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Referral deal, and I got a no-kickback warranty for my buyer.
With the $70 kickback out of the price, the referring agent got involved and demanded that I buy a more expensive warranty because she had never seen one that cheap.
Pushed me to the company she used, and there was no online option to decline the kickback.
Rather than rock the boat, I ordered the warranty and pocketed the cash. Yeah, it sucked.
This was before that particular kickback was eliminated.
Last edited by MikeJaquish; 05-12-2017 at 08:54 AM..
My general feeling about the subject (even without really being all that well-versed on home warranties and real estate) as a first-time buyer is that the majority of the time they have to be bad deals for the customers, just like virtually all warranty/extended warranty products.
The very nature of the warranty/extended warranty business is that the companies offering them have crunched the numbers and know what they need to charge the customer in premiums in order to make a profit (ie payout less in services to the customer than they receive in monthly premiums from the customer). They have people that almost certainly do nothing other than crunch the numbers behind the warranty deals to ensure that they win the vast majority of the cases. Sure, you will hear some stories here (and elsewhere) from people who think they got a good deal and avoided a major expenditure for a water heater or HVAC or dishwasher but those people are pretty much always going to be in the minority because the warranty company couldn't be profitable and stay in business otherwise if this was happening all that often (ie paying out more in services/repairs to a customer than they receive in premiums from that customer).
It basically is a calculated bet between the warranty company and the homeowner concerning who will win the deal; the warranty company is going to win the vast majority of the time because they are the experts and have done the math behind these deals. They wouldn't stay in business and even begin to offer the warranty deals unless they were pretty confident that they were going to win the deal. I would guess at least 80 percent of the time the homeowner ends up on the losing end of the deal (ie pays more in premiums than they receive in services). The part that baffles me is why I see realtors in my area advocating home warranties. A realtor (a buying agent in these cases) are supposed to be advocates for their clients (their buyers in this case) and look out for their best interests but they aren't doing that if they are really suggesting that their clients purchase a home warranty (and some of them are). The math behind the deal says that they are bad deals for the homeowner/buyer the vast majority of the time. It makes me want to not do business with the realtors in my area who are suggesting home warranties to their clients.
Sure, I imagine every so often (maybe 10 percent of the time) someone lucks out and ends up receiving more in service payouts from the warranty company than they paid in via premiums over the life of the agreement but I am sure that those are fairly rare.
No kidding.. If everyone got out more than they put in.. That's not exactly a sustainable business model.
I don't do a home warranty.. But.. I can somewhat see the advantage to them to some people.. A service call on about anything is going to run you $150.. That's just to look at it. Whatever it is.
Replacing an AC system can run $4k-$5k.. For some people, I can imagine that paying the $700 a year helps spread the cost out over a longer time period rather than having a large amount come due at once.
Water leaks and mold can be very expensive repairs.
It really only takes one repair a year to basically eat up the premium.
But.. How many people have a repair per year? I've been in my house 11 years and.. I've had 1 repair that someone had to come out and do, and that was flooring for a busted hot water heater. I replaced the heater myself, flooring was a little over $1k and that would have been covered by homeowners anyway (With a $500 deductible, I didn't even submit)
Now.. For others who aren't as handy as myself.. They might have paid to replace a couple of light switches I've had fail.. They might have covered 2 faucets that had to be replaced.. They might have paid for the service calls on ants in the A/C contactor that has happened at least 10 times. Might have paid to replace the evap fan that failed on the fridge.. But... I did all that work myself.
So.. I'm not defending them. In my case, they're certainly not worth it. But.. I can see instances where they could be to certain people. You just can't look at them as "I'm paying this much, I should get more than that back".. You pay whatever you pay for car insurance.. If you're 'lucky' and run into someone and total their brand new car.. That $800 or so a year that you're paying is a whole lot better than shelling out $25k to replace their car.
Over your lifetime.. You're probably going to pay in more than that $25k.
I would never buy one, but our seller offered one for a year. Turns out, our hot water heater had issues about 3 months in and it was under this warranty. Only cost us $75 for a plumber to come out and fix it. And he was here for a couple of hours because he had to go get the right part.
We don't receive any kickbacks from either home warranty companies, or mortgage companies... or any service provider for that matter.
We have recommended or included home warranties in several contracts. Some representing the buyer, some for the seller. It's often used as a way of soothing a buyer's fears over a home with several older systems in it. A ten or fifteen year old home (or older) is going to be full of appliances and mechanical systems that the inspector says are near the end of their useful life. Most people don't replace these systems til they fail. A home warranty soothes fears of the cost of repairing a lot of aging systems.
