Home Warranties? Yes or No

[Alexander Timberlake]

Hello,

I would like people's opinions on whether home warranties are beneficial or not? I have had OneGuard for the past year and had a pretty poor experience. They either do not cover the item that needs to be fixed or I end up spending more money working through them.

Looking forward to your feedback!

If you are in the Houston, TX market, please add me to your network!

[John Newhall]

I've had a number of buyers that got home warranties, with the home purchase, and they were kind of better than nothing but it seemed to be a fight to get anything out of them.

I've had good luck with regular service contracts with the gas company. They have plans that cover just the gas items and plans that cover all appliances. Much less hassle than the HW.

[Jerry Ta]

They're all terrible, unless it was paid for by a seller, i would never spend money on home warranty.

[Julie Marquez]

My real estate agent gave us a home warranty when we purchased our home. It's through Old Republic, but I have no idea what it covers. We bought the house as a gutted fixer, so not sure what the warranty is for.

[Dana Dunford]

I did a bit of research on home warranty, and here is what I found:

(1) Cost: If you look at the monthly price vs. the value you get, you (most likely) end up losing money in the long haul.

(2) New purchase: Interestingly enough, when a "for sale property"offers 1st year of home warranty for free, it gets a higher price (more than the cost of the home warranty). Buyers like the "comfort" that if something goes wrong with this large purchase ... they have insurance to help cover the cost of what needs to be repaired.

(3) Convenience: There is something to say about just calling one number and having them deal with the vendors to get the issue fixed. However, you may not be dealing with the top vendors, since home warranty companies undercut the vendor.

(4) When do people become unsatisfied: When they don't read the terms and then realize (after the fact) that there are a lot of things that aren't covered by their home warranty plan -- and now they are getting hit with a large bill.

[Alan Grobmeier]

Believe it or not, it depends.  I had 9 rental properties in addition to a stressful full-time career where I traveled around the United States.  My biggest problem is that I did not have time to run every single problem to conclusion.  So, what I did was make systems and processes to allow myself the capability of 'stepping back' from repairs at my rentals.

Expensive:  Yes.  But zero frustration.  I don't want to know my tenants comings and goings.  Nor do I care.  I don't want to be at the property when the dishwasher (for example) is being fixed.  I put a LOT of responsibilities on my tenants.  :-)

Cover 'everything':  Not only no, but hell no.  You need to look at these policies as 'first steps' to getting things fixed and make sure that the items YOU want covered are in the policy.  Most will NOT, for example, cover roofs.  

If you have an air conditioner in Arizona blow up  in the summertime (like I have), you need to have a Plan B, C and probably D.  ;-)

Warranty Companies 'Suck':  Yup, some do.  Some are more responsive than others.  The thing to remember is that these companies, although sometimes national, work differently in different parts of the country.  SOMETIMES differently in the same METRO area!  As I said earlier, we have 9 rentals in 2 different Metros in 5 different cities.  And we use 3 different warranty companies.  Confusing?  Can be, but that is why God made Excel.  ;-)

In essence you are trading money for time and peace of mind.  That doesn't mean you STILL won't have problems, just hopefully fewer.

With that said, I would not own a property WITHOUT a home warranty.

My $.02

AG

[Mark H.]

I've bought two houses that the "seller" paid for it.  Both times I amazingly came out financially on the deal, but in terms of time they're a horrible deal.

The first time, it took a week and a half to replace a blower motor over the coldest part of our winter.  The only heat I had in the meantime was a couple space heaters and a decorative wood burning fireplace.

The second time, I was without A/C for three weeks during the hottest part of our summer with a pregnant wife.  Most of that was waiting for the home warranty company to decide what they were going to do about it.  Even then, they replaced the compressor and paid for the labor, but didn't pay to have the system evacuated and refilled, that was on me.

I couldn't imagine having to wait for these companies with a tenant in place.

[Alan Grobmeier]

@Julie Marquez

Those warranties are supposed to cover the interior stuff like sinks, refrigerators, ovens, general appliances.  They are USUALLY very limited in scope.  But you can buy/upgrade the policy to cover water filters and even swimming pool equipment.

If you have gutted the property, you probably don't need it.  If you are renting it out, give the policy to your renters with the instructions to call Old Republic prior to calling you.

Last, but not least, take the policy out and read it.  See what is covered.

AG

[Alan Grobmeier]

@Mark H.

My waits have been NOTHING like what you described.  I would have been screaming if I didn't have tradespeople on site the following day, depending on the severity of the issue.

My experience has been much different that yours.

