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VOLUME VIIIShould Property Owners Get a Home Warranty? By Melanie Green When plumbing and electrical problems arise, or an appliance breaks down, tenants look to landlords for a fix. Unfortunately, landlords may not be prepared for these expensive emergency repairs. Home warranties could be a solution they both need. Here are some things property owners should know about home warranty programs and whether it makes sense to invest in one.
Mitigate Unexpected Repair or Replacement Expenses Appliances and other parts of a home will need to be repaired or replaced at some point. Replacing high-end appliances like an HVAC system or a washing machine can cost thousands of dollars. Enrolling in a home warranty program can prevent large, unexpected bills by allowing property owners to factor the lower cost of this agreement into their annual expenses.
“One claim pretty much pays for the entire policy, and there’s less of a headache,” said Joe Mitchel, a Senior Account Executive with First Premier Home Warranty.
Home warranties aren’t just used to repair and replace appliances though. These contracts with property owners also provide discounted repair and replacement services for plumbing, electrical and other components of a house. Rates may vary.
According to Mitchel, “Property owners can purchase it at any time. There’s a 30-day wait to ensure systems are in working order, and you can put it on as many properties as you want.”
Depending on the home warranty company, an initial property inspection may not be required.
Benefit From a National Network of Vetted Contractors Home warranty programs have a network of vetted contractors to select from to complete repairs. Having access to multiple contractors means that someone will always be available for the job, and property owners can avoid the tiresome task of shopping around by their lonesome.
The home warranty company finds the contractor(s), schedules them for the job and lets the property owner know when they will arrive. The company can also notify tenants and property managers, too.
Reading prior online reviews about home warranty companies under consideration helps, as well as investigating what current and prior customers had to say about their affiliate contractors.
Also, property managers should confirm that the home warranty company has a wide assortment of technicians who are licensed, bonded and/or insured for service calls throughout the United States. By having a large choice of repair technicians to choose from, the company will be able to find a repair contractor that can get to the property sooner.
Provide Tenants the Ability to Schedule Repairs Home warranties can also help to simplify the process of scheduling repairs and saves property owners money, especially for landlords that own several homes or multi-unit rentals. These programs can shift some of the responsibility of scheduling repairs away from the landlord by allowing property managers and tenants to call the 24/7 hotline on their behalf.
Scheduling repair options at any time of the day without having to first reach the landlord, who could be unavailable when repairs are needed, could also help to foster a more positive rental experience. (This perk should be a talking point before the lease is signed so that tenants know what they are and are not responsible for.)
Potential Pitfalls of Home Warranty Companies Before deciding to purchase a home warranty, landlords should be aware that each program has varying coverage options. Before signing any contracts (or adding this perk to any lease), get clarify on what is and isn’t covered beforehand. According to Investopedia, some covered appliances may not have coverage if they haven’t been maintained properly—even after the 30-day initial inspection.
Additionally, property owners may not get to choose the model or brand of replacement appliances or components. In addition to (possibly) not getting the brand of choice, there’s also the matter of not getting a preferred contractor.
Even if property owners already have a trusted group of HVAC companies, plumbers and handymen to work with, they won’t be able to use them unless the home warranty company sends them out. They also won’t have the option to personally vet and select the contractors that work on their properties.
Is a Home Warranty Worth It Then? As long as appliances are properly taken care of—based on the original purchasing instructions (and hired maintenance, if need be)—home warranties will more than likely come in handy. Appliances will age no matter what, and this purchasing decision can help mitigate unexpected repair expenses.
The often-tedious process of trying to find a last-minute contractor or learning that current contractors cannot do higher-level jobs becomes a non-factor with a home warranty. A credible company will already have qualified contractors who are ready to work.
But as with any long-term contract, the downsides should be considered. For some property owners, the loss of control to select contractors may be a deal-breaker. For others, it’s no big deal. Either way, it’s highly recommended to invest in an emergency stash until that final decision is made.