The Truth About Home Warranties
Have you ever purchased an investment property and considered a home warranty as the perfect solution? Perhaps your real estate agent suggested, "Buy a home warranty, it'll cover everything." If you've ever thought this, you're in the right place. In this blog post, I'll break down why home warranties may not be the best choice for your rental property. If there's anything you feel could be improved or you have questions, comment below.
What is a Home Warranty?
A home warranty is basically a service agreement where you pay a company between $500 to $1,000 a year. In return, they cover a range of repairs and replacements on home systems and appliances that break down. However, coverage varies significantly, with some policies offering very little protection and others more comprehensive coverage. You often see home warranties included in real estate transactions, involving agents negotiating for sellers to pay for a home warranty to cover mechanical failures and repairs.
The Real Issues with Home Warranties
Now, let's dive into the main reasons why Emerson Property Management and I advise against using home warranties. Here are the top five issues we encounter.
Meeting at the Property Home warranty companies often require someone to meet them at the property. Whether it's you, the owner from states away, or the property manager, this can be a logistical nightmare and an added expense.
Vacant Properties Home warranty companies may refuse to service vacant properties without someone present. This creates a hassle, especially as many vendors usually accept a lockbox code to enter the property freely.
Service Fees Regardless of the outcome, companies often charge a service fee of $75, and additional fees may apply if you require a property manager to meet the repair person. These costs add up quickly, especially for long appointment windows.
Limited Coverage Coverage details in the contract can be misleading. You might find only limited repairs are covered, such as a minimal amount of refrigerant or excluding common repairs like garage doors or garbage disposals.
Timeline for Repairs Home warranty companies may not operate on a timely schedule, taking up to several days to simply assess a problem. This delay is unacceptable, especially in crucial situations like air conditioner failures in summer heat.
The True Cost of Home Warranties
When you add up all these issues, it becomes clear that a home warranty is often not worth your money. If you partner with a reputable property management company with a robust maintenance network, they can address problems efficiently and cost-effectively. At Emerson, we leverage our relationships with vendors to keep costs down and response times swift, ensuring tenant satisfaction while saving money.
Conclusion
This isn't just a word of warning; it's a common challenge in property management. Many see home warranties as a solution to all maintenance problems, but in reality, they can become very problematic, especially if you are managing properties out of state or rely on a property management company. Remember, the most expensive thing in property management is turning over a unit. Let’s ensure resident satisfaction and keep maintenance efficient without the hindrance of ineffective home warranties.
Before you consider a home warranty next time, think through these insights. It may work for some, but often, it's best avoided.
