For a number of years -- at least 10 -- I have encouraged my selling clients to throw in a free home warranty from one of the warranty companies like American Home Shield. It seemed to be both a good marketing strategy for the seller and as a help against the possibilities of disclosure disagreements and lawsuits after closing.
It didn't take long doing this that I sold myself that an American Home Shield warranty on our personal home might be just the thing to do, so I bought and the company started drafting my bank account every month for the premium...about $45, I think.
A long time went by before I needed service. I called because the back flow valve for our sprinkler system was frozen. I reported the problem to AHS, and they scheduled a "plumber" who came out and 1) told me that the valve wasn't covered, 2) that he was really not a plumber but a plumber's helper, and 3) that he had learned what he knew about plumbing as a prisoner at the Huntsville prison. He had only recently been released.
"Well, can you fix it while you're here?"
"No, $55 please."
I drove over to the nearby Lowes, bought the part and put it in myself. Total cost of the part $6.00. Total time required to put it in, less than thirty minutes.
The next time I called AHS, the a/c had stopped cooling. The appointment was set by AHS. The service technician never showed up. Calls to AHS and the a/c didn't help. No apologies then or were forthcoming. I was tired of being hot, so I randomly called a company from the Yellow Pages, they showed up within the hour and fixed it.
"$105, please"
The next time I called AHS, one of our commodes had been frequently stopping up and the valve at the house for the main water supply line was leaking, too. I bought a new commode and brought it home for the guy to install because I was sure it was stopping up because of calcification inside the fixture. I took the day off to be at home for the repairs.
The plumber came and told me that the water supply valve wasn't covered because it was on the outside of the house. He said the commode wasn't regulated right and that there was no need to install the new one.
"Well, can you fix the valve while you're here and install the new commode anyway?"
"No, $55 please." I had to write off the day, too.
The commode immediately began stopping up after he "adjusted it" just as it had before. I pulled the old one, installed the new one myself. Cost of the fixture $225.00. Total time less than forty-five minutes.
The air conditioning began leaking freon. This time AHS sent an a/c company to do the repair. The fellow was friendly, knew his stuff, and got it fixed immediately. He fixed it, and he had come on time. Wow!
"$55, please."
The hose that goes to the sprayer at the kitchen sink began leaking. "Hey, American Home Shield, the kitchen sink sprayer hose is leaking and needs replacing."
"How about tomorrow before 10 AM?"
"Great! I'll be waiting."
The plumber came, looked at the problem then asked me to bring in my warranty. "See right here? Replacing washers and stuff like that isn't covered? By the way, I'm a single father trying to raise a young daughter by mself," he added.
"Can you fix it while you're here?" I asked.
"No, $55 please."
Perhaps if this is the business formula followed by all of the home warranty companies, it's time for them to make a change or maybe it's time for real estate agents to discontinue pushing their warranties -- I mean, it's not like we make anything from making the sales for them, and I have to believe that my experiences replicate those of others; worst of all the experiences of those to whom we recommended the services.
Whatever the case, the warranty companies need to be responsible for telling you up front that the service you've requested is likely to not be covered by their warranty. And further, their contracts with the service companies need to specifically require them to make any and all repairs at local market rates whether or not the AHS warranty covers the repair.
As it is, the primary reason for being a AHS service contractor is the $55 annuity for telling the homeowner, "$55 please," and not delivering any service whatsoever in the process.
BILL CHERRY, BROKER-REALTOR. MY 43RD YEAR SELLING TEXAS! 972 380-7347
MEET ME ON THE WEB AT WWW.BILLCHERRYBROKER.COM
Here's the thing that's interesting. At least in the case of AHS. They are continually having to sell new contracts to cover those who dropped out. Lapses, they're called in the insurance bidniz, and lapses are what kill insurance sales people and their companies.
It doesn't take much skill in math to figure out that if you called for an AHS repair once a month, a repair would have had to cost you more than the $55 service charge PLUS the $45 monthly fee before you, the customer, were ever ahead.
I figured this morning that I have paid AHS at least $2,700 in recent history for which I have recovered $75, for a net loss of $2,625. AHS could have fixed anything for me including the full replacement of an a/c compressor and they would still be ahead of the game.
So one would think they would be making every effort to avoid lapses, and the way to do that is to at least make certain service people don't show up when AHS should have known in advance that their contract was not going to cover the repair.
In my own case, I would have been better off had I saved the monthly premium for deferred maintenance. But then knowing my poor saving habits, I have to admit in my heart I wouldn't have done it. Hence, like John pointed out, I'm best keeping the warranty in case one of the big things happens.
