Today, I want to piggyback off another episode where I discussed why home warranties suck. If you haven't seen that video yet, it's linked up here or maybe down below. In this blog post, I actually want to do a case study and show you a real-life example of why home warranties suck. Home warranties? Get the frowny face. No bueno.

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Why Do Home Warranties Suck?

You've probably heard me say this before. In our last video on this topic, we went through the reasons why home warranties are not beneficial. Today, I'll share a real-life example to highlight these points further.

We were doing a make-ready for one of our properties. Typically, we do not work with home warranty companies for all the reasons mentioned in that other video. However, this property owner had recently renewed their home warranty, and we agreed to work with it under the condition that they do not renew it again.

The Costly Wait

During the make-ready, our team noted on June 30th that there was an AC issue. We got an estimate on July 1st; it was going to be $1,000 to fix this. However, once the owner found out, they decided to get the home warranty company involved. Little did we know that this would lead to more complications.

Due to a hurricane, it took the home warranty company three weeks to schedule an appointment. They finally gave approval to do the necessary repairs, and the work was completed on August 1st – a full month later.

Let's break this down:

• We had an initial estimate of $1,000 to fix the AC on July 1st.

• The property, which rents for about $2,000 a month, remained unoccupied for an entire month due to the delay.

Financial Impact

The owner lost $2,000 in rent. This does not include what they paid the home warranty company. There was a service fee of about $75, and likely some deductible. Alongside the lost rent, this also doesn't cover:

• Utilities for the property during the very hot month of July

• Lawn care

• The potential for developing issues like mold due to high humidity and lack of air conditioning

Thankfully, we didn't experience any vandalism, but leaving properties vacant for extended periods can lead to various problems.

Case Study Summary

This case study perfectly illustrates why we do not prefer working with home warranty companies. The owner lost $2,000 just in rent, let alone other expenses and the peace of mind. It was quite stressful trying to coordinate everything. They even needed their own time to meet with the home warranty company, which isn't free. Any property manager worth their salt will charge for these additional visits.

The Reality of Home Warranties

In theory, home warranties sound great – like insurance for your home. They promise to cover emergencies, whether medical, car, or home-related. But when it comes time to make a claim, they often look for ways to avoid paying.

If you are a solo owner without a team of agents or property managers, a home warranty might be useful. However, once you've developed a network of contractors and have a good agent and property manager, you no longer need home warranties.

Final Thoughts

At Emerson Property Management, we firmly believe that home warranties are not beneficial. They cause delays and additional costs that outweigh any potential benefits. Could we have turned this property around faster without the warranty? Absolutely.