Home warranties are not always everything they are advertised to be. A lot of property owners come to us with houses that have a home warranty in place. Often, people are sold the idea that a warranty will provide an extra insurance policy against damages and other problems. That’s great if you’re not the person dealing with the warranty company and the way most of them do business. They are horrific in the eyes of most professional property managers.
There are lots of reasons home warranties don’t work. Think about the business model: most companies don’t go into business to lose money. A warranty company isn’t going to collect a premium from you that is hundreds of dollars and then payout a claim that is thousands of dollars. It doesn’t work that way. If it did, they’d be out of business. Go into any American city, and you’ll notice the tallest and loveliest buildings belong to insurance companies and banks. They got that way by collecting money, not handing it out.
It’s not that legitimate claims won’t get paid. It’s just far more difficult to get those claims paid than you would imagine.
The loss of control is also a problem. When there’s a service call for one of our properties, our maintenance team at Title One Management is on it immediately. We can dispatch our guys in 20 minutes and have the problem fixed right away. With a home warranty company, you have to go through multiple levels of people before you can get someone out to look at the problem. Fixing it might take three or four days or even weeks. That can be a major liability issue for you, especially if you have a tenant without heat in the winter or air conditioning in the summer.
When the vendor does finally arrive to fix the problem, our experience has shown that it’s not always the best and brightest vendor. They tend to do poor work. Also, if you think you aren’t going to have to pay anything because you have the warranty in place, you’re wrong. You’ll be charged a trade call fee, which is often between $75 and $150. This is similar to a deductible you pay your insurance company. You’re paying money just to get a repair covered.
Warranty companies are also very skilled at not covering things. They might cover a broken condenser but then they won’t cover the furnace. All in all, it’s not worth it and it’s a waste of money for homeowners.
If you have any questions or you’re considering a warranty on your rental home, please contact us at Title One Management, and we’ll talk to you in more detail.