Home warranties are popularly sold as a necessity in the modern rental market. In reality, however, while the home sellers press to include home warranties, professional Columbus property managers have serious concerns about them. If you are a prospective property investor in Columbus, you need to understand the issues that come along with home warranties.
What is a home warranty and what does it cover?
A home warranty is a residential service contract that secures maintenance for home systems and appliances for a defined period. Do not confuse this with homeowner’s insurance; the two are not the same thing.
Home warranties cover a variety of things for different durations. A generic home plan covers the following:
- Workmanship and materials: 1 year
- Delivery and distribution system: 2 years
- Envelope (roof/walls): 5 years
- Structural coverage: 10 years
Although appliances are also covered in a home warranty, you need to check if all the appliances in your rental property are covered. If not, more comprehensive plans with wider coverage and more cost are available.
It is common for different warranty companies to provide different coverages. The lack of standardization creates confusion for the buyer as they can never be sure what is included in the plan. Tracking all of this information about what is covered can be exhausting and time consuming.
Advertised and perceived benefits of having a home warranty
A home warranty takes care of any appliance-related damage, finding workmen and scheduling repairs, and saves you from the additional cost of replacing a damaged appliance completely. Additionally, you can claim repairs and replacement expenses as tax deductible, depending on your state rental laws.
Having said that, there are several disadvantages of having a home warranty.
Challenges of having a home warranty
- A home warranty can be costly
A home warranty will cost you hundreds of dollars upfront. Moreover, you will be charged a $75 service fee each time a technician visits you. If the repair requires multiple technicians, you might have to pay $75 per contractor.
- Claiming it is a challenge
In order to claim benefits under a home warranty, you'll need to file a complaint through the provider's website or customer care. The company will then send their technician to assess the situation. When the assessment is complete, you'll be informed if the rental property damage qualifies for a claim. More often than not, however, you'll find that a few items do not fit or get covered in the claims kit. Once the assessment process is done, the technician will arrive to make the repairs.
The process may take a few days. Some companies also require you to be present during the assessment, only to find a coverage gap. This not only costs you time but also your additional hard-earned money. If the repair costs less than $75, it makes sense to fix it by yourself.
- Top-notch service quality is not always a given
Home warranty companies hire technicians that are affordable, rather than the best at what they do. In such a situation, the end result of the service provided can often be just average. You also have the least say in the quality of fitters or fixtures that would be used. This itself is a deal-breaker for many property owners.
Should you get a home warranty?
If you were to ask us if you should get a home warranty for your investment property, we would reply with an emphatic, “No!” We no longer work with properties that have home warranties. In our professional experience, the contractors they use are not as responsive as we are. We have found that they are always trying to repair a system and never consider its replacement. Or they’ll say the issue is a previous condition; it happened before their time.
If you’re still wondering if a home warranty is right for your investment property, talk to your professional property manager.
Solutions for Real Estate can be your trusted real estate and property management partner in Columbus. In business since 2001, S4RE has been a leading independent brokerage in central Ohio for residential, commercial and property management. Contact us to discuss your real estate needs.