Can You Trust a Home Warranty Company?

We never had a home warranty until house #15, so why did we get one this time? The house was 20 years old, and many of the major systems fail around twenty years, something I learned running a handyman business for 8 years. Rather than have to worry about making an emergency HVAC system purchase during year one, a home warranty company would cover problems until we had time to research our next HVAC system. 

While this might have been a good strategy, it's turning into a much bigger story that I could have imagined. So here's a quick recap of the calls we've made to FirstAm (short for First American Home Buyers Protection) in 21 months (initial work order #607923844; now #607969959 due to change in contractors).

• December 2014, first week in the new house and there's no heat upstairs (59º Fahrenheit). Reported problem 12/15 but lived without heat for 3 months, until a second contractor installed a new condenser/compressor on March 13th, 2016 (unit boomed over garage above).
• June 2016, no air conditioning upstairs (temperature 95º Fahrenheit indoors). The next day we discovered the downstairs air conditioning also wasn't working. After an initial visit from the contractor, it's been more than a week and we can't get a written estimate, just a verbal “it will cost us $1800 to replace the 15 month old compressor” with parts covered by manufacturer warranty?

What I Expect From a Home Warranty Company

This is the 15th house we've purchased and the first time we got a home warranty (20 year old house). My experience running a handyman business might have influenced this request, and my realtor ‘s awareness that part-time homeowners tend to neglect home maintenance, so she always recommends this.

So here's what I would expect from a reputable home warranty company. As

• A contractor assigned to investigate the problem within 4 hours, and visit your home within 48 hours. Certain problems should be addressed faster, like no air conditioning when outside temperatures are over 110º Fahrenheit.
• A claims specialist assigned within 24 hours. They should tract open problem tickets and make sure the contractor is meeting contractual commitments, and repairs are completed in a timely manner.
• The company should review contractor estimates, and communicate in writing to homeowners what is covered by the home warranty, and what costs the homeowner must pay.
• The home warranty company should provide an online problem log that enables the company, homeowner and contractor, to communicate quickly and efficiently regarding new information, target closure and status updates.
• A customer satisfaction survey should be done when the job is completed, to give the home warranty company feedback so they improve their internal processes and weed out contractors that fail to deliver good service.

Home Warranty Problem #1 – No Heat First 3 Months in a New House

To give you some perspective, we discovered we had no heat the week we arrived in Arizona. So we were learning about a new house, a new city and unpacking (kitchen/dining room above), in addition to dealing with our home warranty company and multiple contractors.

Here's a quick summary of our first HVAC disaster while I gather documentation. The FirstAm home warranty process doesn't provide any documentation, so once I've got a plan in place for the open problem, I'll reconstruct last years disaster. We know that we chased contractor #1 with more than a dozen calls over several weeks and a few visits. There were lots of excuses and finally we escalated the problem.

It appears that FirstAm doesn't demand much of their contractors, and their solution is to assign a new one. This appears to happen after the homeowner escalates so … last year (and now), a second contractor was assigned, who said we needed a new condenser/compressor.

Problem #1 illustrates how the home warranty company let's their contractors rip off homeowners:

• Contractor #2 verbally told my husband that the cost of the new equipment (condenser and compressor) and installation was going to cost around $5,000. They explained that we had to pay $350 to attach the new condenser to the existing air handler, and they wouldn't schedule the installation until we made this payment. My husband called FirstAm and they confirmed we had to pay … and after 3 months, we were done so we paid.
• At the time of the installation, we received no receipt (will be pulling credit card statement) or documentation for the new condenser/compressor. We've already gotten the warranty from the manufacturer (5 years) and so far calls to the contractor have not been returned (they're not answering their phone).
• Now that the new compressor (diagram of condenser parts) has failed, we discovered that what they installed in March 2015, is an obsolete unit that uses Freon R22. Reading a few more articles seems to indicate that the government loophole is HVAC equipment producers can manufacture R-22 repair parts as long as they are sold “dry,” without refrigerant

First American Homebuyers Protection … Doesn't Protect You!

So here's the sad but true story of our current air conditioning failure. We slept on the floor in my office, using a tiny window air conditioner as houses in Arizona have central air conditioning, so there aren't many double-hung windows. We're glad we were home when both air conditioners failed, as last summer we left for the east coast on June 20th, but different schedule this year.

