do I need the home warranty program

do I need the home warranty program

Real Estate Investor · Irvine, CA · Member since 2016 · 129 posts · 42 votes

HI ,

My realtor insists me on buying a home warranty program for my newly invested single family house.

Is it make sense financially?

Which one is a smarter way in terms of maintaining the rental property solve the problem when it happens or buying a home warranty program?

Stella

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Investor · Downers Grove, IL · Member since 2015 · 1k+ posts · 955 votes
9y

@Dong Yan

Remember, all insurance companies need to make $. Most policies have loop holes and probably a big deductible. Unless the seller is offering to buy me one, I would pass.

First, find a good home inspector and/or contractors to figure out the deficiencies in your house.

2nd. Make sure you budget monthly for repairs, CAPEX and vacancies.

3rd. Screening tenants is very important. The more work  you do up front, the less issues you should have during the rental period. Search on BP and you will find a lot of good tips and articles. 

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  • Real Estate Investor · Irvine, CA · Member since 2016 · 129 posts · 42 votes
    9y
    Sharon,
    That is very helpful tips for waiving the home warranty program to get the better price, hardly ever  any of the realtors I knew would do that though. so sad.In my area, all realtors only like to cater the high price tag transaction, if you have regular purchase they won't consider to cater your request if it takes time.

    Stella
    Originally posted by @Sharon Tzib:

    I only recommend my buyer/investor clients get one if the seller is paying, which in Houston, is pretty customary. Some of my investors don't want anything to do with them, however, due to negative past experiences. And sometimes we can use the home warranty cost as a negotiation tool to get a lower price, seller concession, etc. if we don't ask for one. 

    If you do get one, check out the consumer affair reviews before you choose a company, and then read any companies exceptions very carefully. One company, for instance, has a loophole where no claims can be filed for 30 days after payment for the policy is received-you're SOL if something happens right after you take possession. Here's the link:

    https://www.consumeraffairs.com/homeowners/aaa_warranties.html

    Lastly, in Houston, we cannot take a referral fee from a home warranty or any service company without having a signed disclosure from all parties. I just avoid that scenario at all times.

  • Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    9y

    I didn't know people actually bought those things.  I figured they were like the "Protective undercoat" that the car dealerships try to add on.  

  • Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
    9y
    Home warranties are mostly garbage. Nevertheless it's not a bad idea to offer them with a home sale to give the new buyer a sense of security, even though that feeling is misplaced
  • Rental Property Investor · Phoenix, AZ · Member since 2015 · 224 posts · 50 votes
    9y
    Originally posted by @Dong Yan:
    got it , almost want to try it for my own house but not any more, Thanks!

     Even when they do come through and mail you that check for the broken appliance that you need to to replace ASAP, don't expect funds for at least a month

  • Real Estate Broker · Cypress, TX · Member since 2013 · 822 posts · 468 votes
    9y
    Originally posted by @Dong Yan:
    Sharon,
    That is very helpful tips for waiving the home warranty program to get the better price, hardly ever  any of the realtors I knew would do that though. so sad.In my area, all realtors only like to cater the high price tag transaction, if you have regular purchase they won't consider to cater your request if it takes time.

    Stella
    Originally posted by @Sharon Tzib:

    I only recommend my buyer/investor clients get one if the seller is paying, which in Houston, is pretty customary. Some of my investors don't want anything to do with them, however, due to negative past experiences. And sometimes we can use the home warranty cost as a negotiation tool to get a lower price, seller concession, etc. if we don't ask for one. 

    If you do get one, check out the consumer affair reviews before you choose a company, and then read any companies exceptions very carefully. One company, for instance, has a loophole where no claims can be filed for 30 days after payment for the policy is received-you're SOL if something happens right after you take possession. Here's the link:

    https://www.consumeraffairs.com/homeowners/aaa_warranties.html

    Lastly, in Houston, we cannot take a referral fee from a home warranty or any service company without having a signed disclosure from all parties. I just avoid that scenario at all times.

  • Real Estate Broker · Cypress, TX · Member since 2013 · 822 posts · 468 votes
    9y

    Hi @Dong Yan that is sad. There's lots of different ways to put money in my buyers pocket, so I look at all terms in the contract that we can utilize to help meet my clients' goals. And I find negotiating on terms can be just as successful sometimes as price. There's more than one way to skin a cat :)

  • Dallas, TX · Member since 2016 · 1k+ posts · 745 votes
    9y
    Originally posted by @Dong Yan:

    HI ,

    My realtor insists me on buying a home warranty program for my newly invested single family house.

    Is it make sense financially?

    Which one is a smarter way in terms of maintaining the rental property solve the problem when it happens or buying a home warranty program?

    Stella

     If you can get a seller to throw it in, great.  Usually a seller will more or less throw it in for free.  But otherwise I think you will find there are a lot of exceptions that they wont cover.

    I woudnt buy it after the fact, is your real estate agent getting a commission from the home warranty company?

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