AG

[Jordan Sand]

@Alexander Timberlake

I used to use home warranty, but then I started building up handymen and electricians in my area. At that point, I realized that the service call was less, I didn't have to worry about paying a high monthly fee to the home warranty company (when I wasn't using them), and the quality of the service was a lot better. If you have a list of really good vendors, I'm not sure you need it. You are taking a chance with your appliances, but most likely you will come out ahead without paying the high monthly fee.

[Doug McVinua]

Mixed results with Home Warranty! One area that I really support one is in the event the buyer/owner/landlord would not be able to cover a major system failure.

In Arizona Water Heaters tend to have a life cycle of 7-10 years before the tank leaks due to the water and corrosion. Cost to replace $450-$1000 

HVAC: Arizona uses lots of Heat Pumps and they work great in the hot climate we have but average life cycle is 12-15 years. Cost to replace can run from $3500 - $10,000.

If the owner is not in a cash or credit position to fund replacement of either or both of these systems a Home Warranty can at least soften the blow dramatically.

Home Warranty companies don't really make money paying claims (outside of customer satisfaction) so it's not uncommon to see challenges on claims. They can be frustrating but for some they are a lifesaver.

Not a right or wrong answer, agree with @Alan Grobmeier, It Depends!

[Mark H.]

Originally posted by @Alan Grobmeier:

@Mark H.

My waits have been NOTHING like what you described.  I would have been screaming if I didn't have tradespeople on site the following day, depending on the severity of the issue.

My experience has been much different that yours.

AG

 Actually, I was "screaming" both times.  With the no heat issue, all they told me was that if there were enough complaints, they'd eventually drop that contractor, but as long as the issue was eventually fixed, they got paid in full.

I just prefer to go without at this point.  Paying myself I have better control of the situation.  I find realtors like to toss it in the paperwork because most people don't complain, the seller isn't really paying for it anyway, and it's not like they're going to lower the sales price by the warranty amount if you decline it.  I'm sure the agents probably get a small kickback too, but I could be wrong on that.

[Fred Heller]

Mixed results. One of the properties I manage had a rusted out drain pan and the warranty didn't cover it. On the other hand, another property I manage needed a new motor in the AC and that policy did cover it. That would have cost the owner over $300.

My problem with home warranties is that they advertise that if you buy a policy all your worries will be over. The reality is there is a lot of fine print in those policies and there is a lot that isn't covered.

[Ash Patel]

I wouldn't use the warranty even if you paid me!  In a couple of cases, I had a seller purchased warranty.  They send the worst tradespeople imaginable.  I had an HVAC tech put an indoor motor on an outdoor condenser.  It worked great until the first rain.  A simple shower valve replacement was 2 no shows, 2 different techs, hours on the phone and no solution.  Google the warranty company and the word reviews and you read one nightmare after another.  Alleviating headaches can be accomplished by hiring a licensed and reputable trade.

[Mike Austin]

I'm looking at a warranty myself because it's included with my purchase. The one thing to keep in mind is that the deductibles are 75-125$ per claim on top of the 5-700$ for the policy. That could add up pretty quick.

[Brian Garlington]

Unlike most that have responded to this post I would say absolutely get a home warranty. 

I have home warranties on all my properties. I pay on average $35/mo for each of them and it gives you peace of mind. Yes there is a $60 (Co-pay) each time you have someone come out, but .....when the tenant calls you because there is water leaking through her ceiling at 3:30am it is refreshing to know I have ONE toll free number to call, and they send someone out to fix the problem.....no scrambling to jump on the internet or phone book while dealing with a panicky tenant. Yes this actually happened.

Did I mention peace of mind? Maybe everyone else that responded to this post is great with tools and can do repairs themselves or keeps a list of contractors handy that will respond immediately, but what if you're on vacation or at work and you don't have a property manager that will take care of these issues......tenants do not respond to kindly when you give excuses instead of answers 

Just my 2 cents   

[Alexander Timberlake]

Thanks for all the information everyone! i definitely value all the insight. I don't think I am going to renew the Oneguard home warranty next year. I'll instead try and make contacts with local vendors/contractors.

[Clint E.]

I have American Home Shield, which is the largest home warranty company and most reputable from my research.  I bought it because the house I purchased was in so-so shape and I didn't want to replace everything right now.  

Using it was easy online or via calling them.  They replaced my AC this summer when it crapped out.  They tried all the band-aids fixes first and eventually replaced the compressor.  They didn't cover freon, but I'm still happy with it.  They also replaced a kitchen sink faucet that I had replaced with a low quality faucet (bad move on me).  They put in a Moen for $50 (total cost to me).  I would've spent $50 on the Moen and then had to install it which is not fun at all.  

There is a fee per claim/call/event ($50-75) and that usually covers everything.  

[Sebastian Taylor]

We are in a "landlord & rental" section. Are you guys still talking about home warranties for your rental homes? Do they even cover rentals?