• RocketRaccoon

Home Warranties: Are they worth it in property management?

Updated: Dec 11, 2018

Disclaimer: these are my personal opinions as a property manager. Take it or leave it, but I hope this helps guides you to a decision, whatever that may be for you.

I. Hate. Home. Warranties. There. I said it. Now, before you cry out to stone me in the town square, or put me up in shackles so as to throw rotten food at my face, hear me out!

The Expectation: They sound great on paper, right? You pay an annual fee for the contract, and then whenever you need service, you call them up, and they send one of their "trusted" vendors out to you, for a flat "trade call fee". This amount varies from company to company, and plan to plan. For our purposes, we'll say it's $100.00 So if your water heater breaks and needs replacement, you're only paying that $100.00 and you're getting a new water heater!

The Reality: You've bought the plan and paid the trade call fee. You don't have any hot water, so you cannot bathe the kids, let alone yourself. Your spouse is due out of the field tomorrow, and Lord knows bathing will be a requirement for their safe hygiene and your sanity. The warranty assigns a vendor, but you haven't heard from them to even make an appointment for two days. When you finally do get them on the phone, they're booked out days or weeks! You're bumming showers off friends like you're a chain smoker does with cigarettes. The kids are ecstatic - they get to be dirty. But you can smell them from downstairs as you're going on day three with no resolution. After a whole week, someone FINALLY comes to the house, and has to order parts. You expected it was going to be replaced, but the warranty company didn't approve that; they only approved a repair. So when this happens again in three months, you're about to jump through your phone to strangle the poor rep on the other side, who's just getting paid to answer the phone.

Warranty companies are notorious for lackluster customer service that makes your property manager look like a sad sack. Seriously. The tenants hate us because they've been waiting and put in their written request in a timely manner and have been patient (some of them). But we can't force the vendor or the warranty company to move any faster, and as the owner of the property, you've only given us permission to use the warranty; we're not allowed to send our own vendor whom we know will be there for sure today, because we send them so much business and they want to take care of us. So we're on the other line begging to use our vendor, but all you as an owner can see is us begging to spend more of your money, when you have a perfectly good warranty.

The Expectation: The warranty will save me TONS of money!

The Reality: In the hundreds of rentals I've managed over the years, I've only ever had a warranty company replace ONE HVAC. Then, you know what happened? We went to check on the new unit and the company that "installed" it hadn't done a darn thing. We reported it to the warranty company, but they believed their technician over our photographic evidence. I've only ever see them replace a couple of water heaters, and maybe one or two refrigerators. Everything else is repaired over and over until the "useful life" of the appliance or item is exceeding, forcing the home owner to save on all those darn repairs, up until the replacement unit is needed, then forcing them to dish out hundreds or thousands of dollars in a single sitting, out of the blue.

The Expectation: I can make an emergency work order request with my home warranty.

The Reality: Their idea of an "emergency" is 24-48 hour response time, during normal business hours. I'm not kidding. Guess how many times we get emergency work order requests during normal business hours? Hardly ever. Tenant goes home, it's below 40 degrees outside (which is the threshold for heat, by the way), and it's Friday at 6pm when they walk in to discover their house is cold and heat went out while they were at work. Guess how soon someone will be out to the house? Not today! Not tomorrow! Not even Monday! Because your home is not the only one that lost heat, and while we put it on "emergency" status, so did everyone else with a warranty. So by the time we are able to get through to the vendor, they're already booked for Monday. And all the time you've wasted, waiting, has been a lawsuit waiting to happen. A court of law could see it as you failing to respond in a timely manner. Were there other companies available to go out sooner? They don't care if you're saving money; they care about the safety of the tenant.

Don't get me wrong. I've seen home warranties work beautifully for families and truly save them a ton of money. In our first house, our warranty covered the replacement of our water heater in our first year, but when it came time to even repair the HVAC, we were stuck with an $8,000 out of pocket cost, because the unit exceeded it's useful life. Okay yes, that also included new duct work. Still, what good was it to have the warranty, if it wasn't going to actually cover that big ticket item? We had already paid the $500+ for the warranty plus the trade call fee, only to find out it wasn't covered, then had to spend another $8,000.

So, long story short: your property manager hates your home warranty because not only is it WAY more work for them, but it could also be a bigger liability than a benefit in the long run.

#homewarranty #repairs #liability #propertymanagement #money

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