For investors or first time landlords, the most asked question we get is “should I get a Home Warranty?”
This is a great feature, for owners living in the covered home. However, when it comes to your rental property, we don’t advise a home warranty policy. It’s not worth the cost and causes a plethora of problems for renters and property managers. Here is what you need to know:
- You and BPM don’t get to pick your vendors, which means you can’t be sure the vendor has availability asap, can do the work right, not overcharge, and certified repairs with warranty on labor or parts. We don’t get to know the vendor has quality technicians who are kind and courteous.
- BarronsPM does not get updated on the status of the work orders. BPM has to call the vendor and home warranty company to obtain an update. Normally taking a minimum of 1 hour on hold.
- Vendors are hard to reach, the vendors home warranty companies use don’t normally have a local number, you have to call a 1-800 number and go through a phone tree.
- Vendors normally won’t do any repair on the first visit. The vendor will not do anything until the home warranty company approves the repair first, this takes normally takes about 2-4 days, and then the vendor has to schedule again to visit, when they have availability.
- Not everything is covered. For example, home warranty does not cover freon charges to an a/c, this is a cost that you have to pay BEFORE the vendor will do anything. And can be in excess of $600 in some cases.
- The
home warranty company wants the least expensive thing, not the best option for
the home.
- For example, we recently had a property with an a/c not cooling, after 3 days of waiting for the home warranty assigned vendor to have availability, the technician “found nothing wrong”, we called home warranty again and asked for a re-call for them to go back, and now they have found an issue. After 2 more days of waiting for home warranty to authorize the repair, the tech went back to do a repair. While doing said repair, he broke something else, without knowing. BPM had to call the home warranty AGAIN, and they sent the same vendor back. The vendor wants did another repair, breaking another items. Now the unit requires an electrician, another service call charge to your credit card. Since this whole mess has taken so long, we asked for our preferred vendor to assess and they highly recommended replacement as repairs will be constant in the future and the unit is bad condition due to age. The home warranty will not agree to this, and the owner is stuck waiting for the contract to end so she can properly take care of the home and the tenant. So, here we are, 4 WEEKS later, and the tenant has been without a/c for a month and the repair is STILL NOT DONE.
Time is Money
As a landlord, the Florida Landlord Laws require you to make repairs to your rental property in a reasonable amount of time. We like to respond to maintenance issues quickly, whether they are emergency repairs or routine issues. When you work with a warranty company, your timeline is unpredictable and it can take a lot of extra days to get any work done at all.
Here’s the process: First, the tenant will report an issue. Is it covered? We don’t know until waiting on hold with the Home Warranty for them to confirm. This process can take from a few minutes to hours. Home Warranties are notorious for long waits on hold and bad communication. After BarronsPM has filed a claim, and your credit card has been charged for the service fee, it may take a few days or even a week for someone from the assigned vendor visit the property for diagnosis.
Once a claim is filed, there are many delays that could occur, here are examples:
- Scheduling- It’s not uncommon for a warranty company vendor to call the wrong person (you, the owner instead of the tenant) to schedule. They have a habit of contacting the owner of the property to schedule the repair even when it is made clear to them upon filing a claim who actually needs to be contacted for scheduling.
- The warranty company may not dispatch a vendor until they’ve received a service fee from either the owner or the property manager. Depending on the warranty company, they might have different rules as to who they can receive that payment from.
- Warranty vendors needing to order parts.
- Warranty vendors failing to submit their repair estimate/recommendations for further approval.
Habitability needs such as hot water and heat are extremely time-sensitive, and you want to make sure such repairs are made with a great sense of urgency. Working with a warranty company makes that difficult.
Non- Preferred Vendors
Another issue with warranty companies is that they maintain their own list of vendors. We cannot have our preferred HVAC repair person respond to the repair request, and we can’t use a plumber who may already know the home inside and out. You’ll have to use the vendor that the warranty company has contracted with. Most of which are not quality workers, but cheap labor. And what’s frustrating to Property Managers like us is that we strive to maintain only the most professional contractors in the area are working on our clients’ homes. We can’t certify the work done by someone we have not vetted.
Frustrated Tenants
When repairs drag on and on and it takes multiple visits by representatives of the warranty company, tenants will likely grow frustrated. This is not good for you, because it means you’ll be left with unhappy tenants who are unlikely to renew their lease or leave early without finishing the lease. Tenants may also want rent credits for having “inhabitable” conditions, even if the repairs are not emergencies, they will fight tooth and nail for rent credits on the smallest of things.
Industry statistics show that the number one reason tenants don’t renew their lease is due to a lack of attentiveness to maintenance issues. Having a home warranty will only increase the chances of joining this group.