would still be ahead compared to renting the furnace. How many people would purchase an extended warranty that is priced at multiples of the price of the object they are buying? More than none, but a very small number. New rentals are signed overwhelmingly by builders and not homeowners.
If you buy a home warranty, or an extended warranty for your car, you are (on average) going to be out of pocket more than you would be without it. You are buying it for the peace of mind that comes from not having to deal with an unlikely but major repair expense.
Not at this price. Usually the warranty is a percentage of the price of the goods. So for example, I expect a $1000 gadget to have extended warranty priced at $100 or so. I have never seen the warranty of a $1000 gadget to be priced at $3000 to $5000 dollars. And that is for stuff that break down more frequently, e.g. phones and laptops and cars. The odds of a furnace breaking down are even lower.
I just went through buying a furnace and had a few prospective installers. The first tried to sell the extended coverage: twice annual “checks and maintenance” and a 30% discount on all parts.
The second said he’d let me source the parts myself if I so desired and if I would be responsible for changing the air filter on schedule and hosing down the outside fan every summer I’d be better off putting the annual fee into a sinking fund. Or, I could pay him $200 a year to hold a hose, money he’d happily take. He got the job. ;-)
Or worse, because they are over leveraged and unable to fund a replacement without an installment plan – so they have no better option?
I’m not sure. I can see a consumer protection argument to be made.
Is it the housing market as homeowners who favours HOAs, or is it the builders who favour them? Are HOAs opted in by homeowners in existing communities because of their benefits, or do builders create them force them upon new communities because it benefits them somehow?
I am asking because while I do not have any knowledge of HOAs, I have been following the saga of rental water heaters/furnaces/ACs in Ontario for a while. Long story short, construction companies sign a long-term contract with an appliance company instead of buying and installing necessary appliances like furnaces for new houses. They get a nice kickback for this. If you want to buy a new house, odds are you will be bound by a long-term contact. If you want to terminate it early, you end up paying 30k for an appliance that is worth 10k new and installed. If you keep your contact, you will pay the same over many years.
It is a deal that is very much to the benefits of the builder and very much against the interest of the homeowners. But they have been exploding in popularity. There are relatively more and more homes with rented water heaters and fewer and fewer homes with owned water heaters every year. It would still be wrong to conclude that "water heater rental is beneficial. See, the market has spoken."