Starting a Home Warranty Service Company

12143 Views 4 Replies 2 Participants Last post by huggytree, May 18, 2014

pcplumber

Discussion Starter · May 18, 2014

Is anyone here running a full-blown home warranty company for appliances, plumbing and HVAC and do you have any goods, bads and uglies?

This is something I've been kicking around for several years and I think it has some huge possibilities. I'm still crunching the numbers in my slow brain, but for the past few days, I've been designing my advertising. So far my Agreement Terms with inclusions and exclusions is up to 17 pages with no end in sight.

Years ago, I hob-nobbed with several contractors who started their own home warranty companies, but I never paid any attention and never asked any questions at the time. Now, with business down and no sight of recovery I am looking for new doors and the holy grail.

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pcplumber

Discussion Starter · #2 · May 18, 2014

Wow!!! No bites!!!

Then, today I decided to check on the laws regarding operating a home warranty company and I can't find much except that there is an association for home warranty companies in California and the website explains how huge the market is, how easy the warranties are to sell and the organization has only 7 members. Also, there is a law stating that the home warranty company must keep 40% of the premiums in a reserve account plus $40 for each line item. I think that means $40 for each item that is insured.

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huggytree

· #3 · May 18, 2014 (Edited)

ive worked for 1...it sucked.....they paid on time, but their customers were the worst possible.....the cheapest people on earth.....those will be your customers

i was taught to get my $50 co pay from them before i called in what the repair bill would be to the main company.....homeowners hated giving me $50 just for showing up....some said i didnt trust them and thats why i was charging before i started.......so situations were negative from the first 5 minutes on with many of the customers......often repairs werent covered.....when they werent often customers were once again angry with me...they never paid me to fix them on their own...

they told me the average call needed to be around $200.....well many were water heaters which are $600-800 range (at the time).......my average was $400 range and that got me fired eventually...

their advertising was all about starting a customer base that i would get future jobs from these customers.....total lie....never got a return call from any of them...these customers are so low end/cheap that if it isnt free through the warranty service that they will find a side jobber or friend to do it....none of these people pay full price

i think your idea sucks...you will be dealing with the worst customers possible....

i prefer to deal with rich/high end customers who are willing to pay full price for a quality job.....you wont get any of those....

i also ran into a high % of packrats, filthy houses, homeowners w/ mental issues.....i still remember one who fenced off their kitchen with their dogs inside it...poop/pee all over the kitchen floor....i woke her up at 11am (had to knock/ring the phone several times)...she took me through the kitchen full of poop...she didnt know where any of the mechanicals were(it was an odd house on slab)....they had to move all their belongings because they piled up around all the shut off valves/mechanicals......finally i discovered the problem, it was a burst pipe...the homeowner argued with me that it wasnt a frozen/burst pipe because it wasnt under warranty....they said i didnt know what i was talking about when i denied their claim.....i struggled to get my $50.....after i left i heard they called the police on me saying i vandalized their house by cutting holes in the drywall to find the burst pipe........this is your future customer.....a nut case living in her dogs poop...this was my final job for them....the combination of a customer complaint and $400 average got me fired

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pcplumber

Discussion Starter · #4 · May 18, 2014

huggytree said:
ive worked for 1...it sucked.....they paid on time, but their customers were the worst possible.....the cheapest people on earth.....those will be your customers

i was taught to get my $50 co pay from them before i called in what the repair bill would be to the main company.....homeowners hated giving me $50 just for showing up....some said i didnt trust them and thats why i was charging before i started.......so situations were negative from the first 5 minutes on with many of the customers......often repairs werent covered.....when they werent often customers were once again angry with me...they never paid me to fix them on their own...

they told me the average call needed to be around $200.....well many were water heaters which are $600-800 range (at the time).......my average was $400 range and that got me fired eventually...

their advertising was all about starting a customer base that i would get future jobs from these customers.....total lie....never got a return call from any of them...these customers are so low end/cheap that if it isnt free through the warranty service that they will find a side jobber or friend to do it....none of these people pay full price

i think your idea sucks...you will be dealing with the worst customers possible....

i prefer to deal with rich/high end customers who are willing to pay full price for a quality job.....you wont get any

You are looking at this from the point of view when you work for the home warranty company. I am looking at it as the owner of the home warranty company and their are so many avenues of opportunity from so many directions I don't want to post what I know on CT.

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huggytree

· #5 · May 18, 2014

my experience will be common with the subs you hire and the customers you deal with

your customers will be horrible, complain, be unreasonable

your subs will be unhappy...you will have to lie to them and say your customers are great

there will be a large turn around with subs

if you can make 30% then go for it....if your going to make 5% id skip it

it wouldnt be a business id be interested in....i want the best customers...not the worst

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