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Monday, February 06, 2006 | At $300 or so, a home warranty seems like a great deal.
For a few hundred bucks, the warranty company promises a vision of peace of mind for a homeowner’s first 12 months in their new abode. The warranties, which cover a range of potentially expensive repairs such as a broken dishwasher or a faulty heater, purport to offer the policy holder an extra level of security. If things go wrong, the sales pitch goes, the warranty is there to bail the new homeowner out of trouble.
But local Realtors and their clients tell a different story about their experiences with home warranty companies. Though some San Diego Realtors reported a positive relationship with the warranty companies, most cautioned that the pretty picture companies paint for their clients soon washes off once those customers need help.
“What we have now is worthless, it’s no good for anyone,” said Jim Abbott, a Realtor who lives and works in downtown San Diego.
Abbott has had numerous run-ins with home warranty companies, both as a Realtor and an individual homeowner. He said he “hasn’t found a decent company to work with yet.” His primary complaint with the warranty companies is the poor quality of the workers they use. The warranty companies select their contractors based not on the technicians’ experience or their skill level, Abbott said, but on who can do the work the cheapest.
The result, Abbott said, is that homeowners often end up dealing with someone who simply doesn’t know what they are doing.
“They’re working from home, they’re working out of a car, they’re marginal people, they’re not people that could compete in any other way,” he said.
Not so, said Lorna Mello, vice president of marketing at Old Republic Home Protection, a warranty company that Abbott, as a homeowner himself, used to have a policy with. Mello said home-warranty companies take choosing their contractors very seriously.
Mello said her company has a department that deals solely with the selection of contractors, and that each contractor they hire is chosen on the basis of their experience and their skill-set and must pass a detailed application process. However, Mello said one challenge warranty companies face is that the companies they deal with can still hire whomever they want as the technicians who deal with customers. That makes it difficult for the warranty companies to keep tags on them, she said.
“Just because the company has got years of experience, doesn’t necessarily mean who they send out is going to be the most seasoned technician,” Mello said.
Technicians like the guy who came to fix David MacDonald’s heater.
MacDonald bought a house in the college area of San Diego last year. He bought the $400,000 home while he was living out of state, and, because he was unable to view the property, he ordered a home inspection before signing off on the sale. When he and his wife moved in, MacDonald found the property’s heater didn’t work properly. He called his home warranty company.
The company sent him a technician who MacDonald claims was negligent in his work. MacDonald said he later found out the company had never used the technician before, and after he hade made a mess of MacDonald’s heater, MacDonald said, the company never used him again either. The technician pulled apart his heating system before admitting that he had no idea what was wrong with it, MacDonald said.
To add insult to injury, MacDonald said the warranty company then advised him to purchase a new heater – at a cost of nearly $3,000 – only to turn around and tell him that he actually wasn’t covered for the cost of the replacement.
“I’m really just completely disgusted by the whole thing,” said MacDonald. “It’s basically just, hey, we’ll take your money and argue about it after the fact, and they’re really just not doing anything.”
“I feel basically used by the whole thing,” he added.
Local Realtors said MacDonald’s experience is not unique.
Craig Gagliardi, a downtown Realtor, said home warranty companies “basically sit back and collect money,” and are notorious for giving their customers short shrift. Gagliardi said he always advises his clients to go through him to get to the warranty company. The company is much more likely to deal with someone who is feeding them business, Gagliardi said, and trying to talk to them one-on-one is never a good idea.
By contrast, Peter Toner, a Realtor in La Jolla, said he has had nothing but good experiences with home-warranty companies. That could be because Toner works exclusively with one warranty company, he said, thereby building up a good relationship that only benefits his clients.
Vince Malta, president of the California Association of Realtors, said such a good relationship between a realtor and the home warranty companies they use is always in the best interests of customers, Realtors and warranty companies alike.
“You’re as good as the last transaction you’ve done,” Malta said. “If you’ve had a bad experience with someone, and the Realtor feels it’s inappropriate, unfortunately, the Realtor will remember you for the last thing you’ve done.”
For Abbott, that means he remembers his home warranty company as the guys who sent him a technician to fix his expensive Bosch dishwasher who had never worked on that brand before.
After scratching his head for three weeks, the technician admitted that he didn’t know how to fix it, Abbott said. The warranty company then sent over another technician who also admitted defeat.
Finally, Abbott bought himself a new dishwasher, incurring considerable costs in the process. He passed the old machine on to a neighbor, who promptly had one small part replaced by a skilled electrician.
The dishwasher has worked perfectly ever since.
Please contact Will Carless directly at