• Not until I started researching HVAC systems and freon prices, did I realize the technician did nothing to identify why the freon was leaking out, or make the necessary repairs to avoid more service calls. A bit more research and I learned that this action (lack of) is illegal!
  6/21/16 (Tuesday am), opened online claim with FirstAm for the upstairs air conditioner which was running, but not cooling.
• 6/21 (Tuesday pm), Called FirstAm to switch to the same contractor who installed the failing unit, in hopes that they already knew the system and could make repairs more quickly.
• 6/23 (Thursday am), Brett from contractor #1 concluded that the upstairs unit, a Goodman compressor installed in March 2015, had a compressor “short to ground” and was dead, so we needed a new compressor. He also determined that the older Trane unit was low on Freon and added 3 pounds. Once he'd added the Freon we talked about the quality of the different HVAC manufacturers, and whether a home warranty was a good idea.
• 6/25 (Saturday am), With no communication from anyone, my husband called FirstAm to complain about no action. They didn't offer to do anything, saying only that they had not heard back from contractor #1.
• 6/25 (Saturday am), Exasperated with no ownership by the home warranty company, my husband made a call to contractor #1, leaving a message asking them to send their report to FirstAm ASAP.
• 6/27 (Monday am), My husband called FirstAm again, to complain about no action. Sadly he received the same excuse, they had not heard from contractor #1 … and made no offer to follow-up to move the ball forward.

• 6/28 (Tuesday am), My husband finally reached Adrian at the offices of contractor #1. They told him FirstAm will only pay $600 towards the estimated $2435 cost to repair (and the parts are free, covered by 5 year manufacturer's warranty).

• Strange that my FirstAm contract clearly states the “refrigerant recharging” is covered.
  6/28 (Tuesday am), is when my husband shared the news and we agreed it was time for me to take the lead on this disaster. The excuse for “homeowner's cost” is that most of the expense, about $1300, is for freon (R-22) to fill the compressor. The contractor says FirstAm will only pay $250 towards this expense, but this limitation isn't documented in the home warranty contract I have?
• 6/28 (Tuesday am), So our next step was to check the Goodman unit (serial number 1408677851) and OMG, learned that we had been duped with an obsolete R-22 unit that's been illegal to sell since 2010. We called Goodman in Texas and learned it was manufactured in August of 2014.  It has an “all-parts, 5 year warranty” which I don't think anyone was going to tell is but now I plan to get to the bottom of this mess, and I won't be quiet.
• 6/28 (Tuesday pm), My first call to FirstAm Home Buyers Protection to demand the service I expect from a home warranty company. You have to wonder about priorities when you have to wait for more than 30 minutes to talk to someone in Guatemala?
  1. Requested that a claims specialist be assigned as things were moving too slowly – this was done.
  2. Explained that while contractor #1's technician had added freon to the second (downstairs) air conditioning system, they had failed to find and repair the leak – this landed in a black hole, as the new claims specialist knew nothing about this.
  3. Decided to skip issue number three until I was talking to someone who had a clue about any of this.
• 6/28 (Wednesday pm), Received an email from the claims specialist assigned to … help us? Now remember it's over 110º F in Phoenix, our air conditioner has been dead for a week and she's not going to do anything for another week? At first I thought maybe she didn't understand Arizona summers but she does – her office is in Phoenix!

• 6/29 (Thursday pm), Called Melinda to review my issues (2 of 3, focusing on repairs needed) and what I was expecting to happen:
  1. We wanted a written estimate from FirstAm to repair the dead compressor, along with an explanation of what FirstAm would pay and what they expected us to pay – she either didn't understand this, or didn't think this was possible
  2. We expected an HVAC repair technician to come back to our house and find/repair the leak in the second air conditioner where they'd only given us a bandaid with 3 pounds of freon, which will have to be replaced again, again … Her response to this was she'd discuss this with contractor relations.
• 6/29 (Thursday pm), At the end of my call with Melinda, it was clear I had to escalate so she got Marcus on the phone and he actually seemed to understand something about HVAC systems. So we reviewed all 3 of my issues.
  1. We wanted a written estimate from FirstAm to repair the dead compressor, along with an explanation of what First American would pay and what they expected us to pay. Marcus indicated this was doable, saying they would provide a cover letter which I assumed would accompany a written estimate from contractor #1.
  2. We expected an HVAC repair technician to come back to our house and find/repair the leak in the second air conditioner. This conversation started slowly and finally when I explained to Marcus that not fixing the leak was illegal, he agreed and said maybe they'd have to send another company out to make the repairs.
  3. Lastly, I explained to Marcus that I wasn't happy that in March 2015, FirstAm decided to replace our condenser/compressor with an obsolete unit using R-22 (why the cost of this repair is out of line). I said I was continuing my research but I wasn't happy about this. Have since learned that mixing components from two different manufacturers, lowers system performance. What this means is the existing Trane air handler (SEER 12) combined with new Goodman condenser (SEER 13) is probably delivering SEER 11 performance, less than what we had before.
• 6/29 (Thursday pm), As both my husband and I were working out of the house, we found a voicemail message (ignoring my husband's request that all communication be done via email) at 4:55, asking us to call and confirm a new company (L&S), contractor #2, to come out Saturday morning to deal with the leak ignored by contractor #1.
  • Note: I learned this morning that I didn't get the entire message regarding L&S, so here it is “Hello, this is Melinda calling back from FirstAm Home Warranty, calling about work order #607-969-959 (new number with change in contractors). We're calling today because a decision has been made to go ahead and assign a second opinion technician to the property and the soonest available appointment is going to be Saturday with L&S. Please call me to let me know if this will work …”. My husband immediately called to confirm that L&S could come Saturday morning and …
• 6/30 (Friday all day), While my husband and I called several times to confirm the Saturday service call, we never reached anyone … and no one responded to messages we left. This left me feeling like FirstAm doesn't care how long our air conditioning system is out, how uncomfortable we are – their long holiday weekend is more important!
• 6/30 (Friday pm), When I got home late Friday afternoon, my plan was to call contractor #2 directly but … in looking up their phone number, their Yelp ratings raised a big red flag so I didn't call.

