Can I use a home warranty?

If you currently have a home warranty, property managers will use it. However, we will ask you not to renew it for two main reasons.

The first reason is that home warranties are not tenant-friendly. The second reason is overall, they cost you more money rather than they save you. That’s probably counter-intuitive, so let me explain.

Home Warranty Example: A True Story

Your air conditioning system stops working on a Friday night in July. Your tenant calls it into us during the early hours of Saturday morning, and tells you she has two small children, can we please send someone right away?

On Saturday morning, we open a claim with your home warranty company. On Monday morning, your tenant receives a call from the vendor the warranty company has assigned. They want to schedule the service call for Tuesday, and the vendor has a four-hour service window. Your tenant calls our office, upset that she’ll have to wait until Tuesday and now, she has to take half a day off work. She’s not happy.

On Tuesday, the air conditioning tech goes out to the property and finds a faulty part. He calls it into the office and leaves the property. The tenant calls our office wanting to know what’s going on, but we don’t know. The warranty company doesn’t report to us. So, we jump on the phone and after an hour, we finally speak to a dispatcher, and we’re told they have ordered a part from the factory, and will schedule another service call when the part arrives.

On Thursday, the vendor calls your tenant and schedules another service call for Friday because the part just arrived. There’s another four hour window and at this point, the tenant is ballistic. She has to take another half day, and has not had air conditioning since the previous Friday night.

Solving Maintenance Problems without a Home Warranty

Let’s compare this to a property that doesn’t have a home warranty. What would have happened differently?

We would have dispatched one of our air conditioning vendors right away, on Saturday morning. When they found the faulty part, they would have driven to the local warehouse, purchased the part, and installed it the same day. Your tenant would have had a/c as early as Saturday night, and would have appreciated that her landlord was maintaining the property.

Which is the most tenant friendly scenario?

Which would encourage a good tenant to renew a lease?

The True Cost of Home Warranties

In the case of the tenant with two small children, the landlord ended up paying to put the family in a hotel from Tuesday to Thursday night while waiting for the warranty company to make the repair. As a result, the cost of the repair was way more than it would have been without a warranty.

Home warranties are designed for owner-occupiers. Owner-occupiers will accept the poor service in return for the potential financial savings, should they have an expensive repair. But, tenants won’t accept poor service, and home warranties can drive your good tenants away.

Please don’t get one.

If you have any questions or need more landlord advice, please contact us at Hoffman Realty.