Marchel, I think that's a smart move for both you and your E&O company. Maybe Jim and Maria Hart would let us know who they've had such good luck with.
I once wrote the president of AHS and I asked him why they didn't have a policy that covered everything but the $55 service fee....kind of a "You can either buy the cheap one or the one that covers it all" kind of thing. Even if the premium were, say, twice as much, it should help them AND us.
If someone complained about the service, the answer would always be, "I surely do understand your position. You picked the Major Medical Policy. Why don't you upgrade to the All Inclusive Policy?"
Seems like such easy marketing to me....even if the All Inclusive Policy was so expensive no one would buy it. At least the agent and AHS could remind the disappointed customer that he had chosen the Major Medical Policy.
Well, the president wasn't interested in my idea. It was passed on to someone who wrote me a very condescending form letter that was not the least bit pertinent to what I had written.
I still think I'm right. Guarantee you I wouldn't be an investor in that company with their present attitude enforce.
BILL CHERRY, DALLAS BROKER-REALTOR. MY 43RD YEAR SELLING TEXAS 972 380-7347
My clients have also run in to the same problem with AHS. This is why I started using a company called Land America Home Warranty. They don't seem to cover some stuff AHS, does, but they do cover some things that AHS doesn't.
The good one about AHS is that if they can't fix it, they don't charge you for the visit! - Big one to me and my clients.
Good luck!
Todd
Todd, thanks for sharing your expreience,
Bill
Those of you who use or are considering using American Home Shield Warranty Service should read Patrick's blog about his experience. Here it is http://patrick.veverka.net/2007/07/12/home-warranties-stink/
Bill Cherry
So here's the latest. The dishwasher started making a rumbling noise. I turned in the repair to American Home Shield. The service technician called me, and I told him what was going on. He said, "You don't want me to come until the pump stops working altogether. They won't pay a claim if I replace it before it's broken."
I canceled the service call.
About two weeks later, the thing stopped working. I called American Home Shield. They said they couldn't send anyone for four days. The guy came, and as he walked into our home, he said to me, "You need to scrape and rinse the dishes before you put them in the dishwasher." I said, "Excuse me?"
"That's why your dishwasher is broken. You've not been scraping your dishes." Patty goes nuts when she hears him say that from the other room.
He disassembles the dishwasher and produces a rusted wire brad. "Here's the problem." I say, "We don't have anything like that in our house, and we've lived here for three years, so I find it hard to believe that is the problem."
"Doesn't matter. Your pump's not covered. $55 please." I wrote the check and immediately cancelled the AHS contract, and then I decided the service company didn't need to be paid either, so I put a stop payment on the check I had just written them."
Life has been much better without AHS to aggravate me. It's time for the various states to regulate these "warranty" companies or close them down altogether.
Marchel, I've had nothing but trouble from these people, and I've carried their program for at least ten years, and I don't know how many people have signed up for it who I've sold houses to.
One time they sent out a "plumber" who didn't know a 1/2 inch pipe from a 3/4 inch pipe (honestly) and when I asked him where he learned plumbing, he told me in the Huntsville prison. He had been out for four days! Was convicted on drug charges and served about three years, if memory serves me.
I paid him and sent him on. He didn't know enough about plumbing to make the repair. I drove over to the nearby Lowes, bout about bucks worth of parts and fixed it myself in less than a half hour.
Bill
Bill:
I represented my best friend on the purchase of a home last year and purchased a home warranty from American Home Shield for her. Everytime she calls them she gets the run around and they look for non-legitimate reasons to not cover the problem. In addition, the customer service reps are rude to her on the phone. I will never again use this company (and I own two real estate offices). I tried to get the local sales person and they are long gone. The new one won't even call me back. I WILL NEVER USE THIS COMPANY AGAIN!
Kerry
If NAR and or the state associations were on the ball, they would lobby to get these warranty companies licensed and regulated by the individual states or the federal boys.
We set it up for the American Home Shields of the world to make money on our sales, they pay us nothing for the service, and then they abuse our clients.
None of them are worth shooting.
Thanks for your comment. I'm sorry you've had trouble as well.
Billycherry
Bill,
I am a Home Inspector with Advantage Inspection Clear View. I just posted a blog on the problems inherent with the Home Warranty industry.
I understand the problems as an insider who has studied his competition in depth. We have our own in-house 'No Denied Claim's' warranty, with no 'pre-existing condition's clause, underwritten by an inspection, covering more than any other product. This is unique in the market and is an answer to the bad companies out there. Unfortunatly, Advantage Home Warranty is only available in the coverage area of our Advantage Inspection franchisees, which at present is the South East US. But we are expanding.
I cannot tell you how frustrating it is when a quality product has been developed to address an industry riddled with bad customer service and apparant fraud, only to have most of the large RE agencies in my town refuse to consider our product because they have a very lucrative agreement with one of the national warranty companies ( no names at this time).
Check out my post for some insider stuff.
Philip LaMachio, Advantage Inspection Clear View, Advantage Home Warranty 'No Denied Claims'
Wow! I had recommended to buyers AHS many times with a few taking me up on it. Now I have to wonder what will happen if they do put in a claim. Does anyone have a good warranty company I can check out here in Northern New Jersey?
James, check out Old Republic.
Bill,
Doesn't look like Old Republic services New Jersey based on their website. I will call them to find out for sure.
Thanks!
Hey Bill! I've used AHS for years and still find them very responsive! A past client of ours called the other day to say how great they were...and they replaced a dishwasher, garbage disposal and an HVAC just for the service fee. I guess on many items I pick and chose my battles. I personally love them and their service!
Jim
A survey was taken recently, and it was found that AHS does not enjoy from most others the accolades you gave them. Soon they will be exposed for what they are. It would be interesting to know the length of time most people stay with them. I'll be they have to replace business every year and a half.
Perhaps it's has to do with the regions and how they are managed. I personally had a service man come to my door and before he got inside where the appliance was, he was already telling me that the reason it didn't work was 1) my fault and 2) it wasn't going to be covered.
Sure enough, just as he predicted. I stopped payment on the check.
James, Bill, etc,
We have the home warranty product you are looking for ....
The `No Denied Claims' home warranty ! There is no comparison with us and AHS or Old Republic or any other because we operate on a different business model. In addition, we cover more items than any other warranty on the market.
Check out my post for an analysis of what is wrong with the model on which all other warranty companies operate.
Then, check out the links below, especially the Advantage Home Warranty one.
Philip LaMachio, Advantage Inspection Clear View, Advantage Home Warranty 'No Denied Claims'
PS: At present we are geographically limited to the Southeast US, but are expanding rapidly. That is because our warranty is predicated on an Advantage Inspection Inspector's report.
Bill: Just posted about an experience that I'm having with Home Security of America where they are trying to snake out of fixing my electrical system....thought you might get a kick out of it! It's kind of funny, even with decades of experience, guys like you and me can still get the wool pulled over their eyes on occassion! ;-)
Bob Mitchell
ValueList Real Estate Services, Inc.
Bob,
You'll be pleased to know that one of the large metropolitan newspapers is writing an expose on American Home Shield. They contacted me. I asked the reporter if I was alone in my comments. The reporter told me that he had contacted an awful lot of people, and not one so far had anything good to say about AHS.
That is, except for the big corporate company that owns several franchise companies. They are now in bed with AHS. The reporter wanted to know why they would associate with them.
Fascinating.
Bill
Bill
Bill,
I would really like to know which paper is doing the expose on AHS.
Philip LaMachio Advantage Home Inspection
Philip, I can't do that.
Bill
When the expose comes out, if you remember, could you direct me to it ? If you can.....
Thanks, Philip
I'm guilty of giving home warranties as closing gifts in the past because from my PERSONAL experience they are valuable. You may want to check out my post as well "Is a Home Warranty Worth It?"
Happy Selling,
Christina
Christina, thanks for your comments. I posted my response to your blog, "Is a Home Warranty Worth It?"
What's "warranty"?
AHS..!!! the worst company to work with...
Mina, if nothing else is true about AHS, it is that they are inconsistent in administering what claims they honor and which ones they don't.
I think these companies should be state regulated by the insurance or real estate commission.
I've had good and not so good experiences with AHS both personally and as an agent for Buyer's. Apparently someone has taken it a step further with a class action suit. Check out this link. 3/12/09 http://www.edlesonclassaction.com/
Hello,
As the professionals in Real Estate I'd like to know your opinion.
I just created a new system, which automatically develops the panoramic photos from the usual ones. Everyone can use it and create the virtual tour of its property.
For this project I made a web site. http://www.onre.eu
What are your thoughts about this project? I plan to charge no more than 7-8USD for one panoramic picture, which should be cheap.
Bill,
If all you have time to do is cut down warranty companies, maybe you should read the contracts more thoroughly. They all specifically state what exclusions they have. People think just because you have a warranty, they owe you something. Sure, sometimes things don't always go as well as you expect, and sometimes you have to wait a couple of days for service. BUT, if your AC goes out, you would have to replace it with or without a warranty. Having a warranty helps in the cost of replacement. I use them on every transaction, and yes, I have had a couple of issues, but, all in all, they have saved alot of money for my clients. The new "undetectable pre-existing conditions" package that AHS offers has paid out more out for my clients this past year than I would have ever thought. In my region, foreclosures are overwhelming and I make sure all of my clients select that option when they purchase one. My rep is awesome and she continues to provide the best customer service I've ever seen. Maybe the problem you are having is your rep. It truly makes a difference.
Craig, I'm glad you've had good luck with American Home Shield.
The warranty language is vague, people cancel right and left, and the world in general is, in my opinion, taken to the cleaners by these folks.
That's why I believe they should be regulated by the states in which the operate.
Now just so you and others will know if you don't already, I'm not by myself in this opinion. There is a HUGE class action suit filed against AHSin California. Many, many people participating as joint plaintiffs. That didn't come about because AHS is perceived to operate honorably.
Bill,
To update you on class action lawsuits....The same attorney that filed against AHS has just filed a national class action lawsuit against Old Republic, First American and Fidelity. It's not about oprating honorably, it's about customers understanding their contract and Realtors understanding it as well.
As you put it....MANY, MANY people are participating in this new lawsuit as well!!
By the way, the warranties ARE regulated in most states. Some are under the guidelines of the Bureau of Insurance.
Tonya, the perfect insurance client is one who takes out a policy early in life, pays his premiums month after month until just prior to the occurrence that will require the company to pay his claim. Then he lets the policy lapse.
And that, by the way, is why life insurance companies are trying to figure out how to get around the sale of viaticals .
Not being able to predict or prevent having to pay a claim, they actuarially guess how they can make more money from premiums and earnings on reserves investments than they have to pay out in claims.
A favorite business plan of many casualty companies is to resist paying claims, knowing that they will lose those clients, but heavily marketing so they can replace them with new clients. The idea is that you collect lots of premiums and pay our very few claims. I feel the evidence proves this is AHS's plan.
AHS makes it quite clear that it considers itself a WARRANTY company and not an INSURANCE company. Therefore they don't feel they have to play under the same rules as insurance companies.
Regulators apparently feel that way as well.
(I would like to see a specific list of the state insurance commissioners who 1) regulate AHS and 2) which of those commissioners defines AHS as a warranty company and which defines them as a casualty insurance company.)
Consequently, AHS's business plan is obviously to try its best to weasel out of paying as many claims as it can, regardless of how many clients they lose, because they can depend on Realtors to replace the losses with new clients, and we even do it without charging AHS a commission for selling for them.
(Oy vey, such a deal, Realtors should have.)
No, AHS, in my opinion, is not an honorable company, and Realtors should not recommend AHS's product to clients. Perhaps there are others as well.
BILL CHERRY, REALTORS
DALLAS - HIGHLAND PARK
214 503-8563
I don't really know why this AHS company is still in business. I had warranty with them for 3 years paying $42/month. Had a plumbing leak below the kitchen sink. My mother was at home when Star Plumbing who is the approved vendor of AHS looked at the leak, my mother noticed that they were not thorough inspecting the leak and they jotted down notes at once and call their main office saying it is not covered. Paid $60 as my deductible. In their invoice/repair order form, they just indicated that it is not covered. So, I have to call AHS why it was not covered. They advised that the reason why it leaked was it is faulty workmanship. I agree that anything that has faulty workmanship is not covered. However, my house is only 4 years old and I find it hard to believe that this was the reason. I called an independent plumber to have a look and he advised that it was just a little loose and it just need tightening. Paid the plumber $32.00 (this is his hourly rate). AHS did not do anything but just literatly stared at the leak. Mind you, the leak is not that bad and only drops of water comes out.
I believe there is a conivance between AHS and their vendor. If I just kept my $42 for 3 years for future repairs, then I could have save $1512.00, which is more than enough to cover for leaks and water back up problems.
Bill,
I am from Dallas TX. Do you know if there is a class action against this company in Dallas? Let me know. thanks
Maria, there was one filed in California by a law firm there. It includes everyone in the US who has a complaint. Suggest you google it and ask the lawyer if he'll add you to his list. I'm already on it, but I regret I have misplaced the information.