Expectations for a Home Warranty Company?

So where does this leave us? Between a rock and a hard place as the home warranty business appears to charge a lot of money for referrals to contractors with horrible reputations, who are only able to stay in business because of the work they get from one or more home warranty companies.

Here are my issues with the only home warranty company I've ever worked with. These are my educated opinions, guesses, whatever you want to call them … but they're based on the facts that I'm sharing here. And if they can't commit in writing to doing these things, then I suggest that's ample reason why we can't trust home warranty companies.

• FirstAm does not have quality standards for the contractors they refer homeowners to based on the Yelp reviews above.
• FirstAm does not require their contractors to complete jobs assigned, instead sending out a new contractor to pick up when … lots of reasons like an unhappy homeowner (this time) or the first contractor recognizes they can't make money on the job (early 2015).
• FirstAm doesn't proactively manage any aspect of the repair job, except their cost for repairs. They leave it to the homeowner to manage the repairs and even when you escalate to get a claims specialist assigned, they'll only contact you weekly with an update? In fact Melinda told my husband she is assigned 150 repairs daily.
• FirstAm has contractors negotiate homeowner payments beyond the $60 service call fee. For example, we foolishly paid $350 to attach the new condenser/compressor to the system … after waiting 3 months for heat.
• FirstAm doesn't care how long a repair takes. It actually feels like they let things drag out to wear homeowners down, so that ultimately we'll pay more money than we should … just to get on with our lives.
• First American doesn't confirm with homeowners that a job has been completed. CNN closed our first “no heat” problem and was surprised when we finally called to escalate a contractor who went missing!
• First American avoids written documentation on anything, keeping it strictly your word versus theirs or the contractors. When my husband insisted on email, they send one email, then revert back to voice mail (assignment of contractor #2). It's also funny that they can't email you a copy of the contract (snail mail only and it takes about 2 weeks).

Is my situation unusual? No, because FirstAm has received more than 600 reviews on Yelp and almost all of them tell a very similar story which you'll understand better now that you've read my issues with FirstAm Home Buyers Protection.

So where am I going from here?

• Get estimates to replace the failed (and obsolete) compressor with a new HVAC system.
• Pursue repair of the second air conditioning system that needed 3 lb of freon, as this will happen repeatedly until the leak is found and repaired.
• Document what is and isn't covered by most home warranty contracts so please scan/email me your home warranty contracts ([email protected]). 
• Research home warranty pricing as my gut instinct says it should be the first red flag that there's a problem (read: Why Home Warranty Reviews Hide the Truth). That's because a 20 year old house will require more repairs than a 5 or 10 year old house (just like cars). Then there's the matter of how many components are being covered. Most houses have a single HVAC system but our Portsmouth, NH house had 3 systems (original forced hot air, new forced hot water and a radiant floor system), Hampton NH had a single unit and Arizona has 2 systems (upstairs and downstairs).

Research the home warranty industry and decide how to educate homeowners across the US … starting with wildly conflicting reviews of the service delivered by First American Home Buyers Protection Corporation:

• Yelp with a 1.3 (estimated) on a scale of 1 to 5 based on 661 reviews.
• BBB rating of B on a scale of F to A+ based on 2,056 complaints.
• ConsumerAffairs gives them a 4 star rating (really?) based on 2,375 reviews.

Hope you found this article helpful, and just so you know it's happening to others around the US …

Leave a comment below to share your experience …

 Together we can make a difference!