It basically is a calculated bet between the warranty company and the homeowner concerning who will win the deal; the warranty company is going to win the vast majority of the time because they are the experts and have done the math behind these deals. They wouldn't stay in business and even begin to offer the warranty deals unless they were pretty confident that they were going to win the deal. I would guess at least 80 percent of the time the homeowner ends up on the losing end of the deal (ie pays more in premiums than they receive in services). The part that baffles me is why I see realtors in my area advocating home warranties. A realtor (a buying agent in these cases) are supposed to be advocates for their clients (their buyers in this case) and look out for their best interests but they aren't doing that if they are really suggesting that their clients purchase a home warranty (and some of them are). The math behind the deal says that they are bad deals for the homeowner/buyer the vast majority of the time. It makes me want to not do business with the realtors in my area who are suggesting home warranties to their clients.[/quote]
If you read the many posts from people who have done business with commissioned sales people, it is evident that just as the warranty companies calculate everything for their own benefit, so do they. This is the reason people are turning to selling/buying using only a professional legal real estate attorneys and For Sale By Owner as their hideous financial demands are not to benefit the clients of the salespeople. In our experience, it is easier and cheaper to keep out the sales people and handle our own business like adults.
When we bought our first home we weren't as street smart and got suckered into buying a warranty but learned that they only installed a used water heater while stealing from our garage. Just to put others on notice, when they refuse to leave a manufactures warranty it is because they have installed refurbished junk.
Like another poster said, set money aside for repairs which is the best way to ensure you get what you want and can chose who you let into your home.
It basically is a calculated bet between the warranty company and the homeowner concerning who will win the deal; the warranty company is going to win the vast majority of the time because they are the experts and have done the math behind these deals. They wouldn't stay in business and even begin to offer the warranty deals unless they were pretty confident that they were going to win the deal. I would guess at least 80 percent of the time the homeowner ends up on the losing end of the deal (ie pays more in premiums than they receive in services). The part that baffles me is why I see realtors in my area advocating home warranties. A realtor (a buying agent in these cases) are supposed to be advocates for their clients (their buyers in this case) and look out for their best interests but they aren't doing that if they are really suggesting that their clients purchase a home warranty (and some of them are). The math behind the deal says that they are bad deals for the homeowner/buyer the vast majority of the time. It makes me want to not do business with the realtors in my area who are suggesting home warranties to their clients.
If you read the many posts from people who have done business with commissioned sales people, it is evident that just as the warranty companies calculate everything for their own benefit, so do they. This is the reason people are turning to selling/buying using only a professional legal real estate attorneys and For Sale By Owner as their hideous financial demands are not to benefit the clients of the salespeople. In our experience, it is easier and cheaper to keep out the sales people and handle our own business like adults.
When we bought our first home we weren't as street smart and got suckered into buying a warranty but learned that they only installed a used water heater while stealing from our garage. Just to put others on notice, when they refuse to leave a manufactures warranty it is because they have installed refurbished junk.
Like another poster said, set money aside for repairs which is the best way to ensure you get what you want and can chose who you let into your home.
You are so blinded by your narrow vision, you are specifically the sort of person one should discuss choosing a warranty with, for the mere point of avoiding liability for NOT offering it.
Even in a fiduciary role, the agent has to be alert for ax grinders with little intellectual integrity.
You are so blinded by your narrow vision, you are specifically the sort of person one should discuss choosing a warranty with, for the mere point of avoiding liability for NOT offering it.
Even in a fiduciary role, the agent has to be alert for ax grinders with little intellectual integrity.
It basically is a calculated bet between the warranty company and the homeowner concerning who will win the deal; the warranty company is going to win the vast majority of the time because they are the experts and have done the math behind these deals. They wouldn't stay in business and even begin to offer the warranty deals unless they were pretty confident that they were going to win the deal. I would guess at least 80 percent of the time the homeowner ends up on the losing end of the deal (ie pays more in premiums than they receive in services). The part that baffles me is why I see realtors in my area advocating home warranties. A realtor (a buying agent in these cases) are supposed to be advocates for their clients (their buyers in this case) and look out for their best interests but they aren't doing that if they are really suggesting that their clients purchase a home warranty (and some of them are). The math behind the deal says that they are bad deals for the homeowner/buyer the vast majority of the time. It makes me want to not do business with the realtors in my area who are suggesting home warranties to their clients.
Nobody is putting a gun to a buyers head.. They can look at the cost of the warranty, cost of the service call fee, and the breakdown of coverage etc, and make their own choice.
I receive dozens of postcards yearly, from one warranty company, showing their payouts. Almost every payout exceeded the original plan cost. I'm fairly confident my clients would be happy with that.
Neither my mother nor myself have ever found home warranty companies to be worth the paper they are written on. We both had different companies but the same story: lousy customer service, inferior repair people, terrible turnaround time and nitpicking to find any reason not to pay. The aggravation isn't worth it.
There was a thread a while ago (less than 3 months I believe) that detailed some of the CD member's experience with Home Warranties, most of them negative.
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