American Home Shield and the Home Warranty Business - Should I or Shouldn't I?

By
Services for Real Estate Pros with William S. Cherry & No Co., Wealth Coach
http://actvra.in/4cgy

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

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Tags:
home warranties
ahs
american home shield

Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the tree to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Show All Comments
Rainer
150,001
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

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. 

March 07, 2008 03:20 PM #24
Rainmaker
319,341
BILL CHERRY
William S. Cherry & No Co., Wealth Coach - Dallas, TX
William S. Cherry & No Co., Wealth Coach

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

March 07, 2008 07:17 PM #25
Rainer
16,579
Philip Lamachio
Advantage Inspection Clear View - Greensboro, NC

Bill,

 I would really like to know which paper is doing the expose on AHS.

Philip LaMachio Advantage Home Inspection

 

March 07, 2008 08:57 PM #26
Rainmaker
319,341
BILL CHERRY
William S. Cherry & No Co., Wealth Coach - Dallas, TX
William S. Cherry & No Co., Wealth Coach

Philip, I can't do that. 

Bill

March 07, 2008 09:32 PM #27
Rainer
16,579
Philip Lamachio
Advantage Inspection Clear View - Greensboro, NC

When the expose comes out, if you remember, could you direct me to it ?  If you can.....

Thanks, Philip

March 07, 2008 09:52 PM #28
Rainmaker
178,153
Christina (Asad) Cavins
Irongate Inc. REALTORS - Centerville, OH
www.DaytonOhioHouse.com Search Ohio Homes For Sale

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

July 10, 2008 12:02 AM #29
Anonymous
Anonymous
Bill Cherry

Christina, thanks for your comments.  I posted my response to your blog, "Is a Home Warranty Worth It?"

July 10, 2008 06:24 AM #30
Anonymous
Anonymous
Kaegle

What's "warranty"?

July 15, 2008 02:54 PM #31
Anonymous
Anonymous
Mina

AHS..!!! the worst company to work with...

September 14, 2008 10:39 PM #32
Rainmaker
319,341
BILL CHERRY
William S. Cherry & No Co., Wealth Coach - Dallas, TX
William S. Cherry & No Co., Wealth Coach

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.

September 14, 2008 11:00 PM #33
Anonymous
Anonymous
KERRY CHILDERS COLDWELL BANKER GAINESVILLE FL

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/

March 12, 2009 02:49 PM #34
Anonymous
Anonymous
Oleg Irmann

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.

 

March 27, 2009 06:51 AM #35
Anonymous
Anonymous
Craig

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.

April 05, 2009 11:07 AM #36
Rainmaker
319,341
BILL CHERRY
William S. Cherry & No Co., Wealth Coach - Dallas, TX
William S. Cherry & No Co., Wealth Coach

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.

April 05, 2009 12:36 PM #37
Anonymous
Anonymous
Tonya

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!!

April 12, 2009 05:58 PM #38
Anonymous
Anonymous
Tonya

By the way, the warranties ARE regulated in most states. Some are under the guidelines of the Bureau of Insurance.

April 12, 2009 06:01 PM #39
Rainmaker
319,341
BILL CHERRY
William S. Cherry & No Co., Wealth Coach - Dallas, TX
William S. Cherry & No Co., Wealth Coach

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

April 12, 2009 08:10 PM #40
Anonymous
Anonymous
Maria

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. 

January 08, 2011 09:21 AM #41
Anonymous
Anonymous
Maria

Bill,

I am from Dallas TX.  Do you know if there is a class action against this company in Dallas?  Let me know.  thanks

January 08, 2011 09:26 AM #42
Anonymous
Anonymous
Bill Cherry

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.

January 08, 2011 11:47 AM #43
Show All Comments
Rainmaker
319,341

BILL CHERRY

William S. Cherry & No Co., Wealth Coach
Ask me a question
*
*
*
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the cat to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